Bankruptcy

Bankruptcy and Mass Torts

Bankruptcy begins with the filing of the petition in the district court where the debtor has had its domicile, residence, principal place of business in the United States, or principal assets in the United States for the longest period of the preceding one-hundred-eight-day period.[1]

Most mass tort bankruptcies come in two varieties: Chapter 7 liquidations and Chapter 11 reorganizations.[2] In both Chapter 7 and Chapter 11 cases, a trustee is appointed, although their roles vary. For example, in a Chapter 7, the trustee is the possessor of the bankruptcy estate’s assets, whereas the norm in Chapter 11 proceedings is the “debtor-in-possession”—the debtor continues to operate its day-to-day business.

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[1]           28 U.S.C. § 1408(1).

[2]           And rarely, Chapter 11 liquidations. Ancillary proceedings for foreign bankruptcies under Chapter 15 are much less common, but not unheard of.