[Congressional Record Volume 151, Number 12 (Tuesday, February 8, 2005)]
[Senate]
[Pages S1125-S1129]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CORNYN:
  S. 314. A bill to protect consumers, creditors, workers, pensioners, 
shareholders, and small businesses, by reforming the rules governing 
venue in bankruptcy cases to combat forum shopping by corporate 
debtors; to the Committee on the Judiciary.
  Mr. CORNYN. Mr. President, I rise today to introduce the Fairness in 
Bankruptcy Litigation Act of 2005.
  This legislation will provide much-needed protection--for consumers, 
creditors, workers, pensioners, shareholders, and small businesses--by 
reforming the rules governing venue in bankruptcy cases to combat forum 
shopping.
  Quite simply, my bill will prevent corporate debtors from moving 
their

[[Page S1126]]

bankruptcy cases thousands of miles away from the communities and their 
workers who have the most at stake. And it will prevent bankrupt 
corporations from effectively selecting the judge in their own cases--
because picking the judge isn't far off from picking the verdict.
  This Act is a positive step for fairness, responsibility, and 
justice. It implements a major recommendation from the October 1997 
National Bankruptcy Review Commission report, and earned the support of 
prominent bankruptcy law professors and practitioners nationwide. The 
bill is also supported by Texas Attorney General Greg Abbott (R) and 
former Massachusetts Attorney General Scott Harshbarger (D); Brady C. 
Williamson, who served as chairman of the National Bankruptcy Review 
Commission; and major national bankruptcy organizations like the 
National Association of Credit Management and the Commercial Law League 
of America.
  With the introduction of this Act, this body will now have an 
opportunity to consider this growing crisis, which effects so many 
consumers and workers, just as we are about to examine the issue of 
comprehensive bankruptcy reform.
  Sadly, our current bankruptcy venue law has become a target for 
enormous abuse. It's a problem that is well documented by academics, 
most recently in a comprehensive book published just last week by UCLA 
Law Professor Lynn M. LoPucki, as well as by Harvard Law Professor 
Elizabeth Warren, who served as the reporter for the National 
Bankruptcy Review Commission, and Professor Jay L. Westbrook of the 
University of Texas Law School.
  I have personal experience with the worst kind of forum shopping. 
During my service to the State of Texas as Attorney General, I argued 
that the Enron Federal bankruptcy court proceedings should be litigated 
in Houston. That seemed like the common sense argument, of course--
after all, Houston was where the majority of employees and others who 
were victimized by that corporate scandal called home.
  Yet that's not where the case ended up. Instead, Enron was able to 
exploit a key loophole in bankruptcy law to maneuver their proceedings 
as far away from Houston as possible. They ended up in their desired 
forum in New York. See In re Enron Corp., 274 B.R. 327 (S.D.N.Y. Bankr. 
2002).
  Enron used the place of incorporation of one of its small 
subsidiaries in order to file a bankruptcy claim in New York, and then 
used that smaller claim as the basis for shifting all of its much 
larger bankruptcy proceedings into that same court. The company had 
7,500 employees in the Houston headquarters, but they filed for 
bankruptcy in New York, where Enron had only 57 employees.
  This kind of blatant forum shopping makes a mockery of our laws. The 
common-sense legislation that I've introduced today will combat such 
egregious forum shopping by requiring that corporate debtors file where 
their principal place of business or principal assets are located, 
rather than their state of incorporation, and forbidding parent 
companies from manipulating the venue by filing first through a 
subsidiary.
  Bankruptcy venue abuse is not just bad for our legal system; it hurts 
America's consumers, creditors, workers, pensioners, shareholders, and 
small businesses. Under current law, corporate debtors effectively get 
