3 ms·

The issue in the bankruptcy example isn't that it's unfavorable to the company that's chosen to incorporate in Delaware (in which case, yes, they could choose o

The issue in the bankruptcy example isn't that it's unfavorable to the company that's chosen to incorporate in Delaware (in which case, yes, they could choose otherwise), but to its creditors who had no say in the decision. An Iowa creditor, to collect from a bankrupt company whose main place of business was also in Iowa, for arcane reasons of corporate law has to fly to Delaware and retain Delaware counsel, even though venue ought under any common-sense standard to be located in Iowa.

int_19h 9y ago
> but to its creditors who had no say in the decision One would argue that the creditors did have a say, in that they knowingly chose to extend credit to a company incorporated in Delaware. But overall, it feels like the real problem is that a company can be incorporated in one state, and have no actual business presence or interests in that state. Having a single focal point for lawsuits makes sense, since otherwise businesses (that can be very small) could potentially be dealing with the huge expenses of lawsuits in many different states over the same thing. And then the state of incorporation is an obvious choice. But why should other states allow such an obviously contrived setup for companies coming and doing business in their borders. (I'm sure there's some kind of convoluted constitutional explanation here as to why the states actually can't restrict this, because of the Commerce Clause etc. Still, though.)