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Texas backs change in bankruptcy law

Feb. 9, 2005 at 2:22 PM   |   Comments

AUSTIN, Texas, Feb. 9 (UPI) -- The Texas attorney general Wednesday backed legislation that would stop corporations such as Enron from filing for bankruptcy far from their headquarters.

Texas Attorney General Greg Abbott supports the bill filed by Sen. John Cornyn, R-Texas. The Fairness in Bankruptcy Litigation Act would require corporations to make the filing where their principal place of business is located.

"Infamous bankruptcy filings like Enron's underscore the need for corporations to do the tough work of reorganizing in their home states -- not in far-flung locations where most people can't afford to participate," Abbott said.

The Cornyn bill would stop "forum shopping," a common practice in which corporations file bankruptcy in courts far from the scrutiny of home communities, he said.

Enron had 7,500 employees in its Houston headquarters, but filed for bankruptcy in New York where it had a small, 57-employee subsidiary. The Texas attorney general unsuccessfully tried to get the case sent back to Texas.

© 2005 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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