Thomas J. Francella, Jr., Marla S. Benedek, and Frederick E. Schmidt, Jr. discuss the Bankruptcy Venue Reform Act of 2021, also known as the 2021 Act, in a Q&A in the Texas Lawyer. Senator Elizabeth Warren and Senator John Cornyn reintroduced the Act in September 202l as an effort to restrict where a non-individual debtor is allowed to file for bankruptcy.
“Over the course of the last decade and prior to the introduction of the Bankruptcy Venue Reform Act of 2021, there have been four prior attempts to pass a bill limiting forum shopping …,” Tom points out.
The common question is, what exactly is this new bill, and how is it different from the prior attempts. Marla addresses this by explaining that the bill “seeks to limit debtors’ available forum selection choices.”
“Each of the prior bills aimed at eliminating a debtor’s venue selection choices contained substantially similar provisions, though more recent bills have sought to more effectively close perceived loopholes,” Marla adds.
When asked about the importance of this bill, Erik responded, “The bill would retroactively nullify the capital markets’ ability to ensure predictability of outcome which is of utmost importance to capital lenders and investors.”
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