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A debtor further may file its petition in any venue where it is domiciled (i.e. incorporated), where its principal place of service in the United States is situated, where its principal possessions in the United States are situated, or in any venue where any of its affiliates can submit. See 28 U.S.C.Proposed changes to the venue requirements in the US Bankruptcy Code could threaten the US Bankruptcy Courts' command of international restructurings, and do so at a time when many of the US' perceived competitive advantages are diminishing.

Both propose to eliminate the capability to "online forum store" by leaving out a debtor's location of incorporation from the venue analysis, andalarming to worldwide debtorsexcluding money or cash equivalents from the "primary assets" equation. In addition, any equity interest in an affiliate will be considered situated in the exact same location as the principal.

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Normally, this testament has been focused on questionable 3rd party release arrangements carried out in recent mass tort cases such as Purdue Pharma, Young Boy Scouts of America, and lots of Catholic diocese personal bankruptcies. These provisions regularly force lenders to launch non-debtor 3rd parties as part of the debtor's strategy of reorganization, despite the fact that such releases are arguably not permitted, at least in some circuits, by the Bankruptcy Code.

In effort to mark out this habits, the proposed legislation claims to limit "forum shopping" by forbiding entities from filing in any venue other than where their business headquarters or primary physical assetsexcluding money and equity interestsare located. Ostensibly, these bills would promote the filing of Chapter 11 cases in other US districts, and guide cases away from the preferred courts in New York, Delaware and Texas.

Despite their admirable purpose, these proposed changes could have unanticipated and potentially unfavorable repercussions when seen from a global restructuring potential. While congressional statement and other analysts presume that place reform would simply ensure that domestic companies would submit in a different jurisdiction within the United States, it is an unique possibility that worldwide debtors may pass on the US Insolvency Courts entirely.

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Without the factor to consider of money accounts as an opportunity towards eligibility, numerous foreign corporations without concrete assets in the US might not qualify to submit a Chapter 11 personal bankruptcy in any US jurisdiction. Second, even if they do certify, global debtors might not have the ability to depend on access to the usual and convenient reorganization friendly jurisdictions.

Offered the complex concerns frequently at play in an international restructuring case, this might trigger the debtor and lenders some unpredictability. This unpredictability, in turn, may motivate worldwide debtors to file in their own nations, or in other more beneficial nations, instead. Especially, this proposed place reform comes at a time when lots of nations are imitating the US and revamping their own restructuring laws.

In a departure from their previous restructuring system which emphasized liquidation, the brand-new Code's goal is to reorganize and preserve the entity as a going concern. Therefore, financial obligation restructuring contracts might be approved with as little as 30 percent approval from the total financial obligation. However, unlike the United States, Italy's new Code will not feature an automatic stay of enforcement actions by financial institutions.

In February of 2021, a Canadian court extended the country's approval of 3rd party release provisions. In Canada, businesses generally reorganize under the traditional insolvency statutes of the Companies' Lenders Arrangement Act (). 3rd party releases under the CCAAwhile fiercely contested in the USare a typical element of restructuring strategies.

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The recent court decision makes clear, though, that despite the CBCA's more limited nature, 3rd party release provisions may still be acceptable. For that reason, companies may still get themselves of a less troublesome restructuring offered under the CBCA, while still getting the benefits of 3rd party releases. Effective since January 1, 2021, the Dutch Act on Court Confirmation of Extrajudicial Restructuring Plans has developed a debtor-in-possession procedure carried out outside of official insolvency procedures.

Reliable as of January 1, 2021, Germany's brand-new Act on the Stabilization and Restructuring Framework for Businesses offers pre-insolvency restructuring proceedings. Prior to its enactment, German companies had no alternative to restructure their financial obligations through the courts. Now, distressed business can hire German courts to reorganize their financial obligations and otherwise maintain the going concern value of their organization by utilizing a lot of the exact same tools offered in the United States, such as preserving control of their business, imposing cram down restructuring plans, and executing collection moratoriums.

Motivated by Chapter 11 of the United States Personal Bankruptcy Code, this new structure simplifies the debtor-in-possession restructuring procedure mostly in effort to help little and medium sized organizations. While prior law was long criticized as too pricey and too complicated due to the fact that of its "one size fits all" technique, this brand-new legislation integrates the debtor in ownership design, and provides for a streamlined liquidation procedure when required In June 2020, the United Kingdom enacted the Corporate Insolvency and Governance Act of 2020 ().

Especially, CIGA offers a collection moratorium, revokes certain provisions of pre-insolvency agreements, and allows entities to propose a plan with investors and financial institutions, all of which permits the development of a cram-down plan comparable to what may be achieved under Chapter 11 of the United States Insolvency Code. In 2017, Singapore adopted enacted the Business (Change) Act 2017 (Singapore), that made major legal changes to the restructuring provisions of the Singapore Companies Act (Cap 50) 2006.

As a result, the law has considerably improved the restructuring tools available in Singapore courts and moved Singapore as a leading hub for insolvency in the Asia-Pacific. In May of 2016, India enacted the Insolvency and Personal Bankruptcy Code, which entirely upgraded the personal bankruptcy laws in India. This legislation looks for to incentivize more investment in the country by offering greater certainty and effectiveness to the restructuring procedure.

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Offered these current modifications, international debtors now have more options than ever. Even without the proposed restrictions on eligibility, foreign entities may less require to flock to the US as previously. Further, ought to the US' venue laws be modified to prevent easy filings in specific convenient and beneficial locations, worldwide debtors may start to think about other locations.

Special thanks to Dallas partner Michael Berthiaume who prepared and authored this content under the supervision of Rebecca Winthrop, Of Counsel in our Los Angeles office.

Customer insolvency filings increased 9% in January 2026 compared to January 2025, with 44,282 customer filings that month alone. Commercial filings jumped 49% year-over-year the highest January level given that 2018. The numbers show what financial obligation professionals call "slow-burn monetary pressure" that's been developing for years. If you're struggling, you're not an outlier.

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Consumer personal bankruptcy filings totaled 44,282 in January 2026, up 9% from January 2025. Commercial filings hit 1,378 a 49% year-over-year dive and the highest January business filing level since 2018. For all of 2025, customer filings grew almost 14%.