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The bankruptcy code requires that a business must have its “domicile, residence, principal place of business or principal assets” where it files for bankruptcy according to a U.S. bankruptcy judge as reported by the New York Law Journal on June 26, 2012.
Houghton Mifflin Harcourt Publishing Co. has liabilities of $3.54 billion and assets of $2.68 billion—that means the publisher would owe $860 million to its creditors even if it used all of its assets to pay creditors. This debtor filed for bankruptcy in New York, where it has a “residence” and some business. The court-appointed bankruptcy trustee, however, said that the court did not have power in this particular bankruptcy because it is in New York. The use of a “residence” in deciding where to file bankruptcy is to be used for individuals, not corporations.
The judge ruled that the publisher, as per the trustee’s motion, will have to file bankruptcy in a district outside of New York, such as Massachusetts where the publisher has a presence. Houghton Mifflin will have to work out with its creditors and a court trustee to decide where the bankruptcy will move.
At the law offices of Jayson Lutzky, P.C., we are here to help you. If you are considering bankruptcy, you should contact a qualified attorney. We have helped thousands of clients over the past 29 years. To set up a free initial consultation call us at (800) 660-5299 or visit us on the web at www.BankruptcyNYC.com.