Order Granting Motions to Transfer Venue. The United States Bankruptcy Administrator, supported by several creditors and a state regulatory agency, moved under 28 U.S.C. § 1412 and Federal Rule of Bankruptcy Procedure 1014(a) to transfer two bankruptcy cases to the Eastern District of Kentucky, alleging that venue was improper in the Middle District of North Carolina because the debtors were not incorporated or licensed to do business in North Carolina, did not have their primary operations and physical assets in North Carolina, and consistently represented in corporate filings that their principal place of business was not within North Carolina.
     The Court first found that the movants had not met the required burden to show improper venue because the evidentiary record demonstrated that the principal place of business for the debtors was in the Middle District of North Carolina. The Supreme Court has explained that the “‘principal place of business’ is best read as referring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities” and is sometimes referred to as the “nerve center” of the company, i.e. “the actual center of direction, control, and coordination.” Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010). Here, the evidentiary record showed the nerve center for both debtors was in Winston-Salem at the residence of the debtors’ president and CEO. Despite the debtors’ coal operations occurring primarily in Kentucky, the direction and control of those operations originated in the Middle District of North Carolina. Therefore, the Court found venue was proper as it was the location of the debtors’ principal place of business.
     Nevertheless, the Court granted the movants’ alternative request to transfer venue to the Eastern District of Kentucky “in the interest of justice or for the convenience of the parties.” 28 U.S.C. § 1412. In weighing whether to transfer venue for the convenience of the parties, the Court applied the six-criteria test developed by the Fifth Circuit Court of Appeals in In re Commonwealth Oil Ref. Co., 596 F.2d 1239, 1247 (5th Cir. 1979) (“CORCO”). Here, the Court found that most of the CORCO factors weighed firmly in favor of transfer: nearly all of the debtors’ tangible assets, including the coal wash plant, were located in Kentucky; the greater number of creditors in the cases were either based in Kentucky or argued in favor of venue in Kentucky; in the event of a sale of assets, the potential witnesses—brokers, appraisers, accountants, and auctioneers—would likely be hired from Kentucky; and state regulators, including mining inspectors and bond release specialists, could more fully participate and provide testimony in Kentucky. The Court also found that, because the Bankruptcy Administrator moved to transfer the cases within a week of the petition date, the “learning curve” factor did not weigh against transfer.
     The Court also found that transfer was appropriate “in the interest of justice,” based on several key factors. Judicial economy favored venue of the cases in the Eastern District of Kentucky as there were already pending civil cases against both debtors in that state and venuing the cases in Kentucky would allow the debtors to better coordinate with state and federal inspectors, abate existing environmental violations, and satisfy any regulatory obligations going forward. The Court also found that Kentucky had a greater interest than North Carolina in having the debtors’ cases determined within its borders, citing to the environmental and economic impacts of the debtors’ coal operations. The Court concluded that, despite the deference afforded the debtors’ choice of forum, the connections to their chosen venue in North Carolina did not outweigh the many factors favoring Kentucky. Accordingly, the Court granted the motions and ordered that the cases be transferred to the Eastern District of Kentucky.