Ex-Judge Eugene Wedoff Takes on Bankruptcy Appeals Pro Bono

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By Daniel Gill

Former bankruptcy Judge Eugene R. Wedoff has a pro bono appellate practice, primarily representing debtors in bankruptcy appeals to the district court or circuit court of appeals—and in one instance, to a bankruptcy appellate panel.

After two 14-year terms on the bankruptcy bench in Chicago, Wedoff isn’t slowing down. He has an active portfolio of appellate cases and is president and director of the American Bankruptcy Institute. The group touts itself as the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency.

Arguably best known in legal circles for presiding over the United Airlines Chapter 11 case, Wedoff began planning his career as a pro-bono bankruptcy appellate lawyer “a couple years” before leaving the bench in December 2015, he told Bloomberg BNA Aug. 22.

His plan grew out of an admiration of appellate practice and an enjoyment of oral argument. But he also believes that debtors in bankruptcy are underserved when it comes to appeals.

“I believe there should be a provision of representation to anyone who needs it,” Wedoff said. “Especially in bankruptcy, where debtors are not likely to have the funds to support counsel in an appeal,” which can be a costly proposition.

“Even if the debtor won at the bankruptcy court level, he or she would probably settle an appeal because of the expense of litigating it,” he said.

Improving Bankruptcy Jurisprudence

The result is a missed opportunity to shape a more consistent law that practitioners can rely on.

“A major reason I wanted to do this was to get guidance at a higher level for important questions in bankruptcy practice,” he said.

If there’s no appeal, especially to a circuit court, there’s no binding precedent and therefore an absence of uniformity in the practice, he said. This is because bankruptcy courts aren’t bound by the decisions of other bankruptcy courts or even district court decisions.

Wedoff finds the experience rewarding. His practice “lets me use my experiences as a bankruptcy judge to help people not otherwise able to get representation,” he said. And it’s a chance to “make bankruptcy law clearer, and perhaps even better,” he said.

Word of Mouth

Wedoff finds his clientele by word of mouth. Whenever he has the opportunity, such as at conferences or meetings, Wedoff tells colleagues and attorneys of his practice. He’s always on the lookout for an appellate case with significant implications for bankruptcy law.

Wedoff said he has very little direct contact with his clients. He mostly interacts with the debtors’ bankruptcy attorneys.

In only one case did Wedoff represent a debtor who was not represented at the bankruptcy court level.

Success and Failure

Wedoff shared stories of some of his successes and his failures, and the effect those decisions have on bankruptcy jurisprudence.

He highlighted a case involving the discharge of a client’s student loan obligations. In Educ. Credit Mgmt. Corp. v. Acosta-Conniff (In re Acosta-Conniff), Wedoff successfully obtained a reversal by the U.S. Court of Appeals for the Eleventh Circuit of a district court decision which had reversed a bankruptcy court ruling that the debtor’s student loan obligations should be discharged as an undue hardship.

In reversing the bankruptcy court, the district court said the debtor should’ve realized that it was unlikely the degrees for which she took out the loan would result in additional income sufficient to repay the obligation.

That would create a dangerous precedent for debtors seeking relief from over-burdensome student loans, Wedoff said, especially in today’s economy where there is no certainty a college or advanced degree will translate into a well-paying career.

The Eleventh Circuit said the test for whether to find undue hardship in a student loan contest is “forward-looking,” focusing on “whether a debtor has shown her inability to repay the loan during a significant portion of the repayment period. It does not look backward to assess blame for the student debtor’s financial circumstances.”

The case isn’t resolved yet, however. The Eleventh Circuit remanded the decision so it remains to be seen how the district court will rule, or if the parties will settle.

In another case, Wedoff expressed regret and disappointment in the June 2016 decision by the U.S. Court of Appeals for the Seventh Circuit in Germeraad v. Myrick Powers. There, the court found that a Chapter 13 trustee could move to amend a confirmed Chapter 13 plan, even after all the payments under the plan had been completed.

To contact the reporter on this story: Daniel Gill in Washington at dgill@bna.com

To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com

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