By Tom Hals
WILMINGTON, Del., Feb 1 (Reuters) - The appointment of U.S.
Senator Chris Coons to head a key Senate subcommittee on
bankruptcy is likely to help maintain the federal bankruptcy
courts in Delaware and New York as the top venues for big
While critics have said that the bankruptcy courts in New
York and Delaware are too cozy with big corporations, Coons, a
Democrat from Delaware, has opposed any change.
A spokesman for Coons, Ian Koski, said on Friday that
bankruptcy courts in Delaware and New York have developed an
expertise in large corporate bankruptcies that "gives them the
best chance to get to the right outcome for everybody."
That expertise allows bankrupt businesses to salvage their
operations, avoiding a liquidation that costs jobs, Koski said.
Coons was approved on Thursday by the Senate Judiciary
Committee to head the Subcommittee on Bankruptcy and the Courts,
which has oversight of bankruptcy, court administration and
In 2011, a bipartisan bill was introduced in the House
Judiciary Committee to force companies to reorganize in the
federal district that hosted their main business or assets.
The bill was aimed at increasing the role played by smaller
creditors and employees in Chapter 11 cases. It was prompted in
part by Houston-based Enron Corp and Detroit-based General
Motors Corp, which both filed for bankruptcy in Manhattan. The
companies were able to establish venue by first putting a New
York subsidiary into bankruptcy - in the case of GM, it relied
upon a Harlem car dealer.
The bankruptcy court in Delaware has handled the
bankruptcies of the Los Angeles Dodgers baseball team, media
conglomerate Tribune Co and lender Washington Mutual Inc. None
had significant operations in Delaware but were able to file
there because it was the state of incorporation.
Although hearings were held on the 2011 bill, it did not
make it out of the committee. Coons said at the time that he
opposed the bill.
Restructuring advisers say they prefer the experienced
judges, speed and consistency of the New York and Delaware
One of the most vocal critics of the Delaware court, UCLA
Law School professor Lynn LoPucki, has argued the court has been
corrupted by its desire to remain dominant and is overly
favorable to debtors and their advisors.
Coons was elected in 2010. He defeated Republican Christine
O'Donnell in a special election to fill the seat left open when
Joe Biden became the U.S. vice president.
Delaware's bankruptcy lawyers are likely to welcome Coons
"We think he understands what Delaware has to offer and why
it's important," said Mark Minuti, a bankruptcy attorney with
Saul Ewing in Wilmington and vice president of the state bar's
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