Bankruptcy Venue Reform Gains New Support in Congress

Bankruptcy venue shopping, the practice of companies filing cases in jurisdictions they view as more favorable, has been part of the system for decades, often raising concerns among creditors about cost and participation in proceedings. Congresswoman Zoe Lofgren (D-California) has introduced legislation since 2018 to address this by requiring that Chapter 11 bankruptcy proceedings take place where the principal place of business or principal assets of the corporation are located. Despite bipartisan support for the legislation, it has failed to meaningfully advance each time.

Last week, Rep, Lofgren reintroduced the Bankruptcy Venue Reform Act with a new Republican co-lead, Congressman Ben Cline (R-Virginia), offering new hope to the stymied legislation. Rep. Cline is a well-respected Republican Member of Congress who previously served as Rep. Bob Goodlatte’s Chief of Staff before leaving Congress to practice law. In addition to being a member of the Judiciary Committee in Congress, he also sits on the influential Appropriations Committee and exclusive Select Committee on Intelligence. His stature, along with Rep. Lofgren’s seniority on the Judiciary Committee, may breathe life into the Bankruptcy Venue Reform Act.

This, however, may come at a tradeoff. As NACM’s Lucy Hubbard wrote recently, Rep. Cline is the primary author of the Bankruptcy Threshold Adjustment Act, which would permanently increase the debt ceiling for a business to be eligible for Chapter 11 Subchapter V proceedings. Subchapter V allows for a significantly streamlined bankruptcy process that is both cheaper and faster for debtors, but which also significantly weakens protections for creditors by eliminating the unsecured creditor committee and allowing the confirmation of a reorganization plan over the objection of creditors.

While Members of Congress frequently co-lead legislation together, the timing of the bill’s reintroduction this Congress raises eyebrows. Rep. Cline introduced the Bankruptcy Threshold Adjustment Act on Feb. 26, 2026. Rep. Lofgren was added as a cosponsor to that legislation on March 25. Rep. Lofgren introduced her legislation with Rep. Cline as the new co-lead on March 27th. This signals the possibility that the lawmakers are working together to support both efforts simultaneously.

Last year, the House Judiciary Committee held a general hearing on bankruptcy-related issues and indicated that it may move forward with a package of bipartisan bankruptcy bills this Congress—these bills could be a part of that overall effort. The next step for the bills is likely either a legislative hearing or a Subcommittee vote, depending on how quickly Congress wants to move.

Ultimately it remains hard to predict whether either effort will get across the finish line before the end of the year. This remains the most deeply divided Congress in recent history and most recently a bipartisan housing bill was held up due to differences between House and Senate legislators. NACM will continue to monitor developments on both bills and seek member input as they move through the legislative process.