Bankruptcy Courts and Bankruptcy Venue: Some Thoughts on Delaware

Abstract:     
The purpose of this article is to consider both the merits of the recent Delaware venue controversy-is Delaware venue a good or a bad thing?-- and the question whether efforts to eliminate Delaware bankruptcy venue are likely to succeed. In doing so, I will place particular emphasis on two perspectives that are almost entirely lacking in the existing debate.

First, both proponents and critics of Delaware venue have failed to fully consider the relationship between Delaware's rise to prominence in bankruptcy and its role in corporate law generally. I argue that the two are integrally related. Just as the efforts of Delaware and other states to attract corporations have induced Delaware to regulate corporate law in a generally efficient manner, the same forces will have a beneficial effort on Delaware's bankruptcy judges.

Second, the article offers a detailed historical perspective on the venue controversy. I focus in particular on a series of debates in the 1930s that raised almost precisely the same issues that are being addressed today. Not only does the historical analysis underscore the connection between Delaware venue and Delaware's role in corporate law generally, but it also provides important insights into the political question of whether venue reform is likely to be adopted.

While my analysis focuses on the Delaware venue controversy, it is important to emphasize that preserving the existing framework is only one way to use venue decisions to improve the performance of bankruptcy judges. I briefly decision two other approaches as well, "domicile-only" venue and contractual choice of venue.

JEL Classification: G33, G38, K22

working papers series