United States bankruptcy court
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Contents |
United States Bankruptcy Courts are Article I federal courts that have subject-matter jurisdiction over bankruptcy cases. Bankruptcy cases cannot be filed in state court. Each of the 94 federal judicial districts handles bankruptcy matters. The current, separate system of bankruptcy courts was created by United States Congress in 1979.
Federal Bankruptcy Judges
- Main article: Federal bankruptcy judge
As of May 2010, there are 352 authorized bankruptcy judgeships, including 36 temporary judgeships. [1]
Each bankruptcy judge is a judicial officer of the U.S. district court to which he or she is assigned. They constitute the bankruptcy court for their respective districts.
The U.S. court of appeals for each circuit is in charge of appointing bankruptcy judges in their circuit to renewable fourteen-years terms.
The number of bankruptcy judgeships is determined by Congress. Congress receives periodic advice on the number of bankruptcy judges needed from the Judicial Conference of the United States.
History of judgeships
The position of bankruptcy judge was established by Congress in 1978 as part of broad legislation that reorganized the nation’s bankruptcy system (92 Stat. 2657). Under the Bankruptcy Act of 1898, referees appointed by district judges oversaw the administration of bankruptcy cases in the district courts, and a series of subsequent acts increased the judicial duties of the referees.
In 1973, the Supreme Court issued rules that recognized the importance of these judicial duties and applied the title of "bankruptcy judge" to the referees. Also in 1973, the congressionally chartered Commission on Bankruptcy Laws of the United States recommended the formal establishment of bankruptcy judgeships to preside over judicial proceedings related to bankruptcy in courts that would be independent of the U.S. district courts. The commission called for the appointment of executive branch officers to carry out administrative responsibilities related to bankruptcy cases.
Over the next five years, Congress considered a range of bills to establish bankruptcy courts with their own judges. Much of the debate concerned the method of appointment and terms of service for bankruptcy judges. The Bankruptcy Reform Act of 1978 established bankruptcy courts in each judicial district, with bankruptcy judges appointed by the President and confirmed by the Senate for terms of fourteen years. The act relieved the bankruptcy judges of the administrative duties of the referee system and established a pilot program for U.S. trustees who would assume these responsibilities. The act also set a transition period within which those appointed under the referee system would continue in office until March 31, 1984, or until a successor took office. Upon full implementation of the act in 1984, two bankruptcy judges were to serve on the Judicial Conference of the United States. [1]
Northern Pipeline
In 1982, in Northern Pipeline Construction Co. v. Marathon Pipe Line Co. (458 U.S. 50), the Supreme Court decided that it was unconstitutional for Congress to grant bankruptcy jurisdiction to independent courts composed of judges who did not have the protections of Article III, but the Court postponed the application of its judgment so that Congress could enact legislation to restructure the bankruptcy courts. The Bankruptcy Amendments and Federal Judgeship Act of 1984 (98 Stat. 333) made the courts of appeals responsible for the appointment of bankruptcy judges and declared that the bankruptcy judges “shall serve as judicial officers of the United States district court established under Article III of the Constitution.”
Although the bankruptcy judges constituted a bankruptcy court under the terms of the new statute, Congress reserved for the district courts certain jurisdiction over bankruptcy proceedings in order to meet the concerns expressed by the Supreme Court.
The act of 1984 authorized the Judicial Conference to establish qualifications for bankruptcy judges and authorized the circuit councils to establish merit selection committees to recommend nominees for bankruptcy judgeships. The act included no provision for the representation of bankruptcy judges on the Judicial Conference. In 1997 the National Bankruptcy Review Commission, established by Congress to consider further reforms of the bankruptcy system, recommended that the bankruptcy courts be established under Article III of the Constitution. The subsequent legislation introduced in Congress, however, did not adopt this recommendation that would have extended to bankruptcy judges the protections of life tenure and immunity from any reduction in salary. [1]
Caseload growing
Bankruptcy filings increased by 30 percent during fiscal year 2007 compared to 2006, with more than 1 million cases filed. Chapter 7 liquidation accounted for 65% of all bankruptcy cases in FY 2008, versus 60% in FY 2007. [2]
List of courts
Chapters
- Chapter 7 - This section of the bankruptcy code provides for the complete liquidation of a company or an individual. In either case, the company or organization does not exist after completion of bankruptcy filing. Organizations that often file for Chapter 7 bankruptcy are so far in debt that reorganization of funding will not suffice, and creditors will not be able to get any amount of money back from reorganization. With chapter 7, the United States government sells, through a trustee, all of the unnecessary goods for survival of the individual. All money goes to creditors, then bond holders, and finally stock holders.
- Chapter 11 - This section of the bankruptcy code concerns the payment of debts to creditors through the reorganization of a company. Under this chapter, the company is reorganized under supervision of the United States government. Then, all profits are sent to creditors, bond holders, and finally stock holders. With these cases, the company is required to have their reorganization deemed appropriate and beneficial to the creditors. This requires the participation of the United States bankruptcy courts and bankruptcy lawyers.
- Chapter 12 - Chapter 12 Bankruptcy is reserved for farmers, ranchers, and those in the area of agriculture. This is very similar to the proceedings in Chapter 13, but gives additional benefits to farmers, including but not limited to restrictions of non-purchase by creditors.
- Chapter 13 - Chapter 13 Bankruptcy is a version of chapter 11, reserved for individuals. This provides for the reorganization of the individual under the supervision of the United States government. Any nonessential profits are given to creditors. This also requires presentation of a plan to the United States Bankruptcy Courts. [3]
Before a bankruptcy case is filed, the majority of individual debtors must complete a "special briefing from an approved credit counseling agency".[4]
External links
- U.S. Courts Guide to Bankruptcy Courts
- History of U.S. bankruptcy judges
- A Journalist's Guide to the federal bankruptcy courts
