Tuesday, June 5, 2012

Temporary Bankruptcy Judgeships Reauthorized

This month, Congress finally passed the Temporary Bankruptcy Judgeship Extension Act of 2011 (H.R. 1021 and S. 1821) (the “Extension Act”) and on May 25, 2012, President Obama signed the Extension Act into law.  The law will go into effect on November 21, 2012.  This bill provides for the extension of thirty temporary bankruptcy judgeships in nineteen districts for five years.  The Extension Act was in response to what some commentators had deemed a “crisis” due to the expiration of temporary judgeships created in the wake of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”).  These BAPCPA temporary judgeships expired five years after their creation and could not be filled after a judge in that district retires.  This led some observers to note that, in the coming years, the number of bankruptcy judges would decline by approximately 8%.  This loss of bankruptcy judgeships, combined with an overall increase in filings, led many to fear bankruptcy courts would be overwhelmed.

The Extension Act authorizes five temporary judgeships in Delaware; three temporary judgeships each in Maryland and the Central District of California; two temporary judgeships each in Puerto Rico and the Southern District of Florida; and one temporary judgeship each for the Northern District of New York, the Southern District of New York, New Jersey, the Eastern District of Pennsylvania, the Middle District of Pennsylvania, the Eastern District of North Carolina, the Middle District of North Carolina, the Eastern District of Virginia, the Eastern District of Michigan, the Eastern District of Tennessee, the Western District of Tennessee, the Eastern District of California, Nevada, and the Southern District of Georgia.

Passage of the Extension Act was delayed in large part due to the approximate $16 million it would cost to fund the temporary judgeships amid continuing efforts to control government debt and spending.  Ultimately, the legislation was passed with unanimous support by adopting the House version that increased the $1,000 chapter 11 bankruptcy filing fee by $167.  In addition, prior to any reauthorization, the Extension Act requires the Committee on the Judiciary for the Senate and House to conduct a review of the authorized judgeships and determine whether there continues to be a need for the judgeships.  As part of this review, the Extension Act requires the Administrative Office of the Courts to submit a report to the Judiciary Committees on caseload, costs, and filing revenue.

With the passage of the Extension Act, and the slow decline in filings across the country, it appears that the “crisis” has been averted for at least some of the districts.  The passage of the Extension Act should let some districts allow judges to retire on time and decrease their reliance on senior or visiting judges.  However, not every district with temporary judgeships was approved for extension.  Those districts not addressed in the Extension Act will lose judgeships as judges retire and will have to continue to be creative in handling the increased workloads and large number of filings.

Cathy L. Reece
Fennemore Craig, P.C.

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