On March 16, 2026, Judge Michael B. Kaplan of the U.S. Bankruptcy Court for the District of New Jersey issued a closely watched letter opinion denying motions by the U.S. Trustee and an ad hoc cross‑holder group to dismiss or transfer the chapter 11 cases of Multi‑Color Corporation and its affiliates. Although the court candidly acknowledged discomfort with the debtors’ venue planning—conducting what it called a “gut check” that “does not sit right”—Judge Kaplan nevertheless concluded that venue in New Jersey was proper under the plain language of the bankruptcy venue statute, 28 U.S.C. § 1408, and that neither dismissal nor transfer was warranted.
The opinion is significant not merely because venue was upheld, but because of how the court reached that conclusion. Judge Kaplan’s decision provides one of the most detailed recent analyses of “principal assets” venue, squarely addresses the role of recently opened bank accounts, and reinforces the judiciary’s reluctance to rewrite a venue statute that Congress has repeatedly chosen to leave broad.
Background: A Venue Fight at the Center of a Mega‑Case
Venue for all Multi‑Color debtors rested on the filing of one affiliate, MCC‑Norwood, LLC, a dormant Ohio entity that had ceased operations years earlier. In December 2025—approximately six weeks before the bankruptcy filing—MCC‑Norwood opened bank accounts at a New Jersey bank and funded them with roughly $1.05 million. The debtors relied on those accounts as MCC‑Norwood’s “principal assets” to establish venue in New Jersey.
The U.S. Trustee and the cross‑holder group challenged that strategy on multiple fronts. They argued that (i) MCC‑Norwood’s principal assets during the 180‑day lookback period were patents, intercompany balances, or insurance rights located elsewhere; (ii) bank accounts are intangible assets that should follow the debtor’s domicile; (iii) recently opened accounts should not count for venue; and (iv) MCC‑Norwood’s filing was in bad faith under the Third Circuit’s LTL Management decision.
Judge Kaplan rejected each of these arguments in turn.
The Statutory Framework: A Deliberately Broad Venue Statute
The opinion begins with a reminder that bankruptcy venue is governed by a statute Congress has intentionally drafted in broad, disjunctive terms. Section 1408 permits a debtor to file where its domicile, residence, principal place of business, or principal assets were located for the 180 days preceding the petition date (or for a longer portion of that period than in any other district). Congress has repeatedly considered—and rejected—efforts to narrow this framework, including proposals that would have excluded cash and recently transferred assets from the venue analysis.
Against that backdrop, Judge Kaplan emphasized that courts are not free to “close loopholes” or impose policy preferences where Congress has declined to do so. The question, therefore, was not whether the venue outcome felt comfortable, but whether it complied with the statute as written.
Time‑Based vs. Asset‑Based Approaches to “Principal Assets”
A central contribution of the opinion is its analysis of how courts should determine a debtor’s “principal assets” when assets change over the 180‑day lookback period.
The movants urged what the court described as a “time‑based approach”—identifying which asset was principal on each day of the lookback period and selecting the asset held for the longest time. Because MCC‑Norwood’s bank accounts existed for only 16 days, movants argued that other assets necessarily controlled venue.
Judge Kaplan rejected that framework and instead adopted an “asset‑based approach.” Under this approach, the court first identifies the debtor’s principal assets as of the petition date using a qualitative and quantitative analysis, and then determines where those assets were located for the longer portion of the lookback period. The court reasoned that this interpretation produces more logical results, aligns better with the functional administration of bankruptcy estates, and avoids absurd outcomes where venue would be fixed based on assets that no longer exist or no longer matter.
This holding is particularly important because the court acknowledged that neither the statute nor prior case law squarely resolves the issue—and expressly recognized that Congress has left courts with a “jump ball” on venue.
Bank Accounts as Principal Assets
Applying the asset‑based approach, Judge Kaplan concluded that MCC‑Norwood’s New Jersey bank accounts were its principal assets at the time of filing.
First, the court rejected the U.S. Trustee’s argument that bank accounts are intangible assets that follow the debtor’s domicile under the doctrine of mobilia sequuntur personam. Instead, the court aligned with other bankruptcy decisions holding that deposit accounts are located where they are opened, maintained, and controlled—here, at a New Jersey bank branch governed by New Jersey law.
Second, the court rejected the argument that recently opened accounts cannot count for venue. Section 1408 does not require assets to exist for the entire 180‑day period; it requires only that principal assets be located in the district for a longer portion of that period than in any other district. The statute imposes no longevity, operational, or business‑purpose requirement.
In short, the court declined to graft additional limitations onto the statute that Congress itself has repeatedly declined to enact.
Why Other Alleged Assets Did Not Defeat Venue
Judge Kaplan also carefully addressed—and rejected—each alternative asset advanced by the movants.
Patents. Although MCC‑Norwood owned U.S. patents throughout the entire lookback period, the court found that movants failed to show those patents were more important or valuable than the $1+ million in cash needed to fund adequate assurance and DIP obligations. Ownership alone was not enough; “principal” means most important, consequential, or influential.
Intercompany balances. The court credited unrebutted expert testimony that the alleged intercompany receivables were legacy accounting entries with no economic substance, eliminated prior to filing, never cash‑settled, and not enforceable as real assets. Bookkeeping artifacts did not constitute principal assets for venue purposes.
D&O insurance. While insurance policies are property of the estate, the court found no evidence that the shared, contingent D&O coverage—subject to a substantial retention and untriggered during the relevant period—was so important as to displace the bank accounts as principal assets.
No Bad Faith Under LTL Management
The U.S. Trustee separately sought dismissal for bad faith, invoking the Third Circuit’s decision in In re LTL Management. Judge Kaplan drew sharp distinctions. MCC‑Norwood was not a newly created “Texas Two‑Step” entity, had existed since 2014, and was a guarantor of approximately $5.5 billion in funded debt. Despite having no operations, it was balance‑sheet insolvent and in genuine financial distress. Distress plus a valid reorganizational purpose, the court held, equals good faith—even under LTL.
Transfer Denied: Continuity Over Disruption
Even where venue is technically proper, courts may still transfer cases “in the interest of justice” or for convenience. Judge Kaplan declined to do so. The court emphasized that it had already invested substantial judicial resources, scheduled key hearings, and supervised first‑day relief. Transfer would increase costs, delay the case, risk disruption of DIP and plan milestones, and create uncertainty for lenders, vendors, and employees—without any countervailing convenience or fairness benefit.
The “Gut Check”—and Why It Matters
Perhaps the most quoted portion of the opinion is Judge Kaplan’s candid acknowledgment that the venue strategy “does not sit right.” The court openly recognized that the New Jersey accounts were opened to create venue. Yet the court concluded that this discomfort could not justify judicial revision of a statute Congress deliberately drafted broadly and repeatedly chose not to narrow.
That tension—between policy unease and statutory fidelity—is precisely what makes the decision so important.
Takeaways
The Multi‑Color opinion reinforces several key points:
- Cash can still drive venue. Recently opened bank accounts remain viable principal assets under § 1408.
- Courts may favor an asset‑based analysis. The focus is on what matters at filing, not a day‑by‑day historical tally.
- Venue reform is a legislative issue. Courts are increasingly explicit that perceived forum shopping is not theirs to fix.
- Transfer remains the safety valve. Even technical compliance can yield transfer where facts demand it—but not here.
For now, Judge Kaplan’s opinion stands as a thorough, pragmatic, and candid roadmap for how bankruptcy courts may continue to approach venue disputes in the absence of congressional reform.