to pick the court in which they will file for bankruptcy. As a result, 
creditors can be forced to litigate far away from the real-world 
location, where costs and inconveniences associated with travel are 
prohibitive.
  This troubling loophole also serves to unfairly enable corporate 
debtors to evade their financial commitments. It badly disables 
consumers, creditors, workers, pensioners, shareholders, and small 
businesses from pursuing and receiving reasonable compensation from 
bankruptcy proceedings.
  Current law allows debtors to forum shop and thereby to pick 
jurisdictions likely to rule in their favor. If debtors get to pick the 
jurisdiction, then bankruptcy judges have a disturbing incentive to 
compete with other bankruptcy courts for major bankruptcy cases, by 
tilting their rulings in favor of corporate debtors and their 
attorneys.
  The examples are numerous. Here are three of the most prominent 
incidents: Polaroid. In October 2001, Boston-based Polaroid filed for 
bankruptcy in Delaware, listing assets at $1.9 billion. Polaroid's top 
executives claimed that the company was a ``melting ice cube,'' and 
arranged a hasty sale for $465 million to a single bidder. The court 
refused to hear testimony as to the true value of the company and 
closed the sale in only 70 days. The top executives went to work for 
the new buyer and received millions of dollars in stock. Meanwhile, 
disabled employees had their health-care coverage canceled. The so-
called ``melting ice cube'' became profitable the day after the sale 
became final.
  K-Mart. In January 2002, failed top executives delivered Michigan-
based K-Mart to the bankruptcy court in Chicago, which reportedly had 
been actively soliciting large corporate debtors to file there. With a 
workforce of 225,000, K-Mart had more employees than any company that 
had ever filed bankrupt nationwide. The Chicago judge let the failed 
executives take tens of millions of dollars in bonuses, perks, and loan 
forgiveness. Bankruptcy lawyers also profited, pocketing nearly $140 
million in legal fees. But some 43,000 creditors received only about 
ten cents on the dollar.
  Worldcom. Worldcom perpetrated one of the biggest accounting frauds 
in history, inflating its income by $9 billion. Although based in 
Mississippi, Worldcom followed Enron into the New York bankruptcy 
court, where its managers received the same lenient treatment. No 
trustee was appointed; indeed, five months after the case was filed, 
the directors in office when the fraud occurred still constituted a 
majority of the board. They chose their own successors. A Top Worldcom 
executive used money taken from the company to build an exempt Texas 
homestead, and Worldcom took no action. That executive then used the 
homestead to buy his way out of his problems with the SEC. Meanwhile, 
creditors--mostly bondholders--lost $20 billion.
  This is not the first time we have addressed this important issue. 
The House Judiciary Subcommittee on Commercial and Administrative Law 
held a hearing on July 21, 2004, entitled ``Administration of Large 
Business Bankruptcy Reorganizations: Has Competition for Big Cases 
Corrupted the Bankruptcy System?,'' and Congressman Brad Sherman (D-CA) 
has previously led efforts to champion bankruptcy venue reform in the 
House. During the 107th Congress, Senator Durbin introduced S. 2798, 
the Employee Abuse Prevention Act of 2002, joined by Senators Kennedy, 
Kerry, Leahy, and Rockefeller, while Congressman William D. Delahunt 
(D-MA) introduced the same bill in the House; section 205 of that 
legislation would have reformed bankruptcy venue law.
  I believe we must take steps to respond to this important problem. 
The American people deserve better from our legal system. All 
bankruptcy cases deserve to be handled fairly and justly, and no 
corporate debtor should be allowed to escape responsibility by fleeing 
to another venue. It is high time that we take up this much-needed 
reform.
  I ask unanimous consent that letters of support be printed in the 
Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                    Attorney General of Texas,

