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The increase of big corporations filing bankruptcy reorganization cases in either Delaware or New York, no matter where the headquarters are, has rekindled allegations that a forum-shopping war between the states includes bankruptcy judges engaging in unseemly competition for cases.

“There is a legitimate question, if it is corrupt competition,” says UCLA law professor Lynn LoPucki. His recently released book makes the same controversial assertion, and that has the bankruptcy bar steamed.

It has become so common for big corporations to file bankruptcy reorganization cases in either Delaware or New York, no matter where the headquarters are, that many consider the states de facto victors in wooing big cases.

“Delaware went from no forum shopping during the entire decade of the 1980s to having 87 percent of the [large cases] by 1996,” said Lynn LoPucki, a professor at the University of California at Los Angeles School of Law.

New York gained ground with the bankruptcy filing by Houston-based Enron Corp. in 2002, followed quickly by WorldCom Inc., Adelphia Communications Corp. and others. About 60 percent of recent big corporate bankruptcies have been filed outside the firms’ hometown headquarters, according to LoPucki’s figures.

“It is a billion-dollar-a-year industry and judges are competing for this,” said LoPucki, adding, “[t]here is a legitimate question, if it is corrupt competition.”

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.

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