Bankruptcy Venue Reform Act
- Bill Number
- H.R. 8111
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Status
- Introduced
- Latest Action
- 2026-03-26: Referred to the House Committee on the Judiciary.
- Last Updated
- 2026-04-11T03:53:22Z
AI-Generated Summary
Bankruptcy Venue Reform Act (H.R. 8111)
Purpose
The Act aims to stop "forum shopping" in Chapter 11 bankruptcy cases (a business reorganization process under federal bankruptcy law). Forum shopping occurs when companies file bankruptcy in distant courts they prefer, rather than near their main operations, leading to concentrated cases in a few districts and limiting local input from affected parties like workers and creditors.
Key Provisions
- Venue Rules (Amends 28 U.S.C. § 1408):
- Bankruptcy cases can only be filed in districts where the debtor's (person or entity's filing) main home, residence, principal assets in the U.S., or principal place of business (PPB) has been located for the 180 days before filing (or the longest part of that period compared to other districts).
- For public companies (those filing reports with the Securities and Exchange Commission), PPB is defined as the address in their last annual report, unless proven otherwise by clear and convincing evidence (a high standard of proof).
- Limited affiliate exception: Allowed only if a related company (owning/controlling 50%+ voting securities or general partner) has a properly filed pending case there.
- Anti-avoidance: Ignores ownership changes, control shifts, or moves of PPB/assets within 1 year before filing if done to establish venue.
- Principal assets exclude cash; equity in affiliates is located where the owner has their PPB or residence.
- Burden of proof: The filing company must prove proper venue by clear and convincing evidence if challenged.
- Supreme Court to create rules allowing government attorneys to appear in any bankruptcy court without local counsel fees or charges.
- Change of Venue (Amends 28 U.S.C. § 1412):
- Courts can transfer cases for "interest of justice" or party convenience, even if filed correctly.
- Improper filings: Must be immediately dismissed or transferred to a proper district.
- Courts must rule on venue challenges within 14 days.
Significant Changes to Existing Law
- Eliminates broad venue options: Removes filing based solely on state of incorporation or other affiliates; requires 180-day physical presence test.
- Stricter definitions and proof: Locks PPB for public companies to SEC filings; adds lookback periods and anti-manipulation rules not previously emphasized.
- Faster enforcement: Mandates quick rulings on venue disputes and immediate action on improper filings.
- Government access: New pro bono-like rules for public attorneys.
Potential Impacts
- On debtors/companies: Limits choices, forcing filings near operations; harder to "shop" for favorable judges.
- On citizens/stakeholders: Easier local participation for small businesses, employees, retirees, and creditors, protecting community interests.
- On courts: Spreads cases across more districts, reducing overload in popular venues (e.g., Delaware, Southern District of New York) and allowing broader development of bankruptcy law.
- On government: Simplifies intervention by federal/state/local agencies.
- No direct international effects, but could influence multinational firms' U.S. bankruptcy strategies.
Main Stakeholders Affected
- Businesses filing Chapter 11 (especially large/public companies).
- Creditors, employees, retirees, and small businesses impacted by bankruptcies.
- U.S. district and bankruptcy courts nationwide.
- Government units (federal, state, local) involved in cases.
Notable Legal, Constitutional, or Political Implications
- Legal: Raises bar for venue challenges with "clear and convincing" standard; promotes uniformity and fairness in bankruptcy process.
- Constitutional: Ties venue to physical presence, aligning with due process (fair notice/access for parties); no apparent conflicts noted.
- Political: Bipartisan sponsorship (Reps. Lofgren and Cline); referred to Judiciary Committee; seeks to build public trust in bankruptcy system by curbing perceived abuses.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2026-03-26: Referred to the House Committee on the Judiciary.
- 2026-03-26: Introduced in House
- 2026-03-26: Introduced in House
Bill Versions
- Bankruptcy Venue Reform Act — issued 2026-03-26 — PDF (8 pages)