PRINCIPAL ASSETS – BANKRUPTCY VENUE
INTRODUCTION TO VENUE
Federal bankruptcy court has rules where a bankruptcy case may be filed. In summary, here is the rule:
Thus, venue can be proper based on either: (1) Your residence, (2) Your domicile, (3) Your principal place of business, or (4) Your principal assets. Thus, in some cases there is more than one venue you can choose from.
for example, you could even reside
outside of the
Section 1408 provides that a district is proper venue if “principal assets” of the debtor are located in that district (11 U.S.C. §1408).
“Assets” are things that you own, such as real estate, furniture, cars, jewelry, computers, bank accounts, stocks, copyrights, etc.
“Principal” may be defined as that which is most important, consequential, or influential.“Principal” assets may be determined by the number assets in a location or the dollar value thereof, or a combination of both. Other factors may potentially be considered as well.
A debtor may, in certain circumstances, potentially have more than one appropriate venue choice based upon more than one principal asset (In re Ross, 312 B.R. 879,889 (Bankr. W.D.Tenn. 2004).
Venue is generally considered to be permissive. Permissive means that venue is considered ("presumed") proper wherever the case is filed.
But someone (for example, the bankruptcy trustee or a creditor) may object and seek to prove and convince the court that venue is improper. Of course, you or your attorney have an opportunity to argue that the selected venue is proper. The bankruptcy judge will make a decision based on the evidence presented.
Also, a creditor or other interested party may ask the bankruptcy court to have a bankruptcy case moved to another district for the convenience of the parties or in the interests of justice (i.e., "forum non conveniens"). Alternatively, the Court may dismiss the case, and allow the debtor to refile in another jurisdiction or district. Again, if this issue is raised and disputed, all interested parties will have an opportunity to be heard before a judge makes a decision.
Convenience Factors: Where is the debtor, creditors, witnesses and/or assets in relation to the court? Can the case be economically administered from the particular court? Will property be likely liquidated?).
Practically speaking, frequently, especially when an individual files a case, the venue issues are never raised or objected to. But, fighting a venue battle could turn into a difficult, costly and time-consuming matter; therefore, one should be careful and diligent (and seek legal advice) in selecting the proper venue, especially if venue is based on principal assets or any basis other than residency.
author of this article,
attorney, Matthew B. Tozer, practices bankruptcy law in the Central
California which primarily
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