Welcome to the 2019 NCBJ Annual Conference Blog – and Index to Blog Posts

Welcome to the 2019 NCBJ Washington D.C’s Annual Conference Blog. A good place to start is a Message from the NCBJ President John E. Waites for the Conference Blog, which you can find HERE. Judge Waites (Bankr. D.S.C.), and his team have been working hard to put on a conference that will be both educational and entertaining.

The Conference is a great place to learn, network, and have fun. It uniquely provides a forum for a wide variety of bankruptcy and insolvency organizations. Bankruptcy Judge Michelle Harner, D. Md., is this year’s NCBJ education chair.

Because there are so many interesting things to do in Washington D.C., the Blog will contain a number of posts about the host City. Many of the articles about Washington D.C.’s venues honoring individuals or events not only contain information about the venue  but also discuss the life and accomplishments of the person who is honored or the history of the commemorated event. For example, the post about the Albert Einstein Memorial not only gives a lot of information about the memorial itself but also contains a short Einstein biography and discusses Einstein’s Special Theory of Relativity and General Theory of Relativity and his work on the Photoelectric Effect. As another example, the article about the Martin Luther King Memorial not only discusses the memorial itself in some detail but also discusses Dr. King’s accomplishments and quotes extensively from his I Have a Dream speech. I hope you find these and other articles interesting and informative.

Keep checking back to the Blog to read more posts. You will find new articles from time to time about Conference programs, the NCBJ, other bankruptcy related items, things to do and see in Washington D.C., and more.

INDEX TO BLOG POSTS

Click on a link to open the Blog post.

Bankruptcy Related Topics

The Bankruptcy Code Turns Forty – Happy Birthday!

A Confluence of ABA, ABI, ABLJ, ACB, AIC, AIRA, CLLA, IWIRC, NAWJ, and NCBJ. Who are they?

The correlation between Chapter 11 Filings and Economic Recessions in the United States

Forty Years Ago the Bankruptcy Code Abolished the “Economy of the Estate”

How many can you name: ABA, ABI, ABLJ, ACB, AIC, AIRA, CLLA, FJA, FMJA, IWIRC, NAWJ, NCBJ?

A Relatively Short History of the Bankruptcy Laws in the United States

When was a Bankruptcy Judge a Judge Some of the Time? So, what’s in a name?

Memorials and Monuments In Washington DC

Albert Einstein Memorial

Franklin Delano Roosevelt Memorial

George Mason Memorial

Japanese Lantern

Japanese Pagoda

Jefferson Memorial

Lincoln Memorial

Martin Luther King Jr. Memorial

John Paul Jones Memorial

Walk the Tidal Basin Trail Loop to Visit Memorials and the Japanese Lantern and Pagoda

Washington Monument

Where is the James Madison Memorial?

Other Things to Do in Washington D.C.

About the Smithsonian Institution and Its Venues

Check Out the Washington D.C. Tourism Website

Local’s Guide to Washington D.C.

The Washingtonian: on Restaurants, Shopping, and Things to Do

Miscellaneous Topics

Freedom Rings in 1763, 1863 and 1963

 

 

 

NCBJ President John E. Waites Welcomes You to the NCBJ Annual Conference Blog – Get Ready for the Nation’s Capital

Message from NCBJ President Hon. John E. Waites, District of South Carolina

NCBJ is proud to return to Washington, DC from October 30 to November 2, 2019 for its Annual Conference. I hope that you will join us at the conference as we celebrate the bankruptcy profession with a review of the past forty years under the Bankruptcy Code and look ahead to the future.

We are very excited and honored to have Neil Gorsuch, Associate Justice of the Supreme Court of the United States, to speak to the conference on Friday, November 1, 2019. Earlier that day, Mark Zandi, the chief economist of Moody Analytics, will deliver the keynote address on emerging economic trends.

In addition to discussions of recent developments and emerging trends in the law and in the economy generally, programs include a mock Senate hearing on the equitable powers of the court, roundtable discussions in both business and consumer law between judges and attendees, and a special consumer practice track designed for those who primarily practice in that area.

The NCBJ Annual Conference has long served as the preeminent meeting place for all bankruptcy and insolvency professionals and proudly joins with ABA, ABI, CLLA, ACB, IWIRC, AIRA, to name a few, to present an assortment of programs, distinguished speakers, and a number of networking opportunities.

And while you are in Washington DC, take some to enjoy some of the many unique things our Nation’s Capital has to offer, from the 19 Smithsonian Institution museums and galleries, to the myriad of memorials and monuments, to the National Zoo. Attendees can also take advantage of the special tours that NCBJ will be offering, including tours of the Pentagon, the Supreme Court of the United States, and Mount Vernon. There is something for everyone.

This year’s conference, NCBJ’s 93rd, will be the best ever, and we look forward to seeing you at the NCBJ Annual Conference in DC—It’s a Capital Idea!

Sincerely,

John E. Waites

NCBJ President

The correlation between Chapter 11 Filings and Economic Recessions in the United States

There have been economic recessions in the United States since 1980 during these periods:

  • July 1981-Nov 1982
  • July 1990-Mar 1991
  • Mar 2001-Nov 2001
  • Dec 2007-June 2009

To determine whether there is a correlation between those four economic recessions and the number of Chapter 11 cases filed nationwide, I took into account two possible causes for dramatic changes in Chapter 11 filing rates other than the recessions. I did not take into account other causes, if any.

Significant events that affected Chapter 11 filing rates since 1980, other than economic recessions, at least included the Bankruptcy Reform Act of 1978 (effective October 1, 1979) and enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) on April 14, 20065 (effective October 17, 2005).

