While frequent Jackson Walker co-counsel Kirkland & Ellis has shifted filings toward New Jersey and Delaware, other large firms continue to place major Chapter 11s in Houston.
Large Chapter 11 filings in the Southern District of Texas Bankruptcy Court have declined slightly in the year since the relationship between former U.S. Bankruptcy Judge David R. Jones and former Jackson Walker partner Elizabeth Freeman became public, according to a new report from Debtwire.
Since last October, 37% of debtors with more than $1 billion in funded debt, or "mega cases," have filed in Houston's two-judge complex bankruptcy panel, coming in below the five-year average of 47%. The jurisdiction received 19% of Chapter 11s with more than $100 million in funded debt during the same period, down from a five-year average of 26%.
Meanwhile, jurisdictions like New Jersey and Delaware have received slightly more large Chapter 11s. Delaware saw 46% of Chapter 11s with more than $100 million in funded debt over the past year, up from 40% on average between October 2018 and October 2023.
Some of the decline in large filings in the Southern District of Texas is tied to the apparent preference of Kirkland & Ellis to shift Chapter 11s to other jurisdictions. The firm frequently worked as local counsel for Kirkland in the district, including nine retentions in the first half of 2023.
Between 2018 and 2023, the firm placed at least 50% of its Chapter 11s with more than $100 million in funded debt in the Southern District of Texas, Debtwire data show. Since last October, Kirkland has placed just two large Chapter 11s in the jurisdiction, filing petitions for Vertex Energy Inc. and Digital Media Solutions Inc. in September.
Instead, jurisdictions like Delaware and New Jersey have benefited from Kirkland's change in preference, with Delaware receiving seven large Chapter 11s from Kirkland this year and New Jersey getting three.
However, the two-judge complex case panel that popularized the Southern District of Texas as a debtor-friendly venue remains in place. In July, retired Weil, Gotshal & Manges partner Alfredo R. Perez was appointed as U.S. Bankruptcy Judge for the Southern District of Texas, joining Judge Christopher Lopez on the panel and filling the spot vacated by Jones.
The Southern District of Texas saw at least 13 bankruptcy filings of companies with more than $100 million in liabilities in the first three quarters of 2024, according to data from BankruptcyData.com, including two debtor retentions for Kirkland, two for Latham & Watkins, two for Weil and two for White & Case.