Citation
Casey, A. J., & Macey, J. C. (2021). Bankruptcy Shopping: Domestic Venue Races and Global Forum Wars. Emory Bankruptcy Developments Journal, 37, 101–173. ECGI Law Working Paper No. 577/2021. https://ssrn.com/abstract=3789994
Research Question
How should domestic U.S. bankruptcy venue rules and cross-border forum rules be redesigned to curb opportunistic venue and forum shopping while preserving the benefits of judicial choice in an era of increasingly attractive foreign restructuring forums?
Key Takeaways
Not all bankruptcy venue shopping is harmful; some promotes expertise and efficiency while other forms exploit precedent and local bias; For large, multinational debtors, foreign courts like England and Singapore now offer powerful restructuring tools, and U.S. Chapter 15 practice makes it easy to combine foreign proceedings with U.S. enforcement; Domestic proposals to force filings into “home” districts risk pushing sophisticated companies into foreign forums instead of curbing strategic behavior; Harmonizing the specific substantive bankruptcy rules that drive venue fights is more effective than blunt restrictions on where cases can be filed; Allowing firms and creditors to precommit ex ante to venue and forum selection mechanisms can channel competition among courts toward expertise and reduce opportunism; Nonadjusting creditors remain vulnerable to forum shopping and require narrow nonrecognition and substantive safeguards in cross-border recognition decisions.
Dataset Description
This is a doctrinal and conceptual analysis, not an empirical study using a dataset. The authors examine U.S. bankruptcy venue statutes (28 U.S.C. § 1408 and related provisions), Chapter 11 and Chapter 15 case law, major corporate bankruptcies (including Caesars Entertainment, Patriot Coal, Vitro, Fairfield Sentry, the NRA, and CEOC), legislative proposals such as the Bankruptcy Venue Reform Acts of 2018 and 2019, and key foreign restructuring regimes, including English schemes of arrangement and restructuring plans and Singapore’s recent corporate insolvency reforms. The time period is the modern large-Chapter-11 and cross-border restructuring era, with special emphasis on developments from the 2000s through the late 2010s across U.S., U.K., and Singaporean courts.
Methodology
doctrinal
Key Findings
Casey and Macey argue that current U.S. bankruptcy venue rules facilitate both beneficial and harmful venue shopping, and that reform proposals that focus solely on forcing cases into a debtor’s “home” district overlook how easily sophisticated firms can pivot to foreign restructuring forums and then obtain U.S. recognition under Chapter 15. They distinguish between relatively beneficial shopping, where debtors seek courts with expertise, clear procedures, and predictable judges, and more problematic shopping aimed at exploiting favorable precedent, circuit splits, or local political and cultural bias. They show that tying venue to state of incorporation or principal place of business leads to wasteful bundling and gimmicks (such as nominal offices or strategic reincorporations) that add cost without corresponding social benefit. The authors contend that fears of a domestic race to the bottom are overstated because individual U.S. bankruptcy judges cannot readily change core substantive law; by contrast, foreign jurisdictions like England and Singapore can and do compete for cases through statutory changes that enhance debtor tools (e.g., cross-class cramdown, global stays, and aggressive DIP financing). In a world where U.S. courts broadly recognize foreign main proceedings, aggressive efforts to clamp down on domestic venue shopping are likely to drive major restructurings abroad rather than into local “home” courts. They therefore advocate a two-part reform agenda: first, harmonize the key substantive bankruptcy rules, such as third‑party releases, executory-contract doctrine, and controversial financing tools, that currently generate strong incentives to fight over venue; second, permit firms and creditors to precommit ex ante to structured mechanisms for selecting venue and forum (domestic and foreign), including change-of-forum rules as financial distress deepens. These ex ante commitments would be priced by investors and would tend to channel competition among courts toward expertise and efficiency rather than opportunism. To protect nonadjusting creditors, such as tort victims and environmental claimants, the authors recommend a narrow nonrecognition safety valve in cross-border recognition decisions, ensuring that foreign forum choices are not honored if they would leave such claimants worse off than under a reasonable domestic default. Overall, they conclude that attempting to eliminate venue choice is both unrealistic and counterproductive; a more promising path is to align the underlying law and to structure how, when, and by whom venue and forum are chosen.
