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Both propose to get rid of the ability to "forum shop" by omitting a debtor's place of incorporation from the location analysis, andalarming to global debtorsexcluding money or money equivalents from the "principal possessions" equation. Furthermore, any equity interest in an affiliate will be deemed situated in the very same location as the principal.

Normally, this testimony has been focused on questionable 3rd party release arrangements carried out in current mass tort cases such as Purdue Pharma, Young Boy Scouts of America, and many Catholic diocese bankruptcies. These provisions regularly force lenders to release non-debtor 3rd parties as part of the debtor's strategy of reorganization, despite the fact that such releases are perhaps not allowed, at least in some circuits, by the Insolvency Code.

In effort to stamp out this behavior, the proposed legislation claims to limit "forum shopping" by restricting entities from filing in any location other than where their business headquarters or principal physical assetsexcluding cash and equity interestsare situated. Seemingly, these bills would promote the filing of Chapter 11 cases in other United States districts, and steer cases away from the preferred courts in New York, Delaware and Texas.

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Despite their admirable function, these proposed changes might have unforeseen and potentially negative consequences when seen from an international restructuring potential. While congressional testimony and other analysts presume that place reform would merely make sure that domestic companies would file in a different jurisdiction within the United States, it is a distinct possibility that global debtors may hand down the United States Bankruptcy Courts entirely.

Without the factor to consider of cash accounts as an avenue toward eligibility, many foreign corporations without concrete assets in the United States might not certify to submit a Chapter 11 bankruptcy in any US jurisdiction. Second, even if they do qualify, global debtors may not be able to count on access to the typical and practical reorganization friendly jurisdictions.

Provided the intricate problems frequently at play in an international restructuring case, this might trigger the debtor and creditors some uncertainty. This uncertainty, in turn, might inspire worldwide debtors to file in their own nations, or in other more advantageous nations, rather. Notably, this proposed location reform comes at a time when many countries are replicating the United States and revamping their own restructuring laws.

In a departure from their previous restructuring system which emphasized liquidation, the new Code's objective is to reorganize and maintain the entity as a going concern. Hence, financial obligation restructuring arrangements might be authorized with as low as 30 percent approval from the overall financial obligation. However, unlike the United States, Italy's brand-new Code will not feature an automatic stay of enforcement actions by lenders.

In February of 2021, a Canadian court extended the country's approval of third celebration release arrangements. In Canada, organizations generally restructure under the traditional insolvency statutes of the Companies' Financial Institutions Plan Act (). 3rd party releases under the CCAAwhile fiercely contested in the USare a typical element of restructuring plans.

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The recent court choice makes clear, though, that regardless of the CBCA's more minimal nature, 3rd party release arrangements may still be appropriate. Therefore, business might still get themselves of a less cumbersome restructuring readily available under the CBCA, while still receiving the advantages of third party releases. Efficient as of January 1, 2021, the Dutch Act Upon Court Verification of Extrajudicial Restructuring Plans has actually developed a debtor-in-possession treatment conducted outside of formal insolvency procedures.

Effective as of January 1, 2021, Germany's new Act on the Stabilization and Restructuring Structure for Organizations offers pre-insolvency restructuring procedures. Prior to its enactment, German companies had no alternative to restructure their financial obligations through the courts. Now, distressed business can call upon German courts to restructure their financial obligations and otherwise preserve the going concern worth of their organization by utilizing much of the exact same tools offered in the US, such as keeping control of their company, enforcing stuff down restructuring strategies, and carrying out collection moratoriums.

Inspired by Chapter 11 of the US Insolvency Code, this brand-new structure streamlines the debtor-in-possession restructuring procedure mostly in effort to help small and medium sized businesses. While prior law was long criticized as too pricey and too complicated because of its "one size fits all" method, this brand-new legislation integrates the debtor in possession model, and attends to a streamlined liquidation process when necessary In June 2020, the United Kingdom enacted the Business Insolvency and Governance Act of 2020 ().

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Significantly, CIGA offers a collection moratorium, revokes particular provisions of pre-insolvency contracts, and allows entities to propose an arrangement with shareholders and lenders, all of which permits the formation of a cram-down plan similar to what might be accomplished under Chapter 11 of the US Bankruptcy Code. In 2017, Singapore adopted enacted the Business (Amendment) Act 2017 (Singapore), which made major legal modifications to the restructuring provisions of the Singapore Companies Act (Cap 50) 2006.

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As an outcome, the law has actually considerably enhanced the restructuring tools available in Singapore courts and propelled Singapore as a leading center for insolvency in the Asia-Pacific. In May of 2016, India enacted the Insolvency and Bankruptcy Code, which entirely overhauled the insolvency laws in India. This legislation looks for to incentivize further financial investment in the nation by supplying higher certainty and performance to the restructuring procedure.

Provided these recent modifications, worldwide debtors now have more choices than ever. Even without the proposed restrictions on eligibility, foreign entities might less need to flock to the US as in the past. Even more, must the US' venue laws be amended to avoid easy filings in specific convenient and advantageous venues, international debtors may start to think about other places.

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Special thanks to Dallas associate Michael Berthiaume who prepared and authored this content under the guidance of Rebecca Winthrop, Of Counsel in our Los Angeles office.

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Consumer personal bankruptcy filings rose 9% in January 2026 compared to January 2025, with 44,282 customer filings that month alone. Commercial filings jumped 49% year-over-year the highest January level since 2018. The numbers show what financial obligation experts call "slow-burn financial pressure" that's been developing for several years. If you're struggling, you're not an outlier.

Customer personal bankruptcy filings totaled 44,282 in January 2026, up 9% from January 2025. Business filings struck 1,378 a 49% year-over-year dive and the highest January industrial filing level considering that 2018. For all of 2025, customer filings grew almost 14%.