                                     Austin, TX, February 2, 2005.
     Re Fairness in Bankruptcy Litigation Act of 2005.

     Hon. John Cornyn,
     U.S. Senate,
     Washington, DC.
       Dear Senator Cornyn: I support your important initiative to 
     prohibit opportunistic forum shopping by corporate debtors.
       As you know firsthand from your tenure as Attorney General 
     of Texas during the State's involvement in the Enron 
     bankruptcy proceedings, such unsavory court-shopping truly 
     harms innumerable parties--large and small alike. Far too 
     often, corporate debtors file for bankruptcy in a far-flung 
     district solely because of their incorporation in the state 
     where that district is located.
       Your proposal to amend 28 U.S.C. Sec. 1408--the aptly named 
     Fairness in Bankruptcy Litigation Act--would prevent this 
     unseemly practice. As you know, bankruptcy forum shopping can 
     adversely impact not just states and state agencies, but 
     countless consumers, creditors, employees, pensioners, 
     stockholders, and small businesses that are regularly 
     thwarted from protecting their interests simply because the 
     debtor filed in a distant forum.

[[Page S1127]]

       The venue stratagems used by large law firms to maximize 
     their professional fees, render far-away courts inaccessible 
     to scores of unsecured creditors, and select compliant, 
     debtor-friendly judges undermine the credibility of our 
     nation's bankruptcy system. Indeed, after two years of public 
     hearings, the National Bankruptcy Review Commission 
     recommended that Congress overhaul the law to prevent forum 
     shopping by large Chapter 11 debtors and their affiliates. I 
     strongly support their recommendation and applaud you for 
     bringing this urgent matter to the attention of the United 
     State Senate.
       Abusive forum shopping by corporate debtors harms Americans 
     from all walks of life. It is time for this gamesmanship to 
     stop. I commend your efforts to strengthen our bankruptcy 
     system and safeguard the interests of ordinary Americans.
           Sincerely,
     Greg Abbott.
                                  ____

                                             Murphy, Hesse, Toomey


                              & Lehane, LLP, Attorneys at Law,

                                     Boston, MA, February 8, 2005.
     Re Bankruptcy Venue Reform.

     Senator John Cornyn,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator: I commend efforts, either through an 
     amendment to the bankruptcy bill before Congress or through 
     the separate vehicle being introduced by Senator Cornyn, to 
     close a major jurisdictional loophole in the bankruptcy 
     statutes which directly affects every investor, business 
     competitor, creditor, consumer, union, and state Attorney 
     General in this country. While forum shopping and court 
     competition are having a direct, adverse effect on the 
     governance and reorganization of large, public companies, 
     investors are feeling that effect in their returns; employees 
     and unions in the abrogation of collectively bargained 
     contracts and economic security; competitors in the loss of a 
     level playing field; consumers and creditors in the loss of 
     basic rights; and Attorneys General in the loss of power to 
     be heard and to protect the rights of constituents and state 
     public policy.
       For the past decade, most bankrupt large public companies 
     have ``forum shopped'' their cases to the bankauptcy courts 
     in Wilmington, Delaware and New York City. For a time, that 
     was generally thought to be advantageous. But events in Enron 
     and other cases have shown otherwise. The shopping benefited 
     bankruptcy professionals who worked in those cases by 
     enabling them to charge higher fees and by freeing them from 
     some restrictions on conflicts of interest. The shopping also 
     benefited executives of some of those companies by allowing 
     them to hang onto their jobs longer and in some cases even be 
     paid large ``retention bonuses.''
       But the effect of forum shopping on the companies--and 
     hence on the shareholders and bondholders who invested in 
     them--has been decidedly negative. According to major studies 
     and the empirical research of experts like Professor Lynn 
     LoPucki of UCLA law school, companies reorganized in the 
     Delaware and New York courts in the early and mid-1990s 
     failed at a rate more than double the rate for companies 
     reorganized in other courts. As other courts copied Delaware 
     in an effort to staunch their outflow of cases, the failure 
     rates for those courts' reorganizations skyrocketed to match 
     Delaware's rates. To confirm a plan, the Bankruptcy Code 
     requires that the court find that ``confirmation . . . is not 
     likely to be followed by the liquidation, or the need for 
     further financial reorganization of the debtor.'' But of the 
     43 largest public companies reorganized in U.S. Bankruptcy 
     Courts from 1997 through 2000--the most recent period for 
     which failure rates can be calculated--21 (49%) were back in 
     bankruptcy within five years. Historically, the failure rates 
     for big reorganization in non-competing courts have been 
     below 10%.
       Legislative action can address this problem in a common 
     sense, fair, simple and direct way, by requiring bankrupt 
     companies file in their local bankruptcy courts. By local 
     courts, I mean the courts in the cities where the companies 
     have their headquarters or their principal operations. This 
     will free judges from the pressures to compete with other 
     courts for cases, and enable them to return to the crucial 
     function for which they were appointed: to protect 
     shareholders, creditors, employees, suppliers, customers and 
     the companies themselves during the brief but often frantic 
     period between the failure of one corporate regime and its 
     replacement with another. It will also ensure that these 
     judges and courts hear from everyone affected and entitled to 
     be heard--not only those who can afford to travel or appear 
     in ``foreign'' courts, especially the public's lawyers, the 
     Attorneys General. It is not a panacea for economic 
     insecurity, and it changes no legal rights or duties or law. 
     But it will cure a major inequity and a loophole utilized 
     primarily to ``game'' the system. Enactment of this bill, or 
     a similar legislative amendment, will enable us to say: ``We 
     had a problem, and now we have fixed it.''
     Scott Harshbarger.
                                  ____

