Top law enforcement officials from California, Texas and dozens of other states and U.S. territories are backing the latest bid by federal lawmakers to restrict the ability of financially troubled companies to file for bankruptcy protection far from where they have their headquarters, the Wall Street Journal reported. The National Association of Attorneys General on Thursday sent a letter to Congress supporting a bipartisan bill that would make it harder for companies whose principal place of business is outside New York or Delaware to file for chapter 11 protection in those states, which have long been the most popular venues for large corporate bankruptcies. The letter, signed by 42 attorneys general, touches on an issue in corporate bankruptcy that for years has been a source of debate and occasional controversy. The attorneys general’s letter said that while they respect the expertise of judges in Delaware and New York “we reject the argument that judges in other districts are not equally capable of exercising an expertise in handling corporate cases, large or small.” “Under the current rules, those who already have suffered as a result of a corporate debtor’s financial collapse must spend substantial additional amounts, travel long distances, and often hire additional local counsel simply to participate on an equal footing with the debtor,” the letter said. “While some suggest that distant parties can try to catch up by participating telephonically in court hearings, the inability to appear in person or to engage in face-to-face discussions with those who are in courts puts them at a distinct disadvantage.”
