Corporate Bankruptcy

Over on Dealbook, I look at a fight between Lehman and Deutsche Bank regarding classification of a claim Deutsche Bank bought from Lehman's German estate, and then partially sold to some hedge funds. The stakes are only four or five cents on the dollar -- on a claim of several billion dollars.

So the Swedish court's decision to deny Saab's reorganization petition gets me wondering if the company might not decide to file a US chapter 11 case. The only problem is that, best I can tell, Sweden has no provision for recognizing a foreign insolvency proceeding domestically.

So Adam has come out in support of HR 2533, a bill which would force corporations to file in the jurisdiciton of their corporate headquarters.

This Thursday, the House Judiciary will be holding a hearing on H.R. 2533, which would reform Chapter 11 venue and require corporations (which includes more than true corporations under the Bankruptcy Code) to file in the district in which they are headquartered or in the district in which a controlling affiliate has filed.  So no more bootstrapping of Eastern Airlines, Enron, or GM via tiny affiliates.  And no more Los Angeles Dodgers of Delaware.