Us Congress House Bill HB1017

Us Congress 2023-2024 Regular Session

• Introduced: 2/14/23
• Refer: 2/14/23

Caption

Bankruptcy Venue Reform Act

Impact

The bill proposes more stringent criteria for determining the venue in which bankruptcy proceedings can be initiated. Specifically, it seeks to ensure that cases are filed in jurisdictions directly relevant to the entity, such as where their principal place of business or principal assets are located. This is intended to enhance the integrity and public confidence in the bankruptcy system, benefiting small businesses, employees, and other stakeholders who might be impacted by the outcomes of these cases.

Summary

HB1017, known as the Bankruptcy Venue Reform Act, aims to amend Title 28 of the United States Code with a focus on modifying venue requirements for bankruptcy proceedings. The primary goal of the bill is to reduce the practice known as 'forum shopping', where entities file for bankruptcy in districts that may be more favorable to them, often outside of their home states. This has led to an uneven concentration of bankruptcy cases in certain areas, undermining local participation and fairness in the bankruptcy process.

Contention

During discussions of HB1017, notable points of contention arose regarding the balance between state and federal oversight in bankruptcy matters. Supporters argued that the bill is crucial for maintaining fairness in the bankruptcy system, ensuring all stakeholders have equal access to proceedings. Critics, however, raised concerns about the potential limiting of options for companies seeking relief in times of financial distress. They argued that a reduced range of permissible venues might complicate the bankruptcy process or lead to unintended consequences for businesses and creditors.