                                             Commercial Law League


                                      of America ',

                                    Chicago, IL, February 7, 2005.
     Hon. John Cornyn,
     U.S. Senate,
     Washington, DC.
       Dear Senator Cornyn: The Commercial Law League of America 
     (``CLLA''), founded in 1895, is the Nation's oldest 
     organization of attorneys and other experts in credit and 
     finance actively engaged in the field of commercial law, 
     bankruptcy and reorganization. Its membership exceeds 3,500 
     individuals. The CLLA has long been associated with the 
     representation of creditor interests, while at the same time 
     seeking fair, equitable and efficient administration of 
     bankruptcy cases for all parties in interest.
       The Bankruptcy Section of the CLLA is made up of 
     approximately 1,100 bankruptcy lawyers and bankruptcy judges 
     from virtually every State in the United States. Its members 
     include practitioners with both small and large practices, 
     who represent divergent interests in bankruptcy cases. The 
     CLLA has testified on numerous occasions before Congress as 
     experts in the bankruptcy and reorganization fields.
       A principal concern of the CLLA is the need for an 
     amendment requiring that the domicile and residence for venue 
     of corporate debtors be conclusively presumed to be the 
     location of the debtor's principal place of business without 
     regard to the debtor's state of incorporation. Such a change 
     would benefit creditors and prevent an unacceptable degree of 
     forum shopping by debtors who are in search of a venue that 
     will be friendly to their needs. More important, however, 
     requiring that a corporate bankruptcy take place locally 
     ensures that the distinct needs of the community are not 
     overlooked.
       Allowing the practice of forum shopping by debtors 
     undermines the bankruptcy process and creates unwarranted 
     competition among the courts. Before filing, the debtor is 
     able to determine which courts have taken friendly views of 
     the debtor's particular needs and select such a court with 
     the intent of creating a disadvantage for creditors. Indeed, 
     some corporate debtors have even commenced bankruptcy cases 
     in preferred venues by strategically creating or using 
     otherwise healthy subsidiaries to create a basis for filing 
     in the intended court. Current law as written fosters these 
     abuses.
       The CLLA strongly supports passage of the Fairness in 
     Bankruptcy Litigation Act of 2005 (the ``Act'') since the 
     proposed legislation addresses these abuses. The Act will 
     help to eliminate the forum shopping that skews the 
     bankruptcy process and will foster greater local control over 
     important business and community decisions. Although the Act 
     may require some technical modifications to achieve and 
     address the legislation's purported goals, its overall 
     provisions and goals are well grounded and supported by the 
     abuses taking place within the bankruptcy system.
       Much has been said among members of Congress that 
     bankruptcy reform is necessary to prevent what it perceives 
     as abuse of the bankruptcy process. A venue provision that 
     requires corporate bankruptcies to be filed at the principal 
     place of business furthers that goal and for all these 
     reasons we encourage the passage of the Act at the earliest 
     opportunity.
           Respectfully submitted,
     Mary K. Whitmer,
       President.
     Jay L. Welford,
       Co-Chair, National Governmental Affairs Committee.
     Peter C. Califano,
       Chair, Legislative Committee, Bankruptcy Section.
     Alan I. Nahmias,
       Chair, Bankruptcy Section.
     Judith Greenstone Miller,
       Co-Chair, National Governmental Affairs Committee.
                                  ____



