Skip to content
Main Menu
Utah Attorney General
Search
Attorney General
Sean D. Reyes
Utah Office of the Attorney General
Alerts
Close
Secondary Navigation

Attorney General Reyes Supports Bill Limiting “Venue Shopping” in Corporate Bankruptcy Filing

FOR IMMEDIATE RELEASE

February 25, 2020

ATTORNEY GENERAL SEAN D. REYES SUPPORTS  BILL LIMITING “VENUE SHOPPING” IN CORPORATE BANKRUPTCY FILING
Reyes Joins Coalition of 42 Attorneys General on Bipartisan Legislation

SALT LAKE CITY, UT – Utah Attorney General Sean Reyes has joined a bipartisan coalition of 42 state and territory attorneys general in supporting H.R. 4421, the Bankruptcy Venue Reform Act of 2019, bipartisan legislation that will prevent a corporation from filing for bankruptcy in a District that it believes would be more favorable on issues to the debtor’s advantage—a practice known as “forum shopping”—when the corporation’s principal place of business or assets are located in a different district, which imposes a burden on states and other creditors who may have to travel and incur significant expenses to pursue their claims.
 
Under current U.S. law, individuals must file only in the district in which they have resided for a majority of the 180 days prior to filing. However, corporations are permitted to pursue bankruptcy in any district in which the corporation has a minor affiliated interest, no matter how small or recently created. In addition to conferring a distinct advantage to the corporation’s interest, it encourages placing cases in some of the most expensive legal markets in the country, contributing to the ever-growing costs of these cases. Generally, businesses and consumers who interact with the debtor are located in areas where the debtor primarily operates and having to travel to distant places makes it harder to protect their interests. The same applies to states that may be owed taxes or other payments, and may need to incur expenses to collect, that could wipe out any amounts collected through the bankruptcy.
 
Furthermore, because each individual court currently sets its own requirements for allowing non-local attorneys to appear, including deciding whether to charge an admission fee in each case, and/or to require that local counsel must be associated to the case, financial burdens and unnecessary delays in pursuing justice are virtually unavoidable. The attorneys general letter, therefore, encourages Congress to ensure that when government attorneys appear on behalf of their governments, they can participate in the bankruptcy without having to pay excessive fees or hire local counsel.
 
“Corporations should be required to play by the same rules that the individuals do when it comes to bankruptcy cases,” said Attorney General Reyes. “It’s not right that big companies can shop around for a ‘better deal’. This bill will strengthen the integrity of, and ensure fairness in the bankruptcy system and level the playing field for the financial interests of the public.”
 
If passed, the Bankruptcy Venue Reform Act of 2019 will:

  • Limit where businesses may file bankruptcy by ensuring that they will do so in a jurisdiction in which their “principal assets” or their “principal place of business” are located; and
  • Require rules to be prescribed to allow all governmental attorneys (not just U.S. attorneys) to appear without charge and without being required to associate with local counsel.

In the letter, the attorneys general tender support to the Bankruptcy Venue Reform Act of 2019, and contend that passage of the legislation will:

  • Reduce forum shopping in the bankruptcy system
  • Strengthen the integrity of, and build public confidence and ensure fairness in, the bankruptcy system
  • Help consumers and other parties to be represented in court without undue burden
  • Level the playing field for state attorneys general to guard their states’ financial interests and enforce consumer protection laws

In signing the letter co-sponsored by the attorneys general of Maryland, Ohio, Texas, and Washington, Attorney General Reyes joins the attorneys general of Alabama, Alaska, Arizona, Arkansas, California, Colorado, the District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, West Virginia, and Wisconsin.  

A copy of the letter is available here.

###

Purdue Pharma Files For Bankruptcy, Consistent with Settlement Framework

FOR IMMEDIATE RELEASE
September 16, 2019

Purdue Pharma Files For Bankruptcy, Consistent with Settlement Framework

SALT LAKE CITY — Purdue Pharma announced today it has filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York, on behalf of itself and its affiliated U.S. companies.

This bankruptcy has been anticipated for some time. This bankruptcy filing is consistent with the settlement framework agreed upon by a bipartisan group of 29 attorneys general, including Sean D. Reyes, over 2,000 cities and counties, Purdue Pharma, and Purdue’s owners.

Pursuant to that framework, and with the approval of the bankruptcy court, this bankruptcy means Purdue will no longer exist. It will never again make, sell, or market another opioid product in the United States or anywhere in the world.

In accord with the framework:

  • The Sackler family will give up not only Purdue but also all the family’s international pharmaceutical holdings.
  • The proceeds of those sales are guaranteed to provide billions of dollars to the States and other plaintiffs to help address the devastation of the opioid epidemic.
  •  By the terms of the framework, the Sacklers will be out of the pharmaceutical industry forever.

No other plan on the table has any assurance of accomplishing these things.

These pharmaceutical companies have been the foundation of the Sackler family fortune. The liquidation of these assets will convert a huge portion of the Sacklers’ wealth into resources for our communities.

While the end of Purdue marks an important moment in the struggle against the opioid epidemic, there is much work yet to be done. Our office, along with all the states and subdivisions supporting this settlement, will continue our investigation and litigation against all other parties responsible for this epidemic.

“Purdue was morally bankrupt and now it is legally so,” said Attorney General Sean D. Reyes. “Although there is no dollar amount that will undo the pain and suffering so many families have endured, I’m focused on getting resources to Utahns as quickly as possible.

“We’ve known for some time that bankruptcy was a likely outcome in this case. That is why we have worked so urgently as attorneys general to negotiate a proposed plan that would bring immediate relief and long-term resources to local communities across our states to prevent further devastation from this opioid threat. 

“Our plan also assures the Sacklers are out of pharmaceuticals and Purdue is out of business. Additionally, any assets that can be sold will yield potentially lifesaving treatment, recovery, prevention and education dollars to Utah and its counties and cities. 

I’m pleased to serve as one of nine attorneys general on the ad hoc committee to represent the interests of the states in this proceeding.”

                                                            ###

Site SettingsSettings