Texas’ Success in Luring Companies Now Extends to Bankruptcies

Texas has become the nation’s hottest forum for large corporate bankruptcies, with Dallas and Houston together wrangling more cases than even Delaware, the longstanding champion of bankruptcy venues.

The trend is years in the making. The heavyweight Southern District of Texas and up-and-comer Northern District of Texas are capturing big bankruptcies by offering seasoned benches with Big Law credentials, as well as the “predictability” that attorneys crave in how cases are handled and assigned.

For restructuring professionals and their clients, Texas feels like “one integrated market,” said Nick Montgomery, BankruptcyData’s director of research.

Debtors believe they are likely to get a judge in Texas with whom they are familiar, said Laura Bartell, a law professor at Wayne State University in Detroit said via email. Attorneys for the debtors may be based in Texas, and the companies often have operations there as well, she said.

Judge shopping may be a factor, she added.

The uptick in Texas bankruptcy cases coincides with the Lone Star State’s effort to lure new businesses after creating a specialized business court to rival Delaware’s, with the number of new Texas businesses nearly doubling in the last 10 years.

While Delaware still attracts big Chapter 11s, data shows that more than ever businesses are choosing Texas for their restructuring and wind-down processes.

“Success breeds success—the more bankruptcies that are successfully handled by the judges there, the more likely a future debtor will be drawn to those districts because they can predict what the court will do based on past practice,” Bartell said. “Especially on attorneys’ fees.”

Dallas Surge, Houston Comeback

Together, Dallas and Houston so far this year have drawn 33 bankruptcies with assets of more than $100 million, versus Delaware with 25, according to BankruptcyData. This time last year, Texas had 18 cases and Delaware had 43.

Recent large filings for the Dallas district include Omnicare LLC, Tricolor Holdings LLC, and Genesis Healthcare Inc.

The Southern District of Texas, centered in Houston, has continued its rebound after a lull in early 2024 when filings dropped 65%.

That dip followed the resignation of bankruptcy judge David R. Jones, who left after admitting to a romantic relationship with a local attorney. Under Jones, big-dollar Houston bankruptcies exploded.

The slump ending coincides with the July 2024 appointment of retired Weil, Gotshal & Manges LLP partner Alfredo R. Pérez to fill Jones’ judicial seat.

With Pérez “hitting his stride and restoring confidence and speed,” Montgomery said, the district has logged at least 20 large cases through Sept. 24.

“As the fallout settled and SDTX re-established confidence with Pérez up and running, the aggregate looks stronger than ever for Texas,” Montgomery said.

Dallas and Houston both have rules governing large Chapter 11 cases that are intended to give lawyers predictability in which judges may handle their cases. Detractors of the rules say they encourage venue and judge shopping.

New Jersey bankruptcy Judge Michael Kaplan said in an email that predictability is key.

“Attorneys place their reputations and practices on the line when they make recommendations to their clients as to venue; as a result, predictability, based on prior rulings, precedent and experience is critical in making venue decisions,” Kaplan said.

Texas v. Delaware

The Northern District of Texas, touting nine cases with assets of more than $100 million this year, has overtaken New Jersey with five, and New York with seven, according to stats from BankruptcyData.

New Jersey has cooled after a burst of activity between 2021 and 2024. Kaplan said he welcomes broader geographic diversity in filings, even as he would like to see more big filings in his district.

“For twenty plus years, many academics, pundits, and a handful of judges have fretted about the percentage of cases being filed in only two venues—Delaware and SDNY,” Kaplan said. “Well, the list of Courts with such complex filings has grown and continues to do so. That’s a positive development.”

As a single court district, Delaware still leads, accounting for 40% of large filings in the last year and 36% in the first half of 2025. But Montgomery noted it saw a sharp decrease year over year.

Houston recently attracted auto supplier First Brands Group Holdings and teaching and learning business Anthology, helping bump Texas as a whole ahead of Delaware in big filings, Montgomery said.

“The Texas resurgence looks to be coming at Delaware’s expense,” he said.

The Dallas and Forth Worth courts also tout benches that ensure staff accessibility, Holland N. O’Neil, a Foley & Lardner LLP restructuring partner, said. The Fifth Circuit’s “conservative and business-friendly” jurisprudence also makes it attractive, she said.

“It is notable that each judge was a well-known and well-respected bankruptcy practitioner prior to going on the bench,” O’Neil said.

Montgomery said the Houston and Dallas courts together have “greater bandwidth and flexibility amongst a larger, but qualitatively outstanding pool of judges.”

“That math tells the story: the combined Texas gain roughly offsets Delaware’s slide, with the rest of the national map treading water,” he said.

Busier Bench

Chief Judge Stacey Jernigan of the US Bankruptcy Court for the Northern District of Texas said in an interview that Texas’ shorter court closures during the Covid-19 pandemic and the US Supreme Court’s 2024 Purdue Pharma decision prohibiting third-party, nonconsensual litigation releases nationwide could also be factors in the state’s growth in bankruptcy filings.

The Fifth Circuit had already prohibited such releases, so the high court’s opinion may have leveled the playing field with circuits that allowed them before Purdue.

And while it’s possible the Houston scandal shifted cases north, Jernigan said she didn’t know for sure.

Whatever the reason, Jernigan said as the bar gets more familiar with the bench, they’ll feel more comfortable in predicting what can and can’t happen on a case.

“We certainly are ready for continued growth,” Jernigan said.