House Panel Acts to Avert Potential Bankruptcy Judge Crisis

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By Diane Davis

Bipartisan legislation to shore up the ranks of federal bankruptcy judges and avert what bill supporters call a looming crisis cleared the House Judiciary Committee May 3.

The panel approved H.R. 2266, the Bankruptcy Judgeship Act of 2017, by voice vote.

“The time has come for Congress to address bankruptcy judgeship needs more permanently,” Judiciary Chairman Bob Goodlatte (R-Va.) said in a statement. “We need a bankruptcy system that has a sufficient number of judges to be able to manage the system’s caseload in a just, economical and timely manner.”

Goodlatte said there were 29 temporary bankruptcy judge positions set to expire May 25. The bill would make 14 of them permanent and add four new permanent positions in some of the busiest districts.

Rep. John Conyers, Jr. (D-Mich.), the top Democrat on the committee, introduced the measure to address the immediate need as identified by the Judicial Conference of the United States.

Since the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, when a majority of the temporary judgeships were created, key districts “have seen weighted filings increase by more than 55 percent,” Goodlatte said.

These districts include Delaware, the Southern District of Florida, Maryland, the Eastern District of Michigan, Nevada, the Eastern District of North Carolina, Puerto Rico, and the Eastern District of Virginia.

Additional permanent bankruptcy judgeships haven’t been authorized since 1992, Goodlatte said.

Conyers said that the temporary judgeships are at risk of being lost permanently without immediate congressional action.

“I share the conference’s concern that the bankruptcy courts would face a serious and, in many cases, debilitating workload crisis if their temporary judgeships were to expire,” Conyers said.

This is particularly true with respect to the Eastern District of Michigan, which has a weighted caseload “well in excess of the minimum necessary to trigger additional judicial resources,” Conyers said.

Action by the full House by the May 25 deadline is uncertain. Nearly identical, bipartisan legislation, The Bankruptcy Judgeship Act of 2017 (S. 632), has been introduced in the Senate.

Those sponsors include Chris Coons (D-Del.), Debbie Stabenow (D-Mich.), Marco Rubio (R-Fla.) and Bill Nelson (D-Fla.)

Additional House co-sponsors include Tom Marino (R-Pa.) and David Cicilline (D-R.I.).

Certain Fee Increase

The House bill wouldn’t present any new costs for consumer debtors, Conyers said. It calls for an increase in the quarterly U.S. trustee’s quarterly fees for large Chapter 11 cases.

The increase would apply only to Chapter 11 debtors that have quarterly disbursements in excess of $1 million, and only during the period when the United States Trustee System Fund has less than $200 million, Conyers said.

Conyers offered an amendment, which was approved, clarifying deposits of certain fees for fiscal years 2018 through 2022.

Under the amendment, for each of the fiscal years 2018 through 2022, 97.5 percent of the fees collected are to be deposited as offsetting collections to the United States Trustee System Fund and remain available until expended. In addition, 2.5 percent of the fees collected must be deposited in the general Treasury fund.

Rep. Steve Cohen’s (D-Tenn.) offered an amendment that would have extended the judgeships in the Western District of Tennessee for two years. He later withdrew it.

According to Cohen, the Western District of Tennessee has the highest bankruptcy rate relative to its population in the country.

“The Judicial Conference didn’t recommend this for the Western District of Tennessee,” Goodlatte said, who didn’t support the amendment.

The Judicial Conference followed a multi-step progress to reach its recommendations, according to Goodlatte, and he didn’t want to bypass that process with this amendment.

Goodlatte was concerned, however, that Cohen reported a different experience in his district.

To contact the reporter on this story: Diane Davis in Washington at DDavis@bna.com

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

For More Information

Full text of bill: http://src.bna.com/ouI; Conyer's technical amendment: http://src.bna.com/ouJ; Cohen's withdrawn amendment: http://src.bna.com/ouK

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