                                           Harvard Law School,

                                                 January 31, 2005.
     Senator John Cornyn,
     617 Senate Hart Office Building,
     Washington, DC.
       Dear Senator Cornyn: Since its inception, the central 
     promise of the Federal bankruptcy system is that all 
     creditors--large and small--have equal access to participate 
     in the judicially-supervised liquidation or reorganization of 
     the debtor. No bankruptcy will be run to benefit one group of 
     creditors over another, or to permit the debtor to escape 
     from close scrutiny after its financial collapse.
       Unfortunately, that promise has been significantly eroded. 
     Mega-companies and their counsel shop for courts that will 
     render decisions that may favor the debtor, the attorneys or 
     a small group of powerful creditors. These parties often file 
     the bankruptcy petitions in locations far distant from most 
     of the company's business and from most of its creditors, 
     including its workers, retirees and local trade creditors who 
     have made their own investments in the company.
       Forum shopping creates an advantage for the insiders, while 
     making it virtually impossible for small creditors to 
     participate in the bankruptcy process. Employees, pensioners, 
     trade creditors and others have claims that are important to 
     them, but that are not large enough to justify millions of 
     dollars in lawyers' fees or trips to distant locations. As a 
     result, many of these smaller parties are shut out of the 
     system. They literally cannot get to the courthouse.
       Bankruptcy courts around the country are capable of 
     handling the cases that come their way--large or small. The 
     judges are smart and thoughtful, and the court personnel are 
     dedicated and hard-working. No

[[Page S1128]]

     single court in this country, regardless of its experience, 
     should have an exclusive lock on dealing with big cases. No 
     court has special powers or unique skills to deal with the 
     questions of claims, property of the estate, financing, 
     fraud, attorneys' fees and so on--issues that can arise in 
     any case, regardless of size.
       The current system of court shopping harms too many 
     parties. Closing a loophole in the bankruptcy laws that 
     permits this unseemly practice and forcing companies in 
     trouble to subject themselves to the scrutiny of their local 
     courts and local creditors is an important step toward 
     strengthening the credibility of the bankruptcy system. The 
     reform embodied in your proposal is real reform. If a company 
     prospers in part because it draws on the strength of the 
     community where it operates, that same community should be 
     able to participate fully in its financial reorganization.
           Very truly yours,
                                                 Elizabeth Warren,
     Leo Gottlieb Professor of Law.
                                  ____

                                                    School of Law,


                            The University of Texas at Austin,

                                  Austin, Texas, February 6, 2005.
     Senator John Cornyn,
     Senate Hart Office Building,
     Washington, DC.
       Dear Senator Cornyn: There is no single reform of our 
     Chapter 11 system that is as important as ensuring an end to 
     the forum shopping that has so distorted that system in 
     recent years. The present venue rules are so loosely 
     constructed that they permit any large public' company to 
     file a Chapter 11 pretty much wherever it likes. Naturally, 
     the management of companies in financial trouble and the 
     professionals that advise them take advantage of those rules 
     to choose the forum that will best serve their interests. 
     Often that means a Chapter 11 filing in a courthouse far away 
     from the company's home.
       These rules permit the company's management to escape the 
     close scrutiny of intensely interested local media and to 
     avoid attendance at court hearings by employees, local 
     suppliers, and others vitally interested in the case and 
     knowledgeable about the company. They force smaller creditors 
     to file claims from afar, claims that are often the subject 
     of an arbitrary objection by the debtor that the distant 
     creditor cannot afford to litigate. Conversely, creditors who 
     received some payment before bankruptcy may be the subject of 
     long-distance preference attacks that they cannot properly 
     defend in a remote courthouse, especially if the amounts 
     involved, although substantial, are not enough to justify the 
     expense of a defense. Compounding the problem of expense is 
     the creditor's lack of knowledge of lawyers in the distant 
     forum and the risk, especially in Delaware, that in a big 
     case most experienced local lawyers will already be committed 
     to other clients. On top of these direct injuries to 
     creditors, in cases where a trustee in bankruptcy is 
     appointed, the administration of assets hundreds or thousands 
     of miles removed from the trustee's home cannot be done 
     efficiently and rarely can be done well.
       These and other effects of forum shopping are inefficient 
     and prejudicial. In addition, the present system imposes 
     subtle pressures on bankruptcy judges and district judges, 
     who cannot be unaware that their decisions as to venue will 
     determine whether the community and the local bar will be 
     greatly enriched by the administration of large bankruptcy 
     cases. Despite the high degree of professionalism on our 
     federal bench, it is not reasonable to expect that these 
     pressures will have no effect.
       Although I am expressing my own opinions and not speaking 
     for the University or the Law School, I write as someone who 
     has practiced, studied, taught, and written about bankruptcy 
     law for over thirty years. Please let me know if I can 
     provide further information that would be helpful to your 
     work.
           Respectfully,
                                                 Jay L. Westbrook,
                                                 Benno C. Schmidt,
     Chair of Business Law
                                  ____

