## Facts

- Patriot Coal Corp. and 98 affiliates filed Chapter 11 petitions in the Southern District of New York, and the cases were jointly administered.
- Patriot’s corporate headquarters and senior management were located in St. Louis, Missouri; it operated mining complexes primarily in Kentucky and West Virginia.
- Shortly before filing, two entities (PCX Enterprises, Inc. and Patriot Beaver Dam Holdings, LLC) were formed and arranged limited New York connections:
  - PCX opened a Manhattan bank account holding about $100,000.
  - PBD’s membership interest certificate was held in New York by counsel for a DIP agent.
- Other affiliated debtors relied on affiliate venue based on PCX and PBD.
- The United Mine Workers of America and certain sureties moved to transfer venue to the Southern District of West Virginia under 28 U.S.C. § 1412 and Bankruptcy Rule 1014, arguing that New York venue was engineered and that operational stakeholders were concentrated in coal-mining states.
- The debtors, major financial parties, and other constituencies opposed transfer from New York, emphasizing New York’s concentration of institutional lenders and experience with large Chapter 11 cases.

## Issues

1. Whether venue in the Southern District of New York was proper for at least one debtor under 28 U.S.C. § 1408, permitting affiliate venue for the remaining debtors.
2. Whether the cases should be transferred under 28 U.S.C. § 1412 in the interest of justice or for the convenience of the parties, and if so, to which district.

## Decision

- The court held venue in the Southern District of New York was proper under § 1408 based on PCX’s New York bank account and PBD’s New York-held membership certificate, allowing affiliate venue for related debtors.
- The court found the movants satisfied their burden under § 1412 to show transfer was warranted.
- The court ordered transfer of the jointly administered cases away from New York, but not to the Southern District of West Virginia.
- The court transferred the cases to the United States Bankruptcy Court for the Eastern District of Missouri, where the debtors’ headquarters and management were located.

## Legal Principles

- Under 28 U.S.C. § 1408, a debtor may file where it is domiciled, resides, has its principal place of business, has principal assets, or where an affiliate has properly filed; one properly venued affiliate can support venue for related debtors.
- Prepetition venue planning is not per se improper when statutory venue requirements are satisfied; objections are addressed through transfer analysis rather than invalidating venue.
- Under 28 U.S.C. § 1412, a court may transfer a bankruptcy case “in the interest of justice or for the convenience of the parties,” and the movant must prove transfer is warranted by a preponderance of the evidence.
- In applying § 1412, courts commonly weigh factors including proximity of creditors, assets, management, and material witnesses, efficient and economic estate administration, and ancillary administration considerations.
- A debtor’s forum choice is entitled to deference, but it can be overcome when the § 1412 factors clearly favor another district, including where the filing creates a significant appearance of forum shopping.

## Conclusion

Although New York venue was statutorily proper due to two affiliates’ New York-based assets, the court concluded that the interests of justice and party convenience favored litigating where the debtors’ management and operational decision-making were centered, ordering transfer of the Chapter 11 cases to the Eastern District of Missouri rather than to West Virginia.


In re Patriot Coal Corp., 482 B.R. 718 (Bankr. S.D.N.Y. 2012)