Delaware Bankruptcy Capital Status May End With Proposed Law

Delaware would lose its status as the premier venue for U.S. bankruptcy cases, costing the state’s economy an estimated $100 million a year, under a bipartisan bill sponsored by leaders of the House Judiciary Committee.

Lamar Smith, the Texas Republican who chairs the Judiciary panel, introduced the bill with Michigan’s John Conyers, its ranking Democrat. The aim is to prevent court-shopping and make companies reorganize at home “to ensure maximum input from all affected stakeholders,” Smith said in a statement. Delaware’s Congressional delegation disagreed, citing the Wilmington-based court’s expertise.