CEDAR RAPIDS, Iowa
- Sept. 20, 2019
-- Reps. Zoe Lofgren (D-CA) and Jim Sensenbrenner (R-WI), introduced H.R. 4421, a bipartisan bill in the U.S. House of Representatives to reform and strengthen the U.S. Bankruptcy Code, specifically addressing where a business is allowed to file its bankruptcy. Reps. Charlie Christ (D-FL), and Greg Steube (R-FL) also support the bill as original cosponsors.
The U.S. Bankruptcy Code currently allows companies to file bankruptcy in their place of incorporation, rather than the place the business, or principal assets are located. It also allows a company to follow an affiliate's bankruptcy filing to a different state. Iowa saw the effects of this "forum shopping" in the 2008 VeraSun bankruptcy. The former ethanol production company filed in Delaware, hundreds of miles from the Iowa farmers it worked with, and even further from its home base in Sioux Falls, SD. A committee of Midwest farmers hired Joe Peiffer to represent them in Bankruptcy Court in Delaware, as the cost of hiring individual counsel was majorly cost-prohibitive. Peiffer says, "The framers of the Constitution could not have envisioned the current bankruptcy venue abuse when they gave Congress the power to establish uniform laws on the subject of bankruptcy."
Retired Bankruptcy Judge Steven Rhodes (Bankr. E. D. Michigan) commented in the Wall Street Journal (2015) that the current venue law is "the single most significant source of injustice in chapter 11 bankruptcy cases."
The goal of H.R. 4421 is to close this loophole and provide access to justice to a company's customers, vendors, and creditors.
Ag & Business Legal Strategies is a cutting-edge law firm that provides counsel to farmers and small business owners with a focus on negotiating and strategies to avoid bankruptcy. Shareholder Joseph A. Peiffer has been helping business owners and farmers in the height of the 1980s farm crisis. Mr. Peiffer is a member of the Commercial Law League of America's Venue Steering Committee, which has been instrumental in urging Congress to right this wrong for many years. https://www.ablsonline.com