Bankruptcy Judgeship Act Of 2010

Floor Speech

Bankruptcy Judgeship Act Of 2010

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Mr. COHEN. I yield myself such time as I may consume.

Mr. Speaker, H.R. 4506, the Bankruptcy Judgeship Act of 2010, provides new resources for bankruptcy courts to handle the growing number and complexity of bankruptcy cases. This economy has resulted in many people having to seek bankruptcy who never would have dreamed they would have before. And the complexity of the cases, from our major automobile manufacturers on through other reorganizations, have grown in complexity for the bankruptcy judges to be involved in.

The bill authorizes the creation of 13 new permanent bankruptcy judges, the conversion of 22 temporary judgeships to permanent judgeships, and the extension of two judgeships for another 5 years. The act will help bankruptcy courts in 25 different Federal judicial districts around this country.

Bankruptcies had been steadily on the rise since October 2006. These events, bankruptcies rising and the financial crisis, combined with the continuing mortgage foreclosure crisis, consumer credit problems, and health care crises, have exacerbated this trend significantly and caused the bankruptcy courts much additional work.

According to the Administrative Office of the United States Courts, bankruptcy filings increased by over 300,000 from fiscal year 2008 to fiscal year 2009. That is a 34.5 percent increase in 1 year. The previous year they had increased by 30.2 percent. And the Wall Street Journal recently reported another sharp increase in personal bankruptcy filings in 2009, up 32 percent from 2008. According to the Wall Street Journal, these increases were driven by high unemployment rates and the continuing housing crisis, both of which have affected not only those on the economic margins, but also a growing number of middle class families who desire to work but have had to turn to our Nation's bankruptcy system for help as a last resort.

In addition to the growing numbers of bankruptcy cases, the cases have also grown more complex, particularly in business bankruptcies. As I mentioned earlier, in 2009 two of the big three, General Motors and Chrysler, two companies upon which tens of thousands of workers, thousands of dealers, hundreds of suppliers, and many communities across this Nation depended for their livelihoods, went through quick but nonetheless intense bankruptcy processes. Bankruptcy courts performed admirably but under strain.

Outside the automobile industry, as I mentioned earlier, businesses such as Delta Airlines to Lehman Brothers to Circuit City have all turned to bankruptcy for relief in recent years, with the same kind of extraordinary burden imposed on the bankruptcy courts.

While the workload for bankruptcy courts is increasing, judicial resources are in danger of decreasing. Many current bankruptcy judgeships are authorized on a temporary basis, and some are set to expire soon. A well-functioning bankruptcy system is absolutely essential to helping individuals and businesses weather our Nation's current economic difficulties. Having a sufficient number of bankruptcy judges is a key to making the system work, and has never been more important than today.

H.R. 4506, the Bankruptcy Judgeship Act of 2010, addresses these needs by authorizing the creation of 13 new permanent bankruptcy judgeships and the conversion of 22 temporary judgeships to permanent judgeships. Additionally, it extends the temporary authorization for two judgeships for another 5 years. These new, converted, and extended bankruptcy judgeships reflect the recommendations of the Judicial Conference of the United States. Those recommendations in turn are the culmination of an extensive and careful survey and review process that thoroughly assessed the bankruptcy judgeship needs of every Federal judicial district in the country. In essence transparent, fair, methodical, rational.

I note that a significant part of the conference's assessment of bankruptcy judges' workload depends on the use of case weights that were developed almost two decades ago, prior to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which we still labor under. BAPCPA created numerous new motions that bankruptcy judges are now required to consider.

If anything, the Judicial Conference recommendations may underestimate the need of the workload and the need of new bankruptcy judges. In short, the conference's recommendations, as reflected in the new bankruptcy judgeships authorized by H.R. 4506, may actually be too conservative.

To pay for 13 new judgeships, the bill also raises the filing fees for chapter 7 and 13 cases by $1, and for chapter 11 cases, which are business bankruptcies, by $42. While I understand that filing fees are needed for the successful operation of the bankruptcy system, I believe they are already too high, particularly for consumer debtors seeking bankruptcy relief because they are in dire straits. In this one instance we ultimately determined that a fee increase was the only practical way to get the needed judgeships in a timely manner, which will allow for the efficient functioning of the bankruptcy system to the ultimate benefit of debtors.

So in passing a bankruptcy system, we wanted to have funds to make it self-sufficient. To put the bankruptcy system of our country in bankruptcy while saving the bankruptcy system seemed like an oxymoron.

But I would urge in the future we rely on something other than bankruptcy filing fee increases to pay for new bankruptcy judgeships. The last time Congress addressed the issue of bankruptcy judgeships was 5 years ago when it authorized 28 temporary judgeships in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Those temporary judgeships are now about to expire.

Moreover, the last time Congress authorized new permanent bankruptcy judgeships was in 1992. It is well past the time that we address the critical issue of bankruptcy judgeships needs, and I am pleased that we are able to do so today.

I thank the Judiciary Committee chairman, John Conyers, and Ranking Member Lamar Smith for being original cosponsors of this important legislation and our Judiciary Committee working in a bipartisan fashion to pass the bill. I also thank Trent Franks, the ranking member of the Judiciary Subcommittee on Commercial and Administration Law, for his support of this bill. I guess it wasn't an oxymoron but an inconsistency.

I urge my colleagues to support this important legislation.

I reserve the balance of my time.

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