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Both propose to get rid of the capability to "forum shop" by leaving out a debtor's location of incorporation from the place analysis, andalarming to worldwide debtorsexcluding cash or cash equivalents from the "principal possessions" equation. In addition, any equity interest in an affiliate will be deemed situated in the same place as the principal.

Generally, this testimony has been concentrated on controversial 3rd party release arrangements carried out in current mass tort cases such as Purdue Pharma, Boy Scouts of America, and numerous Catholic diocese bankruptcies. These arrangements often force financial institutions to launch non-debtor third parties as part of the debtor's plan of reorganization, despite the fact that such releases are perhaps not permitted, a minimum of in some circuits, by the Bankruptcy Code.

In effort to stamp out this habits, the proposed legislation claims to restrict "forum shopping" by forbiding entities from filing in any location except where their home office or primary physical assetsexcluding cash and equity interestsare situated. Ostensibly, these expenses would promote the filing of Chapter 11 cases in other US districts, and steer cases away from the preferred courts in New York, Delaware and Texas.

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Despite their laudable function, these proposed modifications could have unanticipated and possibly unfavorable consequences when seen from a global restructuring prospective. While congressional testimony and other commentators presume that venue reform would merely guarantee that domestic business would submit in a different jurisdiction within the United States, it is an unique possibility that international debtors may hand down the United States Bankruptcy Courts completely.

Without the consideration of money accounts as an avenue toward eligibility, numerous foreign corporations without tangible assets in the US may not certify to submit a Chapter 11 personal bankruptcy in any US jurisdiction. Second, even if they do certify, international debtors may not be able to rely on access to the typical and convenient reorganization friendly jurisdictions.

Given the intricate problems regularly at play in a global restructuring case, this may cause the debtor and creditors some unpredictability. This unpredictability, in turn, might motivate worldwide debtors to submit in their own countries, or in other more beneficial nations, rather. Significantly, this proposed venue reform comes at a time when many countries are emulating the United States and revamping their own restructuring laws.

In a departure from their previous restructuring system which emphasized liquidation, the brand-new Code's goal is to reorganize and preserve the entity as a going issue. Therefore, debt restructuring agreements may be authorized with as low as 30 percent approval from the total debt. Unlike the US, Italy's brand-new Code will not include an automated stay of enforcement actions by lenders.

In February of 2021, a Canadian court extended the nation's approval of 3rd party release provisions. In Canada, services generally restructure under the traditional insolvency statutes of the Companies' Lenders Plan Act (). 3rd party releases under the CCAAwhile hotly contested in the USare a typical aspect of restructuring strategies.

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The current court decision explains, though, that despite the CBCA's more minimal nature, 3rd celebration release arrangements may still be acceptable. Companies may still get themselves of a less troublesome restructuring readily available under the CBCA, while still getting the benefits of third party releases. Effective since January 1, 2021, the Dutch Act on Court Verification of Extrajudicial Restructuring Plans has created a debtor-in-possession procedure carried out outside of formal bankruptcy procedures.

Reliable since January 1, 2021, Germany's new Act on the Stabilization and Restructuring Structure for Organizations provides for pre-insolvency restructuring proceedings. Prior to its enactment, German companies had no choice to restructure their debts through the courts. Now, distressed companies can call upon German courts to restructure their financial obligations and otherwise preserve the going issue value of their business by utilizing a lot of the very same tools available in the United States, such as keeping control of their service, imposing stuff down restructuring plans, and executing collection moratoriums.

Influenced by Chapter 11 of the United States Bankruptcy Code, this new structure simplifies the debtor-in-possession restructuring process largely in effort to help little and medium sized businesses. While prior law was long criticized as too expensive and too complicated due to the fact that of its "one size fits all" method, this brand-new legislation includes the debtor in belongings design, and provides for a structured liquidation procedure when essential In June 2020, the United Kingdom enacted the Corporate Insolvency and Governance Act of 2020 ().

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Notably, CIGA provides for a collection moratorium, invalidates specific provisions of pre-insolvency contracts, and allows entities to propose a plan with shareholders and lenders, all of which permits the formation of a cram-down plan comparable to what may be achieved under Chapter 11 of the United States Bankruptcy Code. In 2017, Singapore adopted enacted the Business (Modification) Act 2017 (Singapore), which made major legal changes to the restructuring arrangements of the Singapore Companies Act (Cap 50) 2006.

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As a result, the law has significantly enhanced the restructuring tools readily available in Singapore courts and moved Singapore as a leading hub for insolvency in the Asia-Pacific. In May of 2016, India enacted the Insolvency and Bankruptcy Code, which completely overhauled the insolvency laws in India. This legislation seeks to incentivize additional investment in the nation by supplying higher certainty and efficiency to the restructuring procedure.

Offered these current changes, international debtors now have more alternatives than ever. Even without the proposed restrictions on eligibility, foreign entities may less require to flock to the US as before. Further, should the United States' venue laws be modified to avoid easy filings in particular hassle-free and useful locations, international debtors might start to consider other areas.

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Unique thanks to Dallas partner Michael Berthiaume who prepared and authored this material under the guidance of Rebecca Winthrop, Of Counsel in our Los Angeles workplace.

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Consumer personal bankruptcy filings increased 9% in January 2026 compared to January 2025, with 44,282 customer filings that month alone. Commercial filings jumped 49% year-over-year the greatest January level because 2018. The numbers show what financial obligation specialists call "slow-burn monetary pressure" that's been building for many years. If you're having a hard time, you're not an outlier.

Consumer personal bankruptcy filings amounted to 44,282 in January 2026, up 9% from January 2025. Business filings hit 1,378 a 49% year-over-year jump and the highest January commercial filing level given that 2018. For all of 2025, consumer filings grew nearly 14%. (Source: Law360 Personal Bankruptcy Authority)44,282 Consumer Filings in Jan 2026 +9%Year-Over-Year Increase +49%Business Filings YoY +14%Consumer Filings All of 2025 January 2026 insolvency filings: 44,282 customer, 1,378 industrial the greatest January business level because 2018 Specialists priced quote by Law360 explain the pattern as reflecting "slow-burn monetary stress." That's a refined method of saying what I have actually been expecting years: individuals don't snap economically overnight.