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A debtor further may submit its petition in any location where it is domiciled (i.e. incorporated), where its principal location of business in the United States is located, where its principal assets in the United States are located, 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 united states many of the US' united states personal bankruptcy advantages are diminishing.

Both propose to get rid of the capability to "online forum shop" by leaving out a debtor's location of incorporation from the location analysis, andalarming to international debtorsexcluding cash or money equivalents from the "principal properties" formula. Additionally, any equity interest in an affiliate will be considered situated in the very same location as the principal.

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Typically, this testimony has been focused on questionable third celebration release provisions executed in recent mass tort cases such as Purdue Pharma, Young Boy Scouts of America, and lots of Catholic diocese insolvencies. These arrangements frequently force financial institutions to launch non-debtor 3rd parties as part of the debtor's strategy of reorganization, although such releases are probably not allowed, at least in some circuits, by the Bankruptcy Code.

In effort to mark out this behavior, the proposed legislation claims to restrict "forum shopping" by restricting entities from filing in any place other than where their business head office or principal physical assetsexcluding cash and equity interestsare located. Seemingly, these costs would promote the filing of Chapter 11 cases in other United States districts, and guide cases far from the favored courts in New york city, Delaware and Texas.

Regardless of their laudable function, these proposed amendments might have unexpected and potentially adverse repercussions when viewed from an international restructuring potential. While congressional testimony and other commentators presume that venue reform would simply ensure that domestic companies would file in a various jurisdiction within the US, it is a distinct possibility that international debtors may pass on the US Personal bankruptcy Courts altogether.

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Without the factor to consider of money accounts as an avenue towards eligibility, lots of foreign corporations without tangible assets in the US might not certify to submit a Chapter 11 bankruptcy in any US jurisdiction. Second, even if they do qualify, worldwide debtors may not be able to count on access to the usual and hassle-free reorganization friendly jurisdictions.

Provided the complex issues frequently at play in a global restructuring case, this may cause the debtor and lenders some unpredictability. This uncertainty, in turn, might motivate global debtors to file in their own nations, or in other more helpful countries, rather. Significantly, this proposed place reform comes at a time when many countries are imitating the United States and revamping their own restructuring laws.

In a departure from their previous restructuring system which emphasized liquidation, the brand-new Code's objective is to reorganize and maintain the entity as a going issue. Therefore, financial obligation restructuring contracts may be approved with as low as 30 percent approval from the total debt. However, unlike the US, 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, organizations normally reorganize under the traditional insolvency statutes of the Companies' Financial Institutions Arrangement Act (). 3rd party releases under the CCAAwhile fiercely objected to in the USare a common element of restructuring plans.

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The current court decision makes clear, though, that despite the CBCA's more limited nature, third celebration release provisions may still be acceptable. Therefore, business might still avail themselves of a less cumbersome restructuring readily available under the CBCA, while still getting the advantages of third party releases. Efficient as of January 1, 2021, the Dutch Act Upon Court Confirmation of Extrajudicial Restructuring Plans has created a debtor-in-possession treatment conducted beyond official bankruptcy proceedings.

Reliable since January 1, 2021, Germany's brand-new Act upon the Stabilization and Restructuring Framework for Businesses provides for pre-insolvency restructuring procedures. Prior to its enactment, German companies had no choice to restructure their debts through the courts. Now, distressed companies can hire German courts to reorganize their financial obligations and otherwise maintain the going concern value of their organization by utilizing much of the exact same tools offered in the United States, such as maintaining control of their organization, imposing cram down restructuring strategies, and implementing collection moratoriums.

Inspired by Chapter 11 of the US Personal Bankruptcy Code, this new structure streamlines the debtor-in-possession restructuring procedure mainly in effort to assist small and medium sized companies. While previous law was long criticized as too costly and too complicated since of its "one size fits all" method, this new legislation includes the debtor in ownership design, and attends to a streamlined liquidation process when needed In June 2020, the UK enacted the Business Insolvency and Governance Act of 2020 ().

Notably, CIGA supplies for a collection moratorium, revokes specific arrangements of pre-insolvency contracts, and allows entities to propose an arrangement with shareholders and creditors, all of which permits the formation of a cram-down strategy comparable to what might be accomplished under Chapter 11 of the US Personal Bankruptcy Code. In 2017, Singapore adopted enacted the Companies (Change) Act 2017 (Singapore), that made significant legislative modifications to the restructuring arrangements of the Singapore Companies Act (Cap 50) 2006.

As a result, the law has substantially 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 revamped the personal bankruptcy laws in India. This legislation looks for to incentivize more investment in the country by supplying higher certainty and effectiveness to the restructuring procedure.

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Offered these current modifications, international debtors now have more choices than ever. Even without the proposed limitations on eligibility, foreign entities may less require to flock to the United States as before. Further, ought to the US' venue laws be changed to avoid simple filings in specific practical and useful locations, worldwide debtors might begin to think about other areas.

Unique thanks to Dallas partner Michael Berthiaume who prepared and authored this content under the guidance 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. Industrial filings leapt 49% year-over-year the greatest January level because 2018. The numbers show what financial obligation professionals call "slow-burn monetary pressure" that's been building for several years. If you're struggling, you're not an outlier.

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Customer personal bankruptcy filings totaled 44,282 in January 2026, up 9% from January 2025. Commercial filings struck 1,378 a 49% year-over-year dive and the highest January industrial filing level given that 2018. For all of 2025, consumer filings grew nearly 14%.