Senate Bill Aims to Fortify Bankruptcy Judge Roster

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By Diane Davis

Congress must act swiftly to make permanent temporary bankruptcy judge positions that are set to expire this spring to ensure busy courts in nine districts aren’t overwhelmed by caseloads, a bipartisan group of U.S. senators said.

There are 349 bankruptcy judges authorized and funded, including 33 temporary judgeships, according to the 2016 Annual Report of the Administrative Office of the U.S. Courts (AOUSC).

Legislation Introduced

Sens. Chris Coons (D-Del.), Debbie Stabenow (D-Mich.), Marco Rubio (R-Fla.), and Bill Nelson (D-Fla.) introduced legislation on March 15 to address the potential shortfall.

“This bill will ensure that when bankruptcy judges on courts with temporary judgeships retire, their colleagues will not be left with crushing caseloads that restrict timely access to our bankruptcy courts,” Coons said in a statement.

“The Bankruptcy Judgeship Act of 2017,” (S. 632), would implement recommendations from the Judicial Conference of the United States, which is a national 26-member policy-making body for the federal court system.

Overall, bankruptcy petitions dropped 6 percent nationwide year-over-year to more than 805,000 in 2016, according to the AOUSC. Chapter 7 filings dropped 9 percent to 498,367, while Chapter 11 cases rose 6 percent to 7,450. Chapter 13 filings remained relatively flat, falling 1 percent to 299,150. Chapter 11 petitions typically require more court resources than the other types of cases.

The Senate bill would make 16 temporary judgeships permanent in Delaware, Florida, Maryland, Michigan, Nevada, North Carolina, Puerto Rico, Tennessee, and Virginia. The bill would also create six additional permanent judgeships, with two each in Delaware, Michigan, and Florida.

Senate hearings haven’t been scheduled, but a spokesman for Coons told Bloomberg BNA March 17 that “we look forward to working with colleagues in the Senate to advance the bill and preserve these judgeships.”

The bill has been referred to the Judiciary Committee.

Support for the Bill

“I applaud Sens. Coons, Stabenow, Rubio, and Nelson’s attempt to convert some temporary bankruptcy judgeship positions to permanent,” Chief Judge Cecelia G. Morris of the U.S. Bankruptcy Court for Southern District of New York told Bloomberg BNA March 17.

Morris is an editor of Bloomberg Law: Bankruptcy Treatise.

“We’ve lost a temporary bankruptcy judgeship position due to a retirement, and the court deeply felt the repercussions of that loss,” Morris said. “All remaining judges worked together to balance the caseload to insure all cases were heard promptly.”

Morris also noted the situation in Delaware, which is a renowned bankruptcy court where many Chapter 11 cases are filed.

“The majority of their judgeships are temporary positions. Without a full complement of judges, they, too, would face balancing a caseload of national economic importance,” she said.

Una O’Boyle, clerk of the U.S. Bankruptcy Court for the District of Delaware, told Bloomberg BNA March 17 that only one of six positions there was permanent and that it is one of the “highest-weighted districts” for filings.

“We are hopeful Congress will pass this bill,” she said.

Failure of Congress

Rubio pointed out that Congress has failed to “appropriately authorize judgeships” as recommended by the Judicial Conference.

Last year, the group also recommended that Congress pass legislation to preserve temporary bankruptcy judge positions. There was no action.

If legislative action isn’t taken now, the first bankruptcy judge vacancy that occurs in nine districts outlined in the legislation after May 25 won’t be filled, the Judicial Conference said.

“While passage of the bill is not certain, due to budget constraints outlined in (President Donald Trump’s) recent proposed budget cuts, it is encouraging how many in Congress see the need to pass this critical legislation for the bankruptcy community,” Morris said. An identical bill, H.R. 136, was introduced Jan. 3, by Rep. John Conyers, Jr. (D-Mich.) and has been referred to the Subcommittee on Regulatory Reform, Commercial and Antitrust Law. Reps. Jerrold Nadler (D-N.Y.) and Henry C. “Hank” Johnson, Jr. (D-Ga.), are co-sponsors.

New and converted permanent positions would be paid for by the Temporary Bankruptcy Judges Extension Act of 2012, which imposed an increase in Chapter 11 filing fees, Coons’ office said.

An overview and history of the temporary judgeships is discussed in detail in Bloomberg Law: Bankruptcy Treatise, pt. IX, ch. 285 (D. Michael Lynn et al. eds., 2016).

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 the bill at: http://src.bna.com/mZZ

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