Bankruptcy Court Surprises Observers and Transfers Venue of Patriot Coal Chapter 11 Cases to Missouri

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In an important opinion released on November 27, 2012, Judge Shelley C. Chapman of the United States Bankruptcy Court for the Southern District of New York transferred the Patriot Coal Corporation (Patriot Coal) chapter 11 bankruptcy cases from the Southern District of New York to the Eastern District of Missouri. This decision comes as a surprise to many observers who had expected, based on prior failed attempts to change venue in Enron and other large cases filed in the Southern District of New York, that Judge Chapman would defer to the Debtor’s choice of venue. Perhaps even more surprising, the court transferred venue to the Eastern District of Missouri, where Patriot Coal maintains its corporate headquarters, instead of to the Southern District of West Virginia, as requested in motion filed by the United Mine Workers of America (UMWA) in its motion.

The opinion is significant for several reasons. First, it relies extensively on the “interest of justice” element in the venue transfer statute and finds that the interest of justice compels transfer even though administrative efficiency and convenience favored the New York venue. More broadly, this opinion may signal a more receptive attitude towards transfers of venue away from the Southern District of New York, at least where venue is created on the eve of bankruptcy and requests to transfer garner some support from economic parties in interest.

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Topics:  Chapter 11, Transfer of Venue

Published In: Bankruptcy Updates, Business Organization Updates, Civil Procedure Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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