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Illinois Attorney General Kwame Raoul
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November 9, 2021


Chicago  — Attorney General Raoul, as part of a coalition of 43 attorneys general, today sent a bipartisan letter to Congress urging passage of the Bankruptcy Venue Reform Act of 2021. The bipartisan legislation would end “forum shopping” and prevent corporations from choosing to file for bankruptcy in whichever district is believed to be more favorable.

Currently, individuals can only file for bankruptcy in their district of residence. However, corporations reserve the right to file bankruptcy lawsuits in any district in which they are incorporated, have their principal place of business or assets, or in any district where an affiliate – no matter how small – has been created or located. As a result, corporations are able to choose from a wide variety of possible venues, which can be manipulated to their own advantage.

“Individuals filing for bankruptcy are limited to filing in the court district where they live. Corporations on the other hand, can choose to file in districts perceived as being more advantageous. Those districts may also be located far from where victims and creditors are located, which makes it very difficult for stakeholders to attend proceedings,” Raoul said. “I urge Congress to take action to stop corporations from ‘forum shopping’ and ensure that consumers can be represented in corporate bankruptcy cases that impact them.”

If passed, the Bankruptcy Venue Reform Act of 2021 will limit where businesses may file bankruptcy by ensuring that they do so in a jurisdiction in which their “principal assets” or their “principal place of business” are located. The act would also require rules to be prescribed to allow all government attorneys to appear without charge and without being required to associate with local counsel.

In the letter, Raoul and the attorneys general contend that passage of the legislation will:

  • Reduce forum shopping in the bankruptcy system.
  • Strengthen the integrity of, and build public confidence and ensure fairness in, the bankruptcy system.
  • Help consumers and other parties to be represented in court without undue burden.
  • Level the playing field for state attorneys general to guard their states’ financial interests and enforce consumer protection laws.

Joining Raoul in sending the letter are the attorneys general of Alaska, Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Florida, Georgia, Guam, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming.

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