Currently, businesses can file for bankruptcy in one of three venues: where the business is incorporated (likely Delaware), where its principal assets are located, or where its headquarters are located, according to a commentary in The Hill. A related rule permits a parent company to file where a subsidiary has previously declared bankruptcy. Under this provision, some insolvent businesses will deliberately put a subsidiary into bankruptcy in one location, often New York or Delaware, to satisfy the venue requirements for itself. The debate of where the company should file is not new according to the commentary: Prior to 1987, a business filing for bankruptcy was required to do so either where its principal place of business was located, or where its assets were located. Going back to at least the late 1990s, Congress has wrestled with whether the bankruptcy venue rules could be misused in some way and should be changed. Based on prior legislative efforts, Congress will not likely changes the rules, according to the commentary. However, the new Majority Whip was once very active on this issue, and there are serious arguments made by the proponents of venue reform.
