Judge Shopping in Chapter 11 Bankruptcy
80 Pages Posted: 2 Sep 2021 Last revised: 24 Mar 2022
Date Written: March 23, 2022
Forum shopping has long been a feature of large case chapter 11 bankruptcy practice, with debtors picking the judicial district for their case. In recent years, however, debtors have also begun to engage in judge shopping—picking the individual judge who will hear the case.
This Article documents the rise of judge shopping in big chapter 11 cases, and shows how it has been facilitated—sometimes deliberately—by bankruptcy courts’ local rules. The result has been an extraordinary concentration of big chapter 11 cases before a handful of judges: 55% of the large public company bankruptcy cases filed in 2020 were heard by just three of the nation’s 375 bankruptcy judges.
This Article argues that judge shopping has undermined the integrity of the chapter 11 system in three ways. First, judge shopping has a chilling effect on creditor behavior. Judge shopping undermines creditors’ confidence that they can receive a fair adjudication, which incentivizes them to settle more cheaply with debtors and to not raise even meritorious objections.
Second, judge shopping undermines the adversarial process. The concentration of cases before a few judges means that attorneys anticipate that making future appearances before those judges. The repeat player dynamic encourages creditors’ attorneys to pull their punches and not be zealous advocates for their clients because they fear that angering the judge will harm their future business.
Third, judge shopping appears to be outcome determinative. This Article shows that approval of superspeed “drive-thru” bankruptcy plans that contravene clear statutory timelines has been almost exclusively by those three judges who have been landing most of the large, public company bankruptcy cases.
The Article concludes with a call for random case assignment in large chapter 11 cases, a call that has already been taken up by some courts.
Keywords: bankruptcy, venue, forum-shopping, judge picking, prepacks
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