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ANALYSIS: S.D. Tex. Emerges as Top Bankruptcy Litigation Venue (1)

March 8, 2022, 10:00 AM

In a recent analysis of the three Chapter 11 megacase magnet bankruptcy courts, I observed that the Southern District of Texas (S.D. Tex.) cemented its place as a favored venue for filing large cases, that Delaware maintained its top status, and that the Southern District of New York (S.D.N.Y.) was declining in popularity.

Adversary proceeding caseloads are closely mirroring those same patterns, based on statistics produced by the United States Courts. This was the first year that S.D. Tex. outpaced Delaware and all other bankruptcy courts for adversary proceedings filed, further establishing it as a preeminent bankruptcy destination.

Adversary proceedings are lawsuits filed in bankruptcy court. They are given their own case number, but are always associated with an ongoing bankruptcy case. Unlike main bankruptcy cases, adversary proceedings are similar to federal lawsuits. Typically, debtors or trustees file these actions with the purpose of accumulating more assets for the estate, resulting in a greater distribution to creditors.

Adversary proceeding filing data in the top three megacase jurisdictions reflect overall trends in Chapter 11 cases (although it should be noted that this data covers adversary proceedings associated with cases under any filing chapter). In 2021, S.D. Tex. had the highest number of adversary proceedings filed (1,475), slightly beating Delaware (1,451) for first place. S.D.N.Y. fell to a distant third place among the megacase magnet courts in 2021, with 384 cases.

S.D.N.Y. was only in eighth place among all bankruptcy courts for 2021 adversary filings, behind the Middle District of Florida (773), the Central District of California (649), the District of New Jersey (538), the Southern District of Florida (416), and the Eastern District of Michigan (389).

Due to the overall drop in Chapter 11 cases, we will likely see a corresponding drop in totals for adversary proceeding filings in 2022, with S.D. Tex. maintaining its position at the top.

(Updated the fourth paragraph to clarify that S.D.N.Y.'s total was third among the three megacase courts, not third among all U.S. federal district courts; and added a fifth paragraph to identify the courts that had higher totals than S.D.N.Y.)

Adversary proceeding data can also be found through Bloomberg Law Bankruptcy Dockets. Resources for understanding bankruptcy litigation can be found in the Bankruptcy Fundamentals Toolkit. Resources for understanding Chapter 11 are available in our Practical Guidance: Voluntary Chapter 11 suite.

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