Attorney General Tong Leads Coalition Supporting Bankruptcy Site Reform Law
(Hartford, CT) – Attorney General William Tong today co-edited a letter to Congress signed by 43 attorneys general in support of the Bankruptcy Premises Reform Act of 2021. Biparty legislation would end “forum shopping” and prevent businesses from choosing to file for bankruptcy in the district believed to be the most favorable.
Currently, individuals can only file for Wisconsin BankruptcyÂ in their area of ââresidence. However, corporations reserve the right to sue for bankruptcy in any district in which they are incorporated, have their principal place of business or assets, or in any district where a branch – regardless of size. – was created or located. This leaves companies with a wide choice of possible locations, which can be manipulated to their advantage.
âForum shopping is undermining the integrity of our bankruptcy system and must be stopped. Companies should file for bankruptcy where their main assets or place of business are located, not where they hope to obtain the most favorable treatment â, said Attorney General Tong.
If passed, the Bankruptcy Venue Reform Act of 2021:
â¢ Limit where companies can file for bankruptcy by ensuring that they do so in a jurisdiction in which their âprincipal assetsâ or âprincipal place of businessâ are located; and
â¢ Demand that rules be prescribed to allow all government lawyers to appear without charge and without being required to partner with a local lawyer.
In the letter, the attorneys general argue that the passage of the law:
â¢ Reduce forum shopping in the bankruptcy system.
â¢ Strengthen the integrity and public confidence and ensure the fairness of the bankruptcy system.
â¢ Help consumers and other parties to be represented in court without undue burden.
â¢ Level the playing field for state attorneys general to protect their states’ financial interests and enforce consumer protection laws.
The letter was led by Attorney General Tong, Attorney General of Maryland Brian Frosh, Attorney General of Ohio Dave Yost, and Attorney General of Texas Ken Paxton, and signed by Attorneys General of Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Georgia. , Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Mexico, New York, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, Caroline of South, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia and Wisconsin.
Deputy Attorney General Brendan Flynn and Michael Wertheimer, Deputy Assistant Attorney General and Head of the Consumer Protection Section assisted the Attorney General in this case.