Purdue Bankruptcy Spurs Forum Shopper Pushback in N.Y., Congress

A push to prevent large corporations’ bankruptcy venue shopping is gaining momentum in the wake of public outcry over Purdue Pharma LP’s Chapter 11 case.

The U.S. Bankruptcy Court for the Southern District of New York—which heard the OxyContin manufacturer’s case—last month issued a new rule to assign its judges randomly to bankruptcy filings, an effort aimed at curbing forum shopping. It follows introduction of federal legislation on bankruptcy forum shopping that gained the backing of 43 state attorneys general, and a House Judiciary Committee hearing earlier in the year.

Bankruptcy law gives corporate debtors wide latitude to pick the ...