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A debtor further might submit its petition in any venue where it is domiciled (i.e. incorporated), where its primary location of business in the United States is situated, where its principal assets in the US are situated, or in any location where any of its affiliates can file. 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 restructuringsModifications and do location at a time united states many of might US' united states insolvency advantages are diminishing.

Both propose to remove the capability to "online forum shop" by leaving out a debtor's location of incorporation from the venue analysis, andalarming to international debtorsexcluding money or cash equivalents from the "primary possessions" formula. Furthermore, any equity interest in an affiliate will be deemed situated in the exact same place as the principal.

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Usually, this testimony has been focused on questionable 3rd party release arrangements carried out in recent mass tort cases such as Purdue Pharma, Kid Scouts of America, and many Catholic diocese personal bankruptcies. These provisions often force creditors to release non-debtor 3rd parties as part of the debtor's strategy of reorganization, although such releases are probably not permitted, a minimum of in some circuits, by the Insolvency Code.

In effort to mark out this habits, the proposed legislation claims to restrict "online forum shopping" by restricting entities from filing in any place other than where their corporate head office or primary physical assetsexcluding cash and equity interestsare situated. Seemingly, these bills would promote the filing of Chapter 11 cases in other United States districts, and steer cases away from the preferred courts in New york city, Delaware and Texas.

In spite of their laudable function, these proposed modifications might have unanticipated and potentially adverse repercussions when viewed from an international restructuring potential. While congressional testament and other commentators assume that venue reform would simply ensure that domestic business would file in a different jurisdiction within the US, it is an unique possibility that international debtors may hand down the United States Bankruptcy Courts entirely.

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Without the factor to consider of cash accounts as an avenue towards eligibility, lots of foreign corporations without tangible properties in the United States might not certify to submit a Chapter 11 insolvency in any US jurisdiction. Second, even if they do certify, international debtors might not be able to count on access to the typical and hassle-free reorganization friendly jurisdictions.

Provided the complex concerns frequently at play in a global restructuring case, this may cause the debtor and financial institutions some uncertainty. This uncertainty, in turn, might encourage global debtors to file in their own nations, or in other more helpful nations, instead. Especially, this proposed location reform comes at a time when numerous countries are emulating the United States and revamping their own restructuring laws.

In a departure from their previous restructuring system which emphasized liquidation, the new Code's goal is to restructure and preserve the entity as a going concern. Thus, debt restructuring agreements may be authorized with as little as 30 percent approval from the general debt. However, unlike the United States, Italy's brand-new Code will not include an automated stay of enforcement actions by lenders.

In February of 2021, a Canadian court extended the nation's approval of 3rd party release arrangements. In Canada, organizations normally restructure under the standard insolvency statutes of the Companies' Creditors Plan Act (). Third party releases under the CCAAwhile hotly objected to in the USare a common aspect of restructuring strategies.

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The current court choice makes clear, though, that regardless of the CBCA's more restricted nature, 3rd celebration release arrangements may still be acceptable. Business might still avail themselves of a less cumbersome restructuring offered under the CBCA, while still receiving the benefits of 3rd party releases. Effective since January 1, 2021, the Dutch Act Upon Court Verification of Extrajudicial Restructuring Plans has created a debtor-in-possession procedure carried out beyond official personal bankruptcy proceedings.

Reliable as of January 1, 2021, Germany's new Act on the Stabilization and Restructuring Structure for Organizations attends to pre-insolvency restructuring procedures. Prior to its enactment, German business had no alternative to reorganize their financial obligations through the courts. Now, distressed business can hire German courts to restructure their debts and otherwise maintain the going concern value of their organization by using a number of the very same tools offered in the US, such as keeping control of their service, enforcing cram down restructuring strategies, and carrying out collection moratoriums.

Motivated by Chapter 11 of the US Bankruptcy Code, this brand-new structure simplifies the debtor-in-possession restructuring process mostly in effort to help small and medium sized services. While previous law was long slammed as too costly and too complex since of its "one size fits all" method, this new legislation includes the debtor in possession model, and supplies for a streamlined liquidation procedure when needed In June 2020, the United Kingdom enacted the Business Insolvency and Governance Act of 2020 ().

Notably, CIGA provides for a collection moratorium, invalidates particular arrangements of pre-insolvency contracts, and permits entities to propose a plan with shareholders and lenders, all of which permits the formation of a cram-down plan similar to what might be achieved under Chapter 11 of the United States Bankruptcy Code. In 2017, Singapore adopted enacted the Companies (Modification) Act 2017 (Singapore), that made significant legal modifications to the restructuring provisions of the Singapore Companies Act (Cap 50) 2006.

As an outcome, the law has considerably 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 completely upgraded the insolvency laws in India. This legislation seeks to incentivize more investment in the country by providing greater certainty and effectiveness to the restructuring procedure.

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Provided these current modifications, international debtors now have more choices than ever. Even without the proposed limitations on eligibility, foreign entities might less need to flock to the US as previously. Even more, should the United States' venue laws be amended to prevent simple filings in certain convenient and helpful locations, global debtors might start to think about other locations.

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.

Consumer bankruptcy 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 specialists call "slow-burn monetary pressure" that's been developing for years. If you're having a hard time, you're not an outlier.

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Consumer bankruptcy filings amounted to 44,282 in January 2026, up 9% from January 2025. Industrial filings struck 1,378 a 49% year-over-year dive and the highest January commercial filing level because 2018. For all of 2025, customer filings grew almost 14%.