Bankruptcy Court Aims to Be ‘More Hospitable’ to Bigger Cases

U.S. Bankruptcy Court sign on stone. | Image by Reptile8488

Dallas-based U.S Bankruptcy Court for the Northern District of Texas aims to update its policies to become hospitable to more prominent and complex cases.

A committee, made up of twenty restructuring lawyers from Dallas-Fort Worth and other areas, was set up by the Northern District bankruptcy judges. All twenty committee members were appointed by the judges and will now seek to evaluate the complex case rules and recommend changes if it becomes necessary.

Large companies can file for bankruptcy in any court of their choosing. Hence, updating procedures and rules to make the court more hospitable could attract those companies. The changes could also encourage local companies in distress to file in their locality where the judges are familiar with their operations.

Ian Peck, an attorney in the Dallas office of Haynes and Boone and a committee member, said the committee would present its rule revisions to the Northern District’s five bankruptcy court judges by the end of the year.

Business bankruptcy is expected to rise in a few months if companies don’t fix their problems caused by the pandemic. Many companies have been sustained by the congress-approved Paycheck Protection Program and the Federal Reserve’s Main Street Lending program, amongst others. As the U.S. economy opens back up, those companies are now expected to be self-sustainable. Otherwise, they would have to file for bankruptcy.

Peck said the committee’s goal is to “ensure that the Northern District of Texas remains on the cutting edge of addressing issues in the largest and most complex Chapter 11 cases.”

One of the changes considered by the committee is allowing some cases to be treated virtually. The committee is also considering the implementation of new standards for prepackaged or prenegotiated plans.

“Every jurisdiction wants to provide participants in the bankruptcy process with accessibility, predictability and, perhaps most importantly for large, complex cases, a sophisticated judiciary capable of handling thorny and unique issues,” Peck said. “The Northern District is no exception.”

All five of The Northern District’s judges have handled complex chapter 11 cases. The court also received high praise from independent sources for its handling of bankruptcy cases in 2020.

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