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Law Review: LoPucki, Lynn M., False Venue Claims Signed Under Penalty of Perjury

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By Ed Boltz, 22 April, 2025

Available at:  https://ssrn.com/abstract=5068891

Abstract:

In a study of venue for the one hundred ninety-five large, public company bankruptcies filed from 2012 through 2021, I discovered nine cases (5%) in which the companies’ venue claims were in apparent conflict with what the debtors themselves stated on their petitions to be the locations of the companies’ principal places of business and principal assets. Eight of the nine proceeded to confirmation in an improper venue.

Although it is routine for large, public companies and the courts in which they file to ignore the Bankruptcy Code and Rules, these cases take Chapter 11’s lawlessness to a new level. Top officers of large, public companies, with the advice of counsel, signed apparently false venue claims under penalty of perjury.

This Article analyzes the nine cases and concludes that (1) no apparent basis for the venue claims in seven of the nine cases exists, and (2) the apparent basis for the venue claims in one of the other two cases is both legally implausible and in conflict with the relevant facts stated in the petitions. Because private companies were not included in this study, these nine cases are probably a minority of the big cases in which false venue claims were signed under penalty of perjury. The carelessness regarding venue in these cases shows the depth to which the competition for big cases has taken a few United States Bankruptcy Courts. 

Commentary:

While questions about venue in consumer cases are unaddressed in this article,  it is worth contrasting the venue selection questions in the bankruptcy petition form for individuals:

6. Why you are choosing this district to file for bankruptcy Check one: 

Over the last 180 days before filing this petition, I have lived in this district longer than in any other district. 

I have another reason. Explain. (See 28 U.S.C. § 1408.)

with that for corporations:

11. Why is the case filed in this district?  Check all that apply: 

 Debtor has had its domicile, principal place of business, or principal assets in this district for 180 days immediately preceding the date of this petition or for a longer part of such 180 days than in any other district. 

 A bankruptcy case concerning debtor’s affiliate, general partner, or partnership is pending in this district. 

That consumers are able to provide an explanation for the choice of venue other than just that it is their residence would seem on one hand to allow a response, in something in the the vein that "Venue is for the convenience of the debtor(s) & believing creditors will have no objection."  At the same time,  by ignoring that 11 U.S.C.  1408 can also provide proper venue for individuals based on the location of principal assets or related cases,  the form may be overly restrictive.  With sympathy for the corporate devil,  the absence of space to provide an alternate basis for venue may also be a deficiency.

It is interesting to contemplate how  courts friendly to venue shopping in large corporate cases  would  respond to consumer bankruptcy filings with similarly "manufactured venue".    Could a consumer debtor follow the path of Chapter 11 debtors and first  create a business entity in a favorable jurisdiction (usually only requiring a modest fee for incorporation),  then assigning debts and/or assets to that corporation and finally filing successive bankruptcies for the corporation and then themselves?  While certainly overkill,  particularly as many jurisdictions take a more permissive view to venue and none seem to salivate over the prospect of an additional  consumer case,  it is another thought experiment that might further show the discrepancy between Fake and Real People in Bankruptcy.

 

To read a copy of the transcript, please see:

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