Summary
Casey and Macey examine the contested practice of bankruptcy venue shopping in the United States and argue that the standard debate, race to the bottom versus race to the top, misses the transformation of the restructuring landscape into a global marketplace. They begin with the familiar U.S. pattern: large Chapter 11 cases increasingly cluster in a handful of districts such as Delaware and the Southern District of New York, sometimes joined by newer venues like the Southern District of Texas. Critics see judges competing for big cases by issuing debtor-friendly rulings; defenders emphasize that these courts have accumulated specialized expertise, streamlined procedures, and predictable case management that benefit all parties.
The article breaks down “venue shopping” into different types. Some forms are largely benign or beneficial, such as selecting courts with repeat experience in mega-cases, transparent first-day practices, and predictable judge assignment. Others are more troubling: filing in a particular circuit to obtain favorable precedent on third‑party releases, executory contracts, or financing terms; or seeking a district perceived as politically or culturally sympathetic to the debtor’s industry or identity. Current venue rules, which hinge on state of incorporation, principal place of business, and affiliate filings, also encourage artificial arrangements, nominal offices, hasty reincorporations, or strategically placed affiliates that increase transaction costs without improving outcomes.
When the focus shifts beyond U.S. borders, the authors argue, the stakes and incentives change sharply. Foreign jurisdictions, especially England and Singapore, have deliberately revised their insolvency regimes to attract large cross-border restructurings, offering flexible schemes or plans with cross‑class cramdown, global stays, and sophisticated DIP financing options. At the same time, U.S. courts have been broadly receptive to recognizing these foreign proceedings under Chapter 15 or principles of comity, allowing debtors to combine foreign restructurings with U.S. asset protection and enforcement. In this environment, domestic legislation that tries to force major cases back into local “home” districts will not re-localize control; instead, it will likely divert complex cases to London, Singapore, or similar hubs, where strategic law changes can meaningfully shift bargaining power.
Rather than eliminating venue choice, Casey and Macey propose reorienting reform around two pillars. First, they advocate harmonizing the specific substantive issues that currently drive parties to fight over venue, such as the availability and scope of third‑party releases, the treatment of executory contracts, and controversial financing techniques like roll‑ups. If core rules are more uniform, the value of shopping for particular precedents or circuits falls, allowing venue decisions to turn more on genuine expertise and administrative capacity. Second, they argue for permitting firms and creditors to precommit ex ante to mechanisms for choosing and changing venue and forum, including foreign forums. These mechanisms would specify who can trigger changes and how creditors vote, and they would be publicly observable and priced by capital markets, rewarding firms that adopt arrangements perceived as fair and efficient.
To address distributional concerns, especially for nonadjusting creditors such as tort victims and environmental claimants who cannot negotiate ex ante, the authors recommend a narrow nonrecognition backstop in the cross-border context. U.S. courts should generally respect contractually chosen or precommitted foreign forums, but retain discretion to deny or condition recognition where doing so is necessary to avoid leaving such vulnerable claimants significantly worse off than they would be under a reasonable domestic default forum. Taken together, the article contends that a mix of targeted substantive harmonization, structured ex ante venue and forum selection, and carefully tailored recognition limits is more responsive to modern restructuring realities than blunt efforts to confine cases to local home courts.
Citation
Casey, A. J., & Macey, J. C. (2021). Bankruptcy Shopping: Domestic Venue Races and Global Forum Wars. Emory Bankruptcy Developments Journal, 37, 101–173. ECGI Law Working Paper No. 577/2021. https://ssrn.com/abstract=3789994
Research Question
How should domestic U.S. bankruptcy venue rules and cross-border forum rules be redesigned to curb opportunistic venue and forum shopping while preserving the benefits of judicial choice in an era of increasingly attractive foreign restructuring forums?
