On November 22, 2021, the United States Bankruptcy Court for the Southern District of New York announced a modification to its judge-assignment scheme for “mega chapter 11 cases.” Under the new Local Bankruptcy Rule 1073-1(f), which took effect on December 1, 2021, mega chapter 11 cases will be randomly assigned among each of the district’s nine Bankruptcy judges irrespective of the courthouse in which the case is filed. A case will be considered a “mega” case if either the assets or liabilities of the debtor are at least $100 million (or in a multi-debtor case if the cumulative assets or liabilities meet the $100 million threshold). Under the old assignment rule, the case was randomly assigned among the judges sitting in a particular courthouse. The Southern District of New York has courthouses in New York City, White Plains, and Poughkeepsie.  

The announcement explains that the rule change “will result in a more balanced utilization of resources,” but it may also solve a perception problem. Under the old rule, large debtors could effectively hand-pick their judge by bringing the case in Poughkeepsie or White Plains, each of which has only one judge assigned: Robert D. Drain in White Plains and Chief Judge Cecelia G. Morris in Poughkeepsie.1 There is no doubt forum shopping in bankruptcy cases is a hot topic. We recently wrote about the Bankruptcy Venue Reform Act of 2021 introduced by Senators Elizabeth Warren (D-MA) and John Cornyn (R-TX) that would curb perceived venue shopping nationwide. This rule also brings SDNY in line with two other districts handling large volumes of corporate chapter 11’s, the District of Delaware (which only has one courthouse in Wilmington DE) and the Southern District of Texas (where pursuant to General Order 2018-1, complex chapter 11 cases are assigned randomly between two judges). 

The announcement by the United States Bankruptcy Court for the Southern District of New York can be found here: Modification in Assignment of Mega Chapter 11 Cases.

Email this postTweet this postShare this post on LinkedIn
Zachary Denver

Zachary Denver is counsel in Herrick’s Litigation Department and a member of the Restructuring & Finance Litigation Group.

Zachary’s practice concentrates on bankruptcy, restructuring, financial services litigation, and business litigation matters, where he represents debtors, creditors, lenders, distressed investors, official and unofficial committees…

Zachary Denver is counsel in Herrick’s Litigation Department and a member of the Restructuring & Finance Litigation Group.

Zachary’s practice concentrates on bankruptcy, restructuring, financial services litigation, and business litigation matters, where he represents debtors, creditors, lenders, distressed investors, official and unofficial committees, bondholders, brokers, financial institutions, and third parties in both in-court and out-of-court proceedings.

While attending law school, Zachary was an editor of the NYU Journal of Law and Liberty and a board member for the Suspension Representation Project. Before law school Zachary was a Teach for America corps member in the New York City public schools which taught him to remain calm under pressure and to help people meet their goals by overcoming unique challenges.

Prior to joining Herrick, Zach was an associate at Katten Muchin Rosenman LLP, where he focused on litigation and dispute resolution matters.