                                         University of California,


                                   Los Angeles, School of Law,

                                Los Angeles, CA, January 31, 2005.
     Senator John Cornyn,
     Hart Senate Office Bldg.,
     Washington, DC.
       Dear Senator Cornyn: I write to thank you for your courage 
     in proposing the Fairness in Bankruptcy Litigation Act of 
     2005. This legislation will not only provide protection for 
     all parties to large, public company bankruptcies, it will 
     also protect honest bankruptcy judges from the pressures 
     arising from the necessity to compete for cases. My research 
     suggests that by ending the necessity for the courts to 
     compete for cases, this legislation will result in better 
     reorganizations, the preservation of jobs, and higher returns 
     to creditors and shareholders.
       This is a difficult issue to present to the public, because 
     it is both obscure and complex. Please be assured that I and 
     many others appalled by the competition will do whatever we 
     can to assist you.
           Yours truly,
     Lyan M. LoPucki
                                  ____

       Dear Senator Cornyn: I am writing to you to support your 
     effort to pass a bill that would prevent corporations from 
     shopping for the most favorable venue. The current practice 
     has resulted in a ``race to the bottom'' as bankruptcy courts 
     work hard to lure corporate bankruptcies to their courts.
       I was a professor at the University of Missouri-Kansas City 
     School of Law for almost 20 years. My own worst example is 
     the case of Birch Telecom, a Kansas City-based company that 
     filed in Delaware in 2002. After laying off a quarter of 
     their employees--citizens of Missouri, Kansas, and Texas--
     Birch went into bankruptcy with a prepared plan (known as a 
     ``pre-pack'') that included significant compensation for the 
     very officers who had led the company into bankruptcy.
       A bankruptcy judge from Texas, sitting by designation 
     (because of the volume of cases being filed in Delaware) had 
     the audacity to suggest that he might not approve the plan 
     because of the compensation package. Before his words were 
     out of his mouth, Birch Telecom's attorneys had appealed the 
     reference of the case to that judge. The case was withdrawn, 
     and a Delaware judge, who understood that the game is 
     appeasing the corporate debtors, approved the plan 13 days 
     later.
       What possible chance do employees and local creditors have 
     when a distant bankruptcy judge will rubber-stamp the 
     company's every request, in a court too far away for them 
     even to appear?
       Congress says that it is trying to stop bankruptcy abuse. 
     Venue shopping is the very worst example of bankruptcy abuse, 
     and it affects the lives of thousands of ordinary Americans--
     employees and small businesses--every single day.
       I wish you good luck in the passage of this important piece 
     of legislation.
       Sincerely,
                                                   Corinne Cooper,
     Professor Emerita of Law.
                                  ____

                                            Creel & Moore, L.L.P.,


                                     Attorneys and Counselors,

                                     Dallas, TX, February 4, 2005.
     Re proposed bankruptcy legislation/venue.

