Section 1 Short title
This Act may be cited as the “Bankruptcy Venue Reform Act of 2018”.
Bankruptcy Venue Reform Act of 2018
A BILL
To amend title 28, United States Code, to modify venue requirements relating to bankruptcy proceedings.
Sec. 2 Findings and purpose
Findings— Congress finds that—
bankruptcy law provides a number of venue options for filing bankruptcy under chapter 11 of title 11, United States Code, including place of incorporation, principal place of business and assets, or where an affiliate has filed a case under chapter 11;
the wide range of permissible bankruptcy venue options has led to an increase in companies filing for bankruptcy outside of their home States, or the district in which their principal place of business or principal assets are located, a practice known as forum shopping, and has resulted in a concentration of bankruptcy cases in a few districts;
bankruptcy forum shopping prevents small businesses, employees, retirees, creditors, and other important stakeholders from fully participating in bankruptcy cases that will have tremendous impacts on their lives, communities, and local economies, and deprives district courts of the United States of the opportunity to contribute to the development of bankruptcy law in their jurisdictions; and
reducing forum shopping and manipulation in the bankruptcy system will strengthen the integrity, build public confidence, and ensure fairness in the bankruptcy system.
Purpose— The purpose of this Act is to prevent the practice of forum shopping in cases filed under chapter 11 of title 11, United States Code.
Sec. 3 Venue of cases under title 11
Title 28, United States Code, is amended—
by striking section 1408 and inserting the following:
“1408. Venue of cases under title 11
“(a) Definition—In this section, the term principal place of business means, with respect to a person or entity that is subject to the reporting requirements of section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)), the address of the principal executive office of the person or entity as stated in the last annual report filed under that Act prior to the commencement of a case under title 11 by the person or entity, unless another address is shown to be the principal place of business by clear and convincing evidence.
“(b) Venue—Except as provided in section 1410, a case under title 11 may be commenced only in the district court for the district—
“(1) in which the domicile, residence, or principal assets in the United States of an individual who is the subject of the case have been located for the 180 days immediately preceding such commencement, or for a longer portion of the 180-day period than the domicile, residence, or principal assets in the United States of the individual were located in any other district;
“(2) in which the principal assets or principal place of business in the United States of a person or entity, other than an individual, that is the subject of the case have been located for the 180 days immediately preceding the commencement, or for a longer portion of the 180-day period than the principal place of business or principal assets in the United States of the person or entity were located in any other district; or
“(3) in which there is already pending a case under title 11 concerning an affiliate that directly or indirectly owns, controls, is the general partner, or holds 50 percent or more of the outstanding voting securities, of the person or entity that is the subject of the later filed case if the pending case was properly filed in that district under this section.
“(c) Limitations
“(1) In general—For the purposes of paragraphs (2) and (3) of subsection (b), no effect shall be given to a change in the ownership or control of a person or entity that is the subject of the case or its affiliate, or to a transfer of the principal assets or principal place of business of a person or entity that is the subject of the case or its affiliate to another district, that takes place—
“(A) within 1 year before the date on which the case is commenced; or
“(B) for the purpose of establishing venue.
“(2) Principal assets—For the purposes of subsection (b)(2) and paragraph (1) of this subsection, principal assets do not include cash or cash equivalents.
“(d) Burden—The person or entity that commences a case under title 11 shall bear the burden of establishing by clear and convincing evidence that venue is proper under this section.”
by striking section 1412 and inserting the following:
“1412. Change of venue
“Notwithstanding that a case or proceeding under title 11 is filed in the correct division or district, a district court may nevertheless transfer a case or proceeding under title 11 to a district court for another district or division, in the interest of justice or for the convenience of the parties. If a case or proceeding under title 11 is filed in the wrong division or district, the district court shall transfer, dismiss the case or proceeding, or, if it be in the interest of justice, transfer the case or proceeding under title 11 to any district or division in which it could have been brought. The court shall enter an order on any objection to or request to change venue of a case or proceeding under title 11 not later than 14 days after the filing of such objection or request.”