The Guardian has an article about the dominance of Delaware and New York when it comes to large Chapter 11 cases.
The choice of judge and court is often seen as particularly important in bankruptcy cases where there are no juries and limited ability to appeal the decisions made by that judge. On top of that, the credit crisis has made it more difficult to get bankruptcy exit financing and the bankruptcy law reforms that took effect at the end of 2004 have pushed companies to get out of court sooner, making it crucial for lawyers to find judges used to handling complex cases. "If you’re going to do a pre-negotiated, or pre-packaged bankruptcy, you’ve got to go to an experienced court," said Roger Frankel,a bankruptcy attorney at the Orrick law firm in New York.
The article also mentions Chicago, and the reason it might have lost the opportunity for larger cases.
In 2000 a Chicago focus group looked into why nearby companies were filing cases in Delaware, and made recommendations about rule changes to the court, which it adopted. The court succeeded in attracting large company filings, such as United Airlines, National Steel, Conseco Inc and K-Mart. But an appeals court ruling in K-Mart restricting how certain trade vendors are paid, has scared many lawyers away from Chicago, Lubben said, illustrating how individual decisions can impact where cases are filed. Only two public company bankruptcy filings were made in Chicago in 2007, and just one so far in 2008, according to BankruptcyData.com
For a refresher on the debtor-unfriendly ruling in the K-Mart case by the Seventh Circuit Court of Appeals, click here and here.