     Senator John Cornyn,
     Hart Senate Building, Washington, DC.
       Dear Senator Cornyn: One of the issues being discussed in 
     connection with proposed bankruptcy legislation is in what 
     venue or venues is it most appropriate for business debtors 
     to initiate voluntary bankruptcy cases, where they conduct 
     their daily business or where they were incorporated.
       Because a corporation (or any other type of business 
     organization) seeking bankruptcy relief should do so in a 
     forum that is convenient for itself, its management, its 
     employees and its creditors, Section 1408 of Title 28 of the 
     U.S. Code should be amended to prohibit the right of a debtor 
     corporation to file in the state of its incorporation unless 
     it either has its principal place of business or its 
     principal assets in that state.
       The reason for requiring a debtor to seek relief in a 
     bankruptcy court nearest to its actual place of operation is 
     that, otherwise, the rights of the other parties are 
     significantly and adversely affected because of the distance, 
     delay and costs of dealing with a faraway court.
       The practice that has developed over the years is that 
     corporations, for example those created under the laws of 
     Delaware, file in Delaware, far from their actual places of 
     business, Texas for example, thus causing their management, 
     employees and creditors to have the burden and expense of 
     travel, to hire distant counsel with whom they have had no 
     prior experience, or both, in order to protect their 
     interests. Many times, at least from a creditor/employee 
     perspective, the inconvenience and expense, when balanced 
     against the probability of an insignificant recovery on a 
     claim, is such that creditors/employees simply abandon their 
     claims, a result which is contrary to the spirit and intent 
     of the Bankruptcy Code.
       As a bankruptcy practitioner for over 40 years and one who 
     is active in various bankruptcy organizations, I urge you and 
     your staff to consider the thoughts expressed in their 
     letter.
       As the grandfather of Richie Anderson who served as an 
     intern on your staff last summer, I know, from his 
     experience, that you will listen to the opinions of your 
     constituents.
           Yours very truly,
     L. E. Creel, III.
                                  ____

                                                         Winstead,
                                                 February 4, 2005.
     Re Bankruptcy Venue Reform
     Hon. John Cornyn,
     U.S. Senate, Hart Senate Office Bldg.,
     Washington, DC.

       Dear Senator Cornyn:  I write in support of reform of the 
     Bankruptcy Code's current venue provisions.
       I am twenty-three year bankruptcy practitioner and head of 
     the bankruptcy practice for our law firm, I additionally 
     serve as Vice President (Business Bankruptcy) of the 
     Bankruptcy Section of the State Bar of Texas and am national 
     co-chair of the Unsecured Trade Creditors' Committee of the 
     American Bankruptcy Institute. My practice, while focused in 
     Texas, brings me before courts throughout the country--
     particularly those in Delaware and New York.
       Practicing in Texas, I have personal experience with the 
     unfortunate practice of companies and their counsel shopping 
     for forums. Whether to escape the watchful eye of employees, 
     creditors or the press, numerous companies from around the 
     country have filed bankruptcy cases in the District of

[[Page S1129]]

     Delaware or the Southern District of New York to obtain what 
     they believed would be either favorable treatment or a venue 
     for their bankruptcy cases which would in large measure 
     frustrate the rights and interests of their creditors and 
     employees. It is for these reasons, among others, that I 
     strongly support a modification of the Bankruptcy Venue 
     Statute and urge prompt action.
       If I can be of any assistance to you, please do not 
     hesitate to call upon me. Best regards.
           Very truly yours,
     Berry D. Spears.
                                  ____

                                      Munsch Hardt Kopf & Harr PC,


                                       Attorneys & Counselors,

                                                 February 7, 2005.
     Re Amendment to Section 1408 of Title 28, United States Code
     Hon. John Cornyn,
     U.S. Senate, Hart Senate Office Bldg.,
     Washington, DC.

       Dear Senator Cornyn: As a bankruptcy practitioner for some 
     25 years, I am writing to voice my support for an amendment 
     to the venue provisions of Section 1408 of Title 28, United 
     States Code. As has been well documented, the concept of 
     ``forum shopping'' by significant Chapter 11 Debtors 
     throughout the country has become an art form over the last 
     few years. Certain jurisdictions now actively campaign to 
     attract large, high-profile bankruptcy cases to their venue. 
     It goes without saying that bankruptcy judges must become 
     ``Debtor friendly'' in order to maintain the attractiveness 
     of these venue options. Accordingly, decisions relating to 
     the allowance of professional fees, conflicts and other 
     critical bankruptcy issues have become disparate throughout 
     the country.
       An amendment to Section 1408, which limits the use of the 
     state of incorporation to those instances where the Debtors' 
     principal place of business or principal assets reside, will 
     promote uniformity as well as removing some of the perceived 
     inequities in the system. The public's perception of a fair 
     and uniform bankruptcy system is paramount.
       Thank you for your interest in this legislation.
           Very truly yours,
     Russell L. Munsch.
                                  ____



                                 Fulbright & Jaworski, L.L.P.,

                                 Houston, Texas, February 7, 2005.
     Re bankruptcy venue reform.

