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Judge Baer http://nycourts.law.com/CourtDocumentViewer.asp?view=Document&docID=119864 PROSPECT Capital Corp. claimed it was induced into issuing a loan to ESA Environmental Specialists Inc. (ESA). On Aug. 1, 2007, ESA sought Chapter 11 bankruptcy relief in the U.S. Bankruptcy Court for the Western District of North Carolina. Prospect’s Feb. 11, 2009, amended complaint alleged that beginning in 2005, by various interrelated schemes, defendants—officers, directors, employees or retained professionals of ESA—conspired to siphon funds from ESA for their own purposes. After finding venue improper in the Southern District of New York, the court ordered that a professional negligence claim be severed and transferred to the Eastern District of Pennsylvania, and that the remaining claims be transferred to the Western District of North Carolina. Deeming Prospect’s venue argument premised on 28 USC §1391(b)(2), the court determined that virtually no conduct by defendants—in connection with the alleged siphoning of ESA’s funds and retention of professionals to secure loans from Prospect—occurred in or was directed from the Southern District of New York. As a result, Prospect failed its burden of showing that “a substantial part of the events or omissions giving rise to the claims occurred” in the Southern District.

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