Where Can A Business File Chapter 11 Bankruptcy?

Where may a business file bankruptcy? The president of a small family business based in Georgia called me to ask whether his business could file a Chapter 11 bankruptcy in Florida. The business was a Georgia corporation with offices in Atlanta, Orlando, and Tampa. The caller preferred to file bankruptcy in Florida because he thought doing so would reduce the publicity and his own embarrassment in Atlanta where the president resided. In addition, the president maintains a personal residence in Orlando where he lives half the year.

The general rule is that a debtor may file bankruptcy in the bankruptcy district where that person or entity has its domicile, residence, principal place of business or principal assets. For individuals, the rule means that debtors file bankruptcy where their home is located. Businesses bankruptcy location can be more complicated. For instance, a business may incorporate itself in a state other than the state where it maintains its headquarters or its assets, or a business with its principal office in one state may maintain most of its assets in a different state.

For purpose of the business bankruptcy location a business’s domiciles is deemed to be located where the entity is formed. A Florida business set up as a Delaware corporation is domiciled in Delaware regardless of whether or not it has a Delaware office. A business’s principal place of business is the location where general supervision of employees takes place.

The caller’s business is eligible to file bankruptcy in Georgia where the business is incorporated and where it maintains its principal place of business. The fact that the business has two Florida offices does not make Florida a possible state for filing the business bankruptcy.

Once a bankruptcy is filed in an eligible district any party in interest may move to transfer the case to another district in the interest o justice or for the convenience of the parties. In this case, after filing the business bankruptcy in Georgia the debtor could request a transfer to Florida for convenience.

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