Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Daniel Gill
Nearly 30 temporary bankruptcy judgeships are set to expire May 25. But no one is expecting judiciary disaster if the Bankruptcy Judgeship Act of 2017 ( HR 2266), currently pending in the Senate, does not become law before the deadline.
The funding bill signed by President Trump May 5 accorded some relief. Section 307 of the Consolidated Appropriations Act, 2017, amends the Temporary Bankruptcy Judgeships Extension Act of 2012. It extends for one more year two temporary judgeships in Delaware, two in the Southern District of Florida, and one each in Puerto Rico, the Eastern District of Michigan, and the Eastern District of Virginia.
But more temporary judgeships are at risk, including in Maryland, Nevada, and the Eastern District of North Carolina.
The House passed the Bankruptcy Judgeship Act May 17 and referred it to the Senate May 18.
The law would make 14 of 29 temporary bankruptcy judgeships permanent, and add four new bankruptcy judgeships.
But as of May 24 neither the Senate nor the Senate Judiciary Committee had taken any action on the bill. Even if it passed the measure May 25, it’s not likely the president would be able to sign it into law while he’s overseas on his first official international trip.
So what happens if the expiration date passes before the new law is enacted?
It’s not a desperate situation, Una O’Boyle, the clerk of the U.S. Bankruptcy Court for the District of Delaware, told Bloomberg BNA in a May 23 phone call. Five out of the six bankruptcy judges in the district of Delaware are currently on temporary status, she said.
But the judges won’t be sent home after the May 25 deadline. The position terminates only if a temporary judge vacates his or her seat on the bench.
Because Delaware was awarded another extension in the funding bill for two of its five temporary judgeships, three judges would have to leave the bench for a seat to be lost.
Of course, Delaware is eager for the Bankruptcy Judgeship Act to pass into law, O’Boyle said. It would change the court’s makeup from one permanent and five temporary judges to eight full-time permanent judges, she said. Delaware has one of the busiest and most high-profile bankruptcy courts in the U.S.
Judge A. Jay Cristol of the U.S. Bankruptcy Court for the Southern District of Florida told Bloomberg BNA that his district was relieved by the funding bill’s one year extension of two temporary positions. The concern in that district is especially acute, he said, because Judge Paul G Hyman Jr. had expressed his intention to resign in January, 2018.
Cristol’s district is one of the busiest bankruptcy courts in the country, as it’s become a magnet for Ponzi scheme cases and sees a large number of international cases filed under Chapter 15, he said. It also has a large docket of pro se cases with debtors who don’t speak English, which puts additional stress on the court’s resources, he said.
The possibility of losing a judgeship seat is real. When Arthur Gonzalez retired from the Bankruptcy Court for the Southern District of New York, the court was unable to fill the vacancy because it had been an expired temporary judgeship, O’Boyle said. None of these busy courts wants to lose a judgeship in its district.
To contact the reporter on this story: Daniel Gill in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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