The enforceability of forum-selection clauses in Chapter 11 proceedings remains a point of contention in Delaware bankruptcy practice. The debate over whether such provisions should be recognized in a Chapter 11 often is particularly salient in the context of director and officer agreements (hereinafter referred to as D&O agreements).
As with other pre-petition agreements, the exclusive equitable jurisdiction bestowed upon a bankruptcy court can trump bargained-for forum-selection clauses in D&O agreements. Disregarding these provisions often forces directors and officers to litigate ostensibly "nonbankruptcy" issues in an atypical, and sometimes distant, forum. To further complicate matters, certain courts have adopted the view that filing a proof of claim in a Chapter 11 case subjects a director or officer to the jurisdiction of the bankruptcy court and negates the effectiveness of the forum-selection clause. This creates a Cornelian dilemma that, under certain circumstances, makes it exceedingly difficult for a director or officer to navigate the Chapter 11 process while attempting to preserve rights under a forum-selection clause.
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