Delaware, NY still attract biggest bankruptcies

The case was eventually transferred to the bankruptcy court in Jacksonville, Florida.

Others in the field have alleged that forum shopping gives judges incentives to compete against each other to attract the biggest cases.

UCLA law professor Lynn LoPucki, for example, argued in his 2005 book "Courting Failure" that judges have lowered standards to attract cases that can raise the profile and influence of their courts.

And in the past few years several courts have tried to make themselves more attractive to companies filing large bankruptcy 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 (UAUA.O), National Steel, Conseco Inc (CNO.N) and K-Mart (SHLD.O).

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.

"Delaware is still the favored jurisdiction, with New York running a close second and the only change in recent years has been the decline in Chicago," Lubben said. "Maybe the only way that could change would be if we had a significant upturn in bankruptcies so that Delaware became overburdened."

(Reporting by Emily Chasan, editing by Dave Zimmerman)