Federal Judicial Conference Bankruptcy Committee Issues Guidelines Targeting Houston Complex Panel Chapter 11 Assignment Procedure to Deter ‘Judge-Shopping’ by Debtors

Relevant Documents:
Committee Guidance Memorandum
Judge Isgur Response

On Aug. 21 the Committee on the Administration of the Bankruptcy System of the U.S. Judicial Conference issued guidelines recommending that U.S. bankruptcy courts “avoid establishing a panel or designating a group of judges for the purpose of assigning chapter 11 and chapter 15 cases, or any subset of such cases,” to deter “judge-shopping” by debtor’s counsel.

The guidance takes aim at “complex panels” of specific local judges to whom all large chapter 11 cases are assigned, including the two-judge panel of Judge Christopher Lopez and Judge Alfredo Perez that presides over all large cases filed in the Southern District of Texas. Although the guidance does not specifically mention the Houston complex panel, the Judicial Conference’s official policy is now to discourage the Houston case assignment arrangement, and in a response letter Judge Marvin Isgur claims the guidance is “primarily directed at the Southern District of Texas.”

The committee guidance was originally reported on by The Wall Street Journal.

The Judicial Conference is a statutory body composed of the chief justice of the United States, the chief judge of each circuit court of appeals, the chief judge of the Court of International Trade and a district judge from each judicial circuit. The Judicial Conference is charged with considering “administrative and policy issues affecting the federal court system,” issuing policy recommendations and proposing related legislation to Congress.

The Judicial Conference takes recommendations from various committees, including the Bankruptcy System Committee.

According to the Bankruptcy System Committee, the new anti-complex panel guidance “does not impair a bankruptcy court’s statutory authority and discretion to divide the business of the court” but “explains how bankruptcy courts should develop or modify their case assignment practices to align with the policy of random case assignment” and align such practices “with Judicial Conference policy.”

Octus First Day data suggests that approximately 85% of all chapter 11 filings involving more than $1 billion in debt in the first half of 2025 were filed in either Houston, Delaware or the Southern District of New York, with Houston accounting for approximately 40%. Neither Delaware nor the Southern District of New York uses a complex panel for large chapter 11 assignments.

If the Southern District of Texas were to abandon the complex panel, then the court would have two well-developed alternatives: either chapter 11 cases filed in the district would be assigned to one of the five bankruptcy judges (Judge Lopez, Judge Perez, former complex panel member Judge Marvin Isgur, Judge Jeffrey P. Norman or Judge Eduardo V. Rodriguez) based on the local courthouse division where the case was filed (such as Houston or Corpus Christi), or all large chapter 11 cases could be randomly assigned to any judge in the district.

In November 2021, the Southern District of New York adopted the latter approach. In that district, cases involving assets or liabilities greater than $100 million are randomly assigned to any of the 10 bankruptcy judges in the district, whatever local division the case was filed in.

Prior to 2021, the Southern District of New York followed the former approach, assigning large chapter 11 cases to the judge or judges in the division where they were filed. This allowed debtors to select Judge Robert Drain as their bankruptcy judge by filing in the White Plains division, where he was the sole bankruptcy judge.

In his Aug. 25 letter to the Bankruptcy Committee responding to the new guidance, Judge Isgur defends the complex panel arrangement. “My personal view is that we should not have just two or three venues that predominate for large chapter 11 cases,” Judge Isgur says, but the solution is “legislative change that would create a mandatory dispersion of cases to bankruptcy judges around the United States,” not elimination of complex panels. Judge Isgur posted the letter on the court’s website.

Over the last five years, legislators in Congress have repeatedly introduced bipartisan bankruptcy venue reform legislation that would require debtors to file in the district where they have their principal place of business and eliminate venue workarounds, including forming new entities in Houston or “relocating” to Houston-area mailboxes to get their case assigned to one of the two judges on the complex panel. Those efforts have all died in committee.

Judge Isgur notes that prior to the creation of the complex panel in 2018, the Southern District of Texas, like the Southern District of New York, assigned chapter 11 cases to the judge in the local division where the case was filed. According to Judge Isgur, returning to that system would actually make it easier for debtors to choose their judge by filing in a division where only one judge sits – for example, a debtor could file in Victoria, Texas, to secure Judge Lopez, similar to the pre-2021 White Plains venue maneuver.

Adopting the newer Southern District of New York approach – random assignment of chapter 11 cases to any judge in the district – is not feasible in the Southern District of Texas because of the size of the district, Judge Isgur continues. Judge Isgur points out that under this system, “lawyers and business owners in Laredo would have to travel 350 miles to have a hearing if the case is assigned to a Houston Judge,” and a Brownsville business owner “would also have to drive 350 miles.”

“80% of our judges have their home offices in Houston, so 80% of all chapter 11 divisional litigants would be required to travel long distances,” Judge Isgur adds. “Additionally, 20% of the cases filed in Houston would be assigned to a judge who offices in McAllen,” meaning those debtors and their lawyers “would be required to trek 350 miles to McAllen for their hearings.”

Judge Isgur also defends the procedure for assignment of cases between the two complex panel members – an issue that has arisen in the wake of former complex panel member judge David R. Jones’ resignation in October 2023. Evidence elicited in litigation over Jones’ handling of cases has suggested that Jones actively manipulated case assignments, with certain debtors able to secure Jones to handle their cases rather than Isgur.

According to Judge Isgur, Houston complex panel cases are now assigned to either Judge Lopez or Judge Perez by a random-number generator, assuring “that no judge has a greater than 50% probability of being assigned a particular case.”

Finally, Judge Isgur defends the two judges currently sitting on the complex panel and suggests the new guidance is an insult to them personally. “I have had the honor of observing Judge Lopez’s and Judge Perez’s integrity, devotion and excellence in handling these cases,” and “I have no intention of allowing their integrity to be challenged by ill-considered guidance,” Judge Isgur says.