Bankruptcy Judges, Fish & Farmers

Fourteen temporary bankruptcy judgeships have been extended and four new ones have been authorized nationwide.  This is at least one piece of generally positive legislative news that bankruptcy practitioners should be able to agree on!

Temporary Judges Added to Delaware, Florida, and Michigan

The legislation, H.R. 2266, was included in the $36.5 billion disaster aid bill signed into law on October 26th. It incorporated a version of the Bankruptcy Judgeship Act of 2017 introduced by Rep. John Conyers (D) and Chairman Bob Goodlatte (R).

The bill, as enacted, reauthorizes 14 temporary bankruptcy judgeships in Delaware, Florida, Puerto Rico, Maryland, Michigan, Virginia, Nevada, and North, and authorizes the appointment of four additional temporary bankruptcy judges in Delaware, Florida, and Michigan.

While bankruptcy filings have declined nationwide in recent years, the effected districts have seen a 55% weighted increase in case filings since 2005. The federal Judicial Conference wrote to congressional leaders in April saying that federal bankruptcy courts in Delaware and eight other districts would face a ‘debilitating workload crisis” if lawmakers didn’t add judgeships and permitted the 14 temporary judgeships to lapse. (Original versions of the legislation had hoped not only to add four new, permanent judgeships but also to make the temporary judgeships permanent.)

Quarterly Fees to Increase to Fund the Judgeships

The measure increases the U.S. Trustee’s quarterly fees for large Chapter 11 bankruptcy cases to pay for the additional judgeships.  Specifically, if the balance in the U.S. Trustee System Fund is less than $200 million, then a debtor with total quarterly disbursements of $1 million or more must pay a quarterly fee equal to $250,000 or 1% of disbursements, whichever is less.

What About those Fish and Farm Tax Claims?!

The legislation also amends Bankruptcy Code § 1232 to add tax claims by the IRS resulting from the sale, transfer, exchange, or disposition of farming property in cases under Chapter 12 (e.g., family farmer or fisherman reorganizations). Such a claim that arises before a debtor’s discharge, regardless of whether the claim is pre-petition or post-petition, must be treated as a pre-petition claim, is not entitled to priority status, must be provided for under the bankruptcy plan, and is dischargeable.

Trivia Quiz… This $20 Cabela’s Gift Card Could Be Yours!

I’m offering a $20 Cabel’as gift card to the first person who can explain the connection between the fish and farming amendment and the rest of the bill!

Mette K.

2 thoughts on “Bankruptcy Judges, Fish & Farmers

  1. While it would be contrary to your move across the continent, Congress could obviate the need for new BK judges in DE by changing the venue rules to spread the cases to where debtor entities actually are located.

    1. True….! It is all a matter of perspective, of course. After moving here, I quickly learned that “anti-venue shopping legislation” translates into Delawarean as, roughly speaking, “attacks on the First State.”

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