Shopping for Judges: An Empirical Analysis of Venue Choice in the Bankruptcy Reorganization of Large, Publicly Held Companies

Abstract

This article reports on an empirical study of forum shopping in all bankruptcy reorganization of large, public companies from 1980 through 1997 (273 cases). Principal findings include: (1) forum shopping increased from about 20% to between 50% and 86% over the period studied, (2) the principal destination for shopping changed abruptly from New York to Delaware about 1990, (3) Delaware achieved a virtual national monopoly on these kinds of case by 1996, before the Chief Judge in Delaware took the large cases from the Bankruptcy judges, (4) Delaware processes cases a little faster than other districts but the difference is not statistically significant, (5) shopping rates differ significantly for firms in different cities, suggesting that shopping is in significant part a rejection of particular courts. The study is based on data from Lynn M. LoPucki's Bankruptcy Research Database.

JEL Classification: K41, K42