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October 10, 2007

More on Big Case Forum Shopping

The Los Angeles Daily Journal yesterday had a front page article entitled "Bankruptcy Companies Turn to East Coast Courts."  It and a companion article discuss the recent bankruptcy filing of "Northern California logging giant Pacific Lumber Co."  The cause of its financial troubles according to Pacific Lumber was California's environmental restrictions.  Lots of litigation was pending in California. 

The chapter 11 was filed in the Southern District of Texas.  I'll bet you're asking, "Why Southern Texas?"  That is the location of a subsidiary of Pacific Lumber which filed first.  Of course the subsidiary was formed about six months before the filing and occupied a $500 a month office in Corpus Christi.  When creditors filed the motion to transfer the case to Oakland where it belonged, Judge Richard S. Schmidt, the sole bankruptcy judge in the district, denied the motion.  In fairness to him, he also granted relief to allow significant litigation to proceed in California saying that "It is unlikely that the bankruptcy court will be deciding the significant environmental and regulatory issues facing Pacific Lumber."      

October 10, 2007 in Current Affairs | Permalink

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