Why Texas Is Becoming the New Hotspot for Corporate Bankruptcies
- The Spencer Law Firm
- Oct 10
- 6 min read
Texas, especially the Southern District (Houston), has rapidly become a top choice for large corporate bankruptcies. Companies are structuring minimal “local ties” to file there, drawn by experienced judges, efficient dockets, and predictable rulings once reserved for Delaware.
At a Glance
Houston’s bankruptcy court now rivals Delaware in major filings.
Companies often create limited operations in Texas to qualify.
Judges’ expertise and speed attract large Chapter 11 cases.
Risks include potential scrutiny of “venue shopping.”
Texas could shape the next decade of corporate restructuring law.
Why Companies Are Choosing Houston for Restructuring
Over the past few years, Houston’s bankruptcy bench has built a reputation for speed, consistency, and business-savvy decisions. Bloomberg Law reports that companies from across the U.S., including energy, retail, and healthcare sectors, now prefer Texas over traditional venues like Delaware or New York. Judges in the Southern District of Texas (SDTX) are praised for their pragmatic approach and deep understanding of complex reorganizations. Large firms view the Houston court as efficient, fair, and less congested—critical factors in high-stakes corporate turnarounds.
A Jurisdiction on the Rise: The Rise of Texas in Corporate Bankruptcy Law
In the world of corporate restructuring, venue matters, and Texas is fast becoming the preferred jurisdiction for big business bankruptcies. Once dominated by Delaware and the Southern District of New York, the landscape is shifting as major companies now flock to the Southern District of Texas (SDTX), particularly Houston, to file Chapter 11 cases.
This trend isn't accidental. Legal strategy, venue flexibility, and judicial reputation all play a role. Whether you're a corporate attorney, financial advisor, or restructuring expert, understanding why Texas is now a bankruptcy venue hotspot is essential for staying competitive in 2025 and beyond.
For decades, Delaware was the undisputed leader in corporate bankruptcy law. It offered predictability, seasoned judges, and a reputation for striking a balance between business pragmatism and legal rigor. But in recent years, a new powerhouse has emerged: Texas, specifically the Southern District of Texas (SDTX), anchored in Houston.
In an unexpected twist, companies from across the U.S. are crafting “local ties”, sometimes minimal, to qualify for filing in Houston. Energy companies, retailers, and even tech firms are now opting for SDTX over traditional venues, signaling a remarkable legal and economic shift.
A Historical Overview of Bankruptcy Venues: From Delaware to Texas
Why Delaware Dominated Corporate Restructuring for Decades
Delaware’s dominance stemmed from its deep corporate roots. Most U.S. companies are incorporated there, providing a natural nexus for bankruptcy filings. Over time, Delaware’s bankruptcy judges gained a reputation for sophisticated, efficient case management, a key factor in attracting corporate debtors seeking predictability.
How Texas Stepped Onto the National Stage
Houston’s rise began around 2016, fueled by the energy sector downturn. As oil and gas companies flooded into bankruptcy, Texas courts gained experience handling large, complex restructurings. Judges like David R. Jones and Marvin Isgur built a streamlined process that favored quick resolutions and practical solutions—qualities corporate boards crave.
The Shift: How Texas Overtook Delaware in Some Cases
For decades, Delaware was the go-to venue for Chapter 11 filings, especially for companies incorporated there. But recent years have seen a measurable pivot toward Texas. According to Bloomberg Law (2024), the Southern District of Texas handled more large corporate bankruptcies than Delaware in certain quarters.
This is not due to an influx of local businesses in distress. Rather, companies are structuring minimal local ties to gain access to SDTX courts, sometimes establishing nominal offices or subsidiaries in Houston just to qualify for venue.
Why the Shift?
Speed and predictability of rulings
Judicial expertise in complex restructurings
Well-developed local rules and standing orders
Favorable perception among creditors and debtors alike
Why Companies Are Choosing Houston for Bankruptcy Filings
Why Companies Are Choosing Houston for Restructuring
Speed, Efficiency, and Judicial Expertise
Corporations crave fast, predictable restructurings that minimize public fallout and preserve liquidity. Houston delivers just that. The SDTX’s modern docket management and reputation for fairness make it especially appealing to Fortune 500 and energy sector firms.
Creditor Confidence and Transparency
The court’s approach isn’t just debtor-friendly—it balances creditor interests with transparent oversight. This balance has helped build credibility that extends far beyond Texas borders.
High-Profile Precedents that Set the Tone
Major cases like J.C. Penney, Neiman Marcus, and Diamond Offshore Drilling cemented Houston’s reputation as a go-to jurisdiction. These high-stakes filings signaled to the corporate world that Texas is not just open for business—it’s open for restructuring.
Experienced Judges with Pro-Debtor Reputations
SDTX judges like Judge David R. Jones (retired in 2023) and Judge Marvin Isgur have cultivated a national reputation for handling high-stakes bankruptcies efficiently and equitably. Their willingness to entertain prepackaged and pre-negotiated bankruptcies has drawn interest from large corporations.