     Senator John Cornyn,
     Senate Hart Office Building, Washington, DC.
       Dear Senator Cornyn: I write you to express my strong 
     support for bankruptcy venue reform. By way of introduction, 
     I have been a partner in the bankruptcy section of Fulbright 
     & Jaworski since June 1, 2004. Prior to that, I served as a 
     United States Bankruptcy Judge in Houston for almost 17 
     years, resigning as Chief Judge a day before I joined 
     Fulbright.
       Over the many years of my judicial career, I watched as 
     many cases which should have been filed in Texas instead 
     found their way to the dockets of courts in Delaware, New 
     York, or some other distant jurisdiction. This migration of 
     large cases is not unique to Texas and it represents a 
     fundamental flaw in the perceived and actual fairness of the 
     bankruptcy system. The ``little people'' (small creditors, 
     former employees, etc.) in a large bankruptcy case are at 
     once the most vulnerable economically and the parties least 
     capable of participating in a distant forum.
       I firmly feel the integrity of today's bankruptcy system 
     requires that the rights of all involved be protected and 
     that fair access to court be ensured. Bankruptcy venue reform 
     would be a tremendous step toward rectifying these problems.
       The opinions expressed in this letter are my own and not 
     those of Fulbright & Jaworski or its clients. I appreciate 
     your consideration of my concerns. If you should have any 
     questions or need additional information or assistance from 
     me, please do not hesitate to contact me.
           Sincerely,
     William Greendyke.
                                  ____

                                                 January 31, 2005.
     Senator John Cornyn,
     Senate Hart Office Building,
     Washington, DC.
       Dear Senator Cornyn: On behalf of the National Association 
     of Credit Management (NACM), I am writing to express the 
     support of NACM National Board of Directors and the NACM 
     membership for the Venue in Bankruptcy Cases bill scheduled 
     to be introduced by Senator Cornyn. This important 
     legislation would provide enormous relief to the thousands of 
     business creditors, and most importantly to small business 
     creditors whose interests are routinely impaired by a 
     bankruptcy process that is long-overdue for change.
       NACM is a 22,000-member trade association, representing the 
     interests of corporate (commercial) credit executives. NACM 
     was founded in 1896 and represents both American business 
     credit professionals in all 50 states as well as business 
     credit executives in more than 30 countries worldwide. NACM's 
     mission is to ensure the constant improvement and enhancement 
     of the business trade credit profession and process.
       NACM's membership comprises all types of businesses: 
     manufacturers, wholesalers, service industries, and financial 
     institutions. NACM's members range in size from small 
     businesses to a majority of the Fortune 500. NACM members 
     make the daily decisions to extend unsecured, business and 
     trade credit from one company to another. NACM members--the 
     business credit executive--approve and provide billions of 
     dollars each day in business and trade credit, which fuels 
     this country's business economy.
       This bill would provide much needed relief to businesses 
     and--perhaps even more importantly--to small businesses. This 
     bill would provide relief to the current practice of 
     requesting a transfer of venue, which is both expensive and 
     time consuming to both the debtor's estate and to creditors. 
     Additionally, this bill would address any abuse that 
     currently exists in the Code that encourages ``shopping'' 
     cases into a ``friendly forum''.
       Our membership stands ready to provide whatever level of 
     support is needed to advance this important legislation. As 
     the national organization representing the decision makers 
     within the American economic model who drive commerce, we 
     hope you will ensure that Congressional leadership will take 
     action on this bill as expeditiously as possible.
       We must provide immediate relief to the small business that 
     simply cannot afford to wait any longer for bankruptcy reform 
     from Congress.
       Thank you for your consideration of our comments and please 
     let us know what we can do to assist you in advancing this 
     legislation.
           Sincerely yours,
                                             Robin Schausell, CAE,
                                                        President.
                                 ______