When a debtor decides to file a petition for bankruptcy, one decision to make is in what court, or what jurisdiction to file. However, the debtor’s choice of where to file is not always indisputable. Once a case is filed in a particular court, any “party in interest” may bring a motion seeking to change the venue of the case to an alternate court. Additionally, a court, on its own motion, may transfer a case to an alternate venue. The three statutory provisions that govern transfers of venue are Bankruptcy Rule 1014 (“Rule 1014”), 28 U.S.C. § 1408 (“Section 1408”), and 28 U.S.C. § 1412 (the substantive equivalent of Rule 1014).
This article primarily discusses Rule 1014, however, it is important to note that Section 1408 provides the criteria for what constitutes proper venue. These considerations include the debtors’ and creditors’ domicile, residence, principal place of business, and principal assets. However, the statutory interpretation of Rule 1014(a)(2) is what will be focused on in this article.
Rule 1014(a)(2) states in pertinent part, “[i]f a petition is filed in an improper district, the court, on timely motion of a party in interest or on its own motion . . . may dismiss the case or transfer it to any other district if the court determines that transfer is in the interest of justice or convenience of the parties.” The language of this provision poses two issues: (1) What discretion does a bankruptcy court have to retain a case filed in an improper venue; and (2) what constitutes in the interest of justice and convenience to the parties?
The majority of courts have held that a bankruptcy court does not have discretion to retain jurisdiction over an improperly venued case upon a timely-filed objection. Furthermore, when determining what constitutes the interest of justice and convenience of the parties under Rule 1014, courts will consider several practical and equitable factors.
This article explores how courts have interpreted Rule 1014 in a twofold approach. Part I discusses whether a court has the discretion to retain a case even if it was filed in the improper venue. Part II examines what constitutes “in the interest of justice and convenience of the parties” under Rule 1014.