4 ms·

If you're not from the northeast, the fact that Delaware is the state of incorporation for so many companies is a huge pain point when bankruptcy is involved.

If you're not from the northeast, the fact that Delaware is the state of incorporation for so many companies is a huge pain point when bankruptcy is involved. For example, why should a company who exclusively does business within 200 miles of their headquarters be able to file bankruptcy thousands of miles away? Is that the justice intended by our court system? Any parties involved (suppliers, employees who are still owed money, and customers) must hire an attorney to represent their interests, and furthermore must hire local council in Delaware to be able to submit documents to the court.

nine_k 8y ago
Would you suggest that a company must operate close to where it's registered? How is it going to work with companies that operate across several states, and gradually focus on more on other states than the place of the original incorporation? Can they even close a branch in the state of the incorporation? How important the convenience of the bankruptcy process is compared to other processes related to a company?
- GavinMcG 8y ago
  Those are legitimate concerns, but they're distant and relatively specific ones compared to the widespread practice of incorporating where you aren't.
- SllX 8y ago
  Expensively. This came to mind while I was reading your comment and this is not a position I am actually advocating, but the law is malleable and reflects human will, it doesn't confine it. If you wanted to make such a scheme work, you could require a corporation incorporate in each and every State/Nation that they conduct their business in. You could slice this down to what it means exactly to do business in a State so every charge on a corporate credit card across State lines doesn't have to mean you suddenly do business in that State. If you wanted to close all the branches in the state of incorporation, you (as in the many legislatures, not you specifically) could setup a process of disincorporation and transfer of control to one of the subsidiaries. The law is not a stone tablet handed down from on high, it is, in a literal sense, whatever humans wish to make of it, and there are always processes for changing the laws to fit whatever position you're advocating. Now effective enforcement is another matter entirely, and without care and consideration, there will always be knock on effects. In this case, requiring incorporation in multiple jurisdictions would make the cost of doing business more expensive, and liable to expose corporations to increased liability.

nine_k 8y ago

Would you suggest that a company must operate close to where it's registered? How is it going to work with companies that operate across several states, and gradually focus on more on other states than the place of the original incorporation? Can they even close a branch in the state of the incorporation? How important the convenience of the bankruptcy process is compared to other processes related to a company?

GavinMcG 8y ago
Those are legitimate concerns, but they're distant and relatively specific ones compared to the widespread practice of incorporating where you aren't.
SllX 8y ago
Expensively. This came to mind while I was reading your comment and this is not a position I am actually advocating, but the law is malleable and reflects human will, it doesn't confine it. If you wanted to make such a scheme work, you could require a corporation incorporate in each and every State/Nation that they conduct their business in. You could slice this down to what it means exactly to do business in a State so every charge on a corporate credit card across State lines doesn't have to mean you suddenly do business in that State. If you wanted to close all the branches in the state of incorporation, you (as in the many legislatures, not you specifically) could setup a process of disincorporation and transfer of control to one of the subsidiaries. The law is not a stone tablet handed down from on high, it is, in a literal sense, whatever humans wish to make of it, and there are always processes for changing the laws to fit whatever position you're advocating. Now effective enforcement is another matter entirely, and without care and consideration, there will always be knock on effects. In this case, requiring incorporation in multiple jurisdictions would make the cost of doing business more expensive, and liable to expose corporations to increased liability.