Forum Shopping

Welcome to the 71st Pari Passu Newsletter.

A few weeks ago, we covered a niche technical concept, class gerrymandering. Everyone enjoyed it so today we are back with a shorter and more technical explanation of another peculiar restructuring concept: forum shopping.

If you have been reading Pari Passu for a few months, you might recall our edition on Judge Jones. He is (or rather, was) a bankruptcy judge in the Southern District of Texas. However, and he has recently undergone some negative publicity about relationships with a lawyer on numerous cases that he presided over. However, what makes Judge Jones an exciting character is his role in revolutionizing the bankruptcy courts in Texas, turning them into a hotspot for Chapter 11 filings and attracting companies to file for bankruptcy in Texas despite minimal connections to the state. All of this was possible thanks to the practice of forum shopping, let’s dive in.

What is Forum Shopping?

Forum shopping is an incredibly controversial feature of bankruptcy law. It is the practice of debtors pursuing restructuring in the court that will treat them the most favorably. Frequently, the court that treats the most favorably coincides with the judge that rules the most leniently, but that is something that will be discussed later. The choice of venue can affect the ease of restructuring, the costs involved, and the overall efficiency of the bankruptcy process.

If you are looking for an explanation in easier terms (or you are just looking to laugh), find here how I would describe the practice of forum shopping to someone who is not familiar with the restructuring world.

Rules Behind Forum Shopping

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