Venue Flexibility for Out-of-State Companies
Under U.S. bankruptcy law, a company can file in a district where it has:
Its principal place of business
A domicile (typically incorporation)
Assets or affiliates
By creating a subsidiary or acquiring minor assets in Texas, many out-of-state firms meet the threshold for filing in SDTX, even if their operations are based elsewhere.
Speedy Dockets and Predictable Procedures
Houston courts are known for moving quickly and having well-published procedures that streamline the filing and hearing process. This predictability reduces legal costs and uncertainty—a major incentive in time-sensitive restructurings.
Case Examples: Who’s Filing in Texas?
Recent high-profile Chapter 11 filings in SDTX include:
Chesapeake Energy (Oklahoma-based)
Neiman Marcus (Dallas-based)
JCPenney (Texas-based, but also filed to leverage favorable venue dynamics)
Avaya (New Jersey headquarters, filed in SDTX)
Many of these companies used Texas strategically—not just for local proximity but for favorable procedural outcomes.
Risks and Opportunities of the Texas Bankruptcy Strategy
Opportunities
More debtor-friendly procedures
Potential for faster resolution
Experienced judges familiar with complex capital structures
Venue certainty for repeat players (law firms, financial advisors)
Risks
Perception of venue shopping can erode public trust or invite pushback from stakeholders
SDTX has recently faced scrutiny and judicial ethics reviews, especially after Judge Jones' undisclosed romantic relationship with an attorney involved in multiple cases (Wall Street Journal, 2023)
Future legislative changes could curb aggressive venue tactics
What Out-of-State Firms Should Know Before Filing in SDTX
Establishing a Venue Link Is Essential
A token office, small asset transfer, or affiliate may suffice, but it must be legitimate.
Local Counsel Is Often Required
SDTX courts may require filings through local attorneys or co-counsel to navigate local rules.
Be Prepared for Procedural Scrutiny
Recent high-profile filings have led to greater media and stakeholder attention.
Use Prepackaged Plans When Possible
Courts in Houston are more receptive to negotiated resolutions than to contentious litigation.
How This Affects the National Bankruptcy Landscape
The rise of Texas as a bankruptcy venue is more than a procedural shift; it reflects deeper trends in forum shopping, legal strategy, and regional economic power.
Implications:
Delaware’s dominance is being challenged, though not eliminated
Bankruptcy law firms are opening Houston offices to stay competitive
Texas is now a player in national restructuring conversations, not just oil & gas
Expect more filings in SDTX across tech, retail, energy, and manufacturing in the years ahead.
FAQs About the Texas Bankruptcy Venue Trend
Q- Is Texas replacing Delaware for bankruptcy filings?
Not entirely, but Houston is now a serious contender. In some quarters, it has surpassed Delaware in total case volume.
Q- Why do companies prefer Houston’s bankruptcy court?
Efficient judges, consistent rulings, and a strong legal infrastructure make Houston appealing for complex reorganizations.
Q- Can a company file in Texas without being based there?
Yes, but it must establish legitimate local ties, such as an affiliate entity or operations within the district.
Q- What risks come with choosing Texas for bankruptcy?
Potential venue disputes, scrutiny over local connections, and possible legislative tightening on
Q- Is filing in Houston cheaper than in Delaware?
Generally, yes, due to lower administrative costs and faster resolutions, though case complexity can affect total expense.
Conclusion: Texas Is Now on the Bankruptcy Map
Texas, especially Houston’s Southern District, has rewritten the map of U.S. bankruptcy practice. What began as an energy-sector niche has blossomed into a national model of judicial efficiency and business pragmatism.
The Southern District of Texas is no longer just a regional court; it’s a national restructuring venue with increasing influence. For law firms, financial advisors, and distressed companies, understanding the risks, benefits, and logistics of filing in Texas is not optional. It’s essential.
Expect this trend to continue into 2026, especially if Congress doesn’t limit venue flexibility. Whether you're preparing a Chapter 11 plan or advising a distressed company, Texas should be on your radar.
As long as its courts maintain transparency and integrity, Texas will continue to attract corporations seeking clarity amid crisis, making it not just a hotspot but a cornerstone of America’s restructuring landscape.
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Last updated: October 7, 2025
Author: Ashley Spencer, Business lawyer and Legal Content Strategist
Reviewed by: Bonnie Spencer, Esq. – Texas Bankruptcy Attorney, 30+ years experience
Disclaimer: This article is provided for informational and educational purposes only. It does not constitute legal, financial, medical, or professional advice. Laws and regulations change frequently, and the information may not reflect the most current developments. Reading this content does not create an attorney–client relationship.
While every effort is made to ensure accuracy and timeliness, the author and publisher make no warranties regarding the completeness or reliability of the information provided. The author and publisher disclaim any liability for actions taken or not taken based on this article.
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