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A battle of “bankruptcy tourists” has erupted in New York court, with unclear consequences for global companies and their bondholders, Bloomberg News reported. Bankruptcy Judge Martin Glenn yesterday refused to issue a ruling on a request by Ocean Rig UDW Inc. to block a lawsuit in the Marshall Islands that it said threatens a $3.7 billion restructuring approved in Cayman Islands Courts. Judge Glenn said he would think about the “extraordinary” issues the case raised, possibly ruling later. "You want me to stop litigation in another sovereign country," Glenn said in court Thursday, adding that he had never seen such a request and that there was no clear precedent. If Highland wanted to try to recover Ocean Rig’s U.S. assets in U.S. court, then the issue would be in his jurisdiction, he said. Any decision in the case could have wider implications for what restructuring experts call "bankruptcy tourism." In the past, bankruptcy participants wrangled over the merits of Delaware versus New York courts, and sometimes drew criticism about "forum shopping" for a venue that favored their case. Now companies and creditors are engaged in international battles over where they can best win their debt wars. "This is the next phase of the restructuring business,” said William Brandt Jr., chief of a New York-based restructuring advisory firm Development Specialists."Bankruptcy tourism will come into the fore." Brandt cited his work as a trustee in the international case of China Fishery Group Ltd., where he regularly travels from Lima to Hong Kong. Another example, he said, is Oi SA, a Brazilian telecom company, in which Aurelius Capital Management is fighting a battle that involves jurisdiction of Dutch, U.S. and Brazilian law.

While Toys “R” Us world headquarters are in Wayne, N.J., the struggling retailer chose not to file for bankruptcy in nearby Newark, N.J. Instead, the toy company followed an increasing number of corporations — from Gymboree to a major coal company to a Pennsylvania fracking company — that are choosing to file for bankruptcy in Richmond, Va., according to a New York Times analysis. In recent years, Richmond has become the destination wedding spot for failed companies. The bankruptcy court there offers several features attractive to the executives, bankers and lawyers trying to get an edge in the proceedings. First, Richmond’s bankruptcy court offers a so-called rocket docket that moves cases along swiftly. Second, the legal record in that court district includes precedents favorable to companies, like making it easier to walk away from union contracts. But perhaps one of the biggest draws, according to bankruptcy lawyers and academics, is the hefty rates lawyers are able to charge there. The New York law firm representing Toys “R” Us, Kirkland & Ellis, told the judge that its lawyers were charging as much as $1,745 an hour. That is 25 percent more than the average highest rate in 10 of the largest bankruptcies this year, according an analysis by the New York Times.