Key Takeaways
Not all bankruptcy venue shopping is harmful; some promotes expertise and efficiency while other forms exploit precedent and local bias; For large, multinational debtors, foreign courts like England and Singapore now offer powerful restructuring tools, and U.S. Chapter 15 practice makes it easy to combine foreign proceedings with U.S. enforcement; Domestic proposals to force filings into “home” districts risk pushing sophisticated companies into foreign forums instead of curbing strategic behavior; Harmonizing the specific substantive bankruptcy rules that drive venue fights is more effective than blunt restrictions on where cases can be filed; Allowing firms and creditors to precommit ex ante to venue and forum selection mechanisms can channel competition among courts toward expertise and reduce opportunism; Nonadjusting creditors remain vulnerable to forum shopping and require narrow nonrecognition and substantive safeguards in cross-border recognition decisions.
Dataset Description
This is a doctrinal and conceptual analysis, not an empirical study using a dataset. The authors examine U.S. bankruptcy venue statutes (28 U.S.C. § 1408 and related provisions), Chapter 11 and Chapter 15 case law, major corporate bankruptcies (including Caesars Entertainment, Patriot Coal, Vitro, Fairfield Sentry, the NRA, and CEOC), legislative proposals such as the Bankruptcy Venue Reform Acts of 2018 and 2019, and key foreign restructuring regimes, including English schemes of arrangement and restructuring plans and Singapore’s recent corporate insolvency reforms. The time period is the modern large-Chapter-11 and cross-border restructuring era, with special emphasis on developments from the 2000s through the late 2010s across U.S., U.K., and Singaporean courts.
Methodology
doctrinal
Key Findings
Casey and Macey argue that current U.S. bankruptcy venue rules facilitate both beneficial and harmful venue shopping, and that reform proposals that focus solely on forcing cases into a debtor’s “home” district overlook how easily sophisticated firms can pivot to foreign restructuring forums and then obtain U.S. recognition under Chapter 15. They distinguish between relatively beneficial shopping, where debtors seek courts with expertise, clear procedures, and predictable judges, and more problematic shopping aimed at exploiting favorable precedent, circuit splits, or local political and cultural bias. They show that tying venue to state of incorporation or principal place of business leads to wasteful bundling and gimmicks (such as nominal offices or strategic reincorporations) that add cost without corresponding social benefit. The authors contend that fears of a domestic race to the bottom are overstated because individual U.S. bankruptcy judges cannot readily change core substantive law; by contrast, foreign jurisdictions like England and Singapore can and do compete for cases through statutory changes that enhance debtor tools (e.g., cross-class cramdown, global stays, and aggressive DIP financing). In a world where U.S. courts broadly recognize foreign main proceedings, aggressive efforts to clamp down on domestic venue shopping are likely to drive major restructurings abroad rather than into local “home” courts. They therefore advocate a two-part reform agenda: first, harmonize the key substantive bankruptcy rules, such as third‑party releases, executory-contract doctrine, and controversial financing tools, that currently generate strong incentives to fight over venue; second, permit firms and creditors to precommit ex ante to structured mechanisms for selecting venue and forum (domestic and foreign), including change-of-forum rules as financial distress deepens. These ex ante commitments would be priced by investors and would tend to channel competition among courts toward expertise and efficiency rather than opportunism. To protect nonadjusting creditors, such as tort victims and environmental claimants, the authors recommend a narrow nonrecognition safety valve in cross-border recognition decisions, ensuring that foreign forum choices are not honored if they would leave such claimants worse off than under a reasonable domestic default. Overall, they conclude that attempting to eliminate venue choice is both unrealistic and counterproductive; a more promising path is to align the underlying law and to structure how, when, and by whom venue and forum are chosen.
