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      American Bankruptcy Institute New York City Bankruptcy Conference Lynn M LoPucki Security Pacific Bank Professor of Law UCLA Law School       The Corruption Dynamic  Debtors can file anywhere they please “Case placers” select the court      Debtor’s executives   Example Kenneth Lay      Debtor’s lawyers        DIP lender; new contract partners Creditors shareholders employees old contracting parties have no say Courts that favor the case placers get the cases Courts change practices to compete         My argument  Debtors shop Courts compete Competition a  Changes substantive practices b  Abrogates statutory protections c  Destroys companies d  Reduces recoveries Delaware’s four new judges will make the situation worse       The Innocent list Better judges Quicker hearings Omnibus hearings Better PACER sites Convenience Circuit law    The Guilty list Higher professional fees No trustees Deference to “consensus” day prepacks Critical vendor orders Relaxed conflicts of interest Executive pay issues Third party releases Easy § sales No real estate tax sales   Debtors shop for substantive practices       Debtors shop for substantive practices  From the National Law Journal July “Steven H Case of New York’s Davis Polk and Wardwell readily admitted steering his clients to venues that will pay his going rate

Court shopping bankrupts U S system Lynn M LoPucki Sunday February SF Chronicle Submissions Yukos Oil Co one of Russia's largest publicly traded companies filed for bankruptcy in Houston For more than a year Yukos has been the target of a Vladimir Putin vendetta The Russian government claimed billion in taxes from Yukos and scheduled a sale of the company's most valuable assets in Russia to pay off the claim Yukos asked the Houston Bankruptcy Court to prohibit the Russian government from conducting the sale and prevent prospective buyers from participating in it Why is a Russian oil company filing bankruptcy in Houston? In court papers Yukos claims to have a place of business in Houston but the company isn't even in the Houston telephone directory Still the Houston Bankruptcy Court has taken jurisdiction and has already granted part of the relief requested The Houston court's injunction is the product of a competition among the leading U S Bankruptcy Courts for big cases The cases are an important industry generating billions of dollars annually in professional fees Most of those fees go to local bankruptcy lawyers and investment bankers who lobby for the appointment of judges who will keep the



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