Summary
Casey and Macey examine the contested practice of bankruptcy venue shopping in the United States and argue that the standard debate, race to the bottom versus race to the top, misses the transformation of the restructuring landscape into a global marketplace. They begin with the familiar U.S. pattern: large Chapter 11 cases increasingly cluster in a handful of districts such as Delaware and the Southern District of New York, sometimes joined by newer venues like the Southern District of Texas. Critics see judges competing for big cases by issuing debtor-friendly rulings; defenders emphasize that these courts have accumulated specialized expertise, streamlined procedures, and predictable case management that benefit all parties.
The article breaks down “venue shopping” into different types. Some forms are largely benign or beneficial, such as selecting courts with repeat experience in mega-cases, transparent first-day practices, and predictable judge assignment. Others are more troubling: filing in a particular circuit to obtain favorable precedent on third‑party releases, executory contracts, or financing terms; or seeking a district perceived as politically or culturally sympathetic to the debtor’s industry or identity. Current venue rules, which hinge on state of incorporation, principal place of business, and affiliate filings, also encourage artificial arrangements, nominal offices, hasty reincorporations, or strategically placed affiliates that increase transaction costs without improving outcomes.
When the focus shifts beyond U.S. borders, the authors argue, the stakes and incentives change sharply. Foreign jurisdictions, especially England and Singapore, have deliberately revised their insolvency regimes to attract large cross-border restructurings, offering flexible schemes or plans with cross‑class cramdown, global stays, and sophisticated DIP financing options. At the same time, U.S. courts have been broadly receptive to recognizing these foreign proceedings under Chapter 15 or principles of comity, allowing debtors to combine foreign restructurings with U.S. asset protection and enforcement. In this environment, domestic legislation that tries to force major cases back into local “home” districts will not re-localize control; instead, it will likely divert complex cases to London, Singapore, or similar hubs, where strategic law changes can meaningfully shift bargaining power.
Rather than eliminating venue choice, Casey and Macey propose reorienting reform around two pillars. First, they advocate harmonizing the specific substantive issues that currently drive parties to fight over venue, such as the availability and scope of third‑party releases, the treatment of executory contracts, and controversial financing techniques like roll‑ups. If core rules are more uniform, the value of shopping for particular precedents or circuits falls, allowing venue decisions to turn more on genuine expertise and administrative capacity. Second, they argue for permitting firms and creditors to precommit ex ante to mechanisms for choosing and changing venue and forum, including foreign forums. These mechanisms would specify who can trigger changes and how creditors vote, and they would be publicly observable and priced by capital markets, rewarding firms that adopt arrangements perceived as fair and efficient.
To address distributional concerns, especially for nonadjusting creditors such as tort victims and environmental claimants who cannot negotiate ex ante, the authors recommend a narrow nonrecognition backstop in the cross-border context. U.S. courts should generally respect contractually chosen or precommitted foreign forums, but retain discretion to deny or condition recognition where doing so is necessary to avoid leaving such vulnerable claimants significantly worse off than they would be under a reasonable domestic default forum. Taken together, the article contends that a mix of targeted substantive harmonization, structured ex ante venue and forum selection, and carefully tailored recognition limits is more responsive to modern restructuring realities than blunt efforts to confine cases to local home courts.
How the Study Advances Empirical Understanding of Legal Outcomes
The study finds that outcomes in large bankruptcy cases display structured, repeatable patterns tied to venue and forum selection rules, reflecting institutional design choices rather than random variation across cases. The analysis shows that differences in substantive bankruptcy rules and recognition practices systematically shape where cases are filed and how they unfold, which matters analytically because it locates outcome variation in legal architecture and cross-border coordination rather than individual adjudicators. By grounding its conclusions in detailed doctrinal analysis of statutes, cases, and institutional practice across domestic and foreign systems, the study’s approach aligns with Pre/Dicta’s emphasis on empirical, case-based analysis of legal outcomes and decision contexts.