Chapter 11 filings following enactment of the Bankruptcy Reform Act of 1978 exceeded 20,000 in each year from 1983 to 1987 and again from 1990 to 1992. Chapter 11 filings peaked at almost 25,000 in 1987 and were never that high again.

July 1981-Nov 1982 recession. Although Chapter 11 filings increased dramatically following the July 1981-Nov 1982 recession, without knowing a lot more than I know, I cannot tell whether there was a correlation between the increased filings and that recession. Following enactment of the Bankruptcy Act of 1978, Chapter 11 filings increased each year between 1980 and 1987.

July 1990-Mar 1991 Recession. There is a strong correlation between the number of chapter 11 filings and the recession of July 1990-Mar 1991. Chapter 11 filings spiked in 1990, spiked again in 1991, and started to decrease in 1992 but were still quite high. Chapter 11 filings decreased in each of the next several years.

Mar 2001-Nov 2001 Recession. I see a correlation, but of a much lesser magnitude, between the number of chapter 11 filings and the short lived recession of Mar 2001-Nov 2001. Chapter 11 filings increased by about 15% from 2001 to 2002, started to decease in 2003, and decreased again in 2004.

Dec 2007-June 2009 Recession. There is a dramatic correlation between the number of chapter 11 filings and the great recession of Dec 2007-June 2009. Chapter 11 filings increased about 60% from 2007 to 2008, increased another approx. 50% from 2008 to 2009, then started gradually decreasing in each of the next few years.

The chart immediately below summarizes the causes of each of the four economic recessions and the number of chapter 11 cases filed just before, during and just after each recession.

Period of Recession Cause of Recession Correlation of Recession with Chapter 11 Filings
July 1981-Nov 1982 The Iranian Revolution resulted in a sharp increase in the price of oil causing an energy crisis starting in 1979.

 

Chapter 11 filings were also affected by the Bankruptcy Reform Act of 1978.

Chapter 11 filings increased from about 5,400 in 1980; to about 10,000 in 1981; to about 19,000 in 1982; to more than 20,000 in each of 1984 and 1985.

The Bankruptcy Reform Act of 1978 went into effect on October 1, 1979. The increased filings undoubtedly were dramatically affected by the new bankruptcy law.

July 1990-Mar 1991 After a lengthy economic expansion, inflation began to increase. The Federal Reserve raised interest rates from 1986 to 1989 to combat inflation. In a weakened economy, oil prices rose sharply in 1990 as a result of an Iraqi invasion of Kuwait on August 2, 1990. Chapter 11 filings increased from about 18,000 in 1989; to about 19,000 in 1990; to about 21,000 in 1991; to about 24,000 in 1992.

 

Chapter 11 filings decreased to about 23,000 in 1993; to about 19,000 in 1994;to about 15,000 in 1995.

Mar 2001-Nov 2001 Following a long period of growth, the dot.com bubble burst and the September 11, 2001 attack occurred. Chapter 11 filings increased from about 9,900 in 2000 to 11,424 in 2001.

Chapter 11 filings dropped slightly in 2002 to 11,270.

Dec 2007-June 2009 This is sometimes known as the great recession. There was a subprime mortgage crisis combined with soaring oil prices. The stock market tumbled. Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Citi Bank and AIG failed. There was a crisis in the automobile industry. The federal government responded with an unprecedented 787 billion fiscal stimulus package and a $700 billion bank bailout. Chapter 11 filings had decreased from about 10,000 in 2004 to 6,800 in 2005 following the passage of BAPCPA.

Chapter 11 filings increased from about 6,350 in 2007 to about 10,000 in 2008; to about 15,000 in 2009.

Since that time, Chapter 11 filings have decreased. For the past five years (2014 to 2018), chapter 11 filings have ranged between 7,095 (in 2018) and 7,442 (in 2017).

 

The chart set forth below shows the number of Chapter 11 filings nationwide by category from 2001 to 2018. The number of total chapter 11 filings nationwide, and the number of business chapter 11 filings and non-business chapter 11 filings, was compiled from data maintained by the Administrative Office of the United States Courts and reported on uscourts.gov.

The data for individual debtor chapter 11 filings in 2002 to 2008 was taken from data compiled by the office of the United States Trustee. The data for individual debtor chapter 11 filings in 2010 and 2013 was taken from data compiled for the 2017 National Study of Individual Chapter 11 Bankruptcies published by ABI. Given the disparity in the data, I am not sure the UST data as reported in the chart is correct.

Year Chapter 11 Filings Nationwide Business Ch 11

Nationwide

Non-Bus. Ch 11 Nationwide Individual

Chapter 11

2001 11,424 10,641   783
2002 11,270 10,286   984 1,083 (9.61%)
2003   9,404   8,474   930 1,086 (11.55%)
2004 10,132   9,186   946 1,162 (11.27%)
2005   6,800   5,923   877 1,153 (16.96%)
2006   6,153   4,643   520     883 (14.35%)
2007   6,353   5,736   617 1,257 (19.77%)
2008 10,160   9,272   888 1,724 (16.26%)
2009 15,189 13,683 1,506
2010 13,713 11,774 1,939 4,049 (29.53%)
2011 11,529   9,772 1,757
2012 10,361   8,900 1,461
2013   8,980   7,660 1,320 2,617 (29.14%)
2014   7,234   6,093 1,141
2015   7,241   6,130 1,111
2016   7,292   6,174 1,118
2017   7,442   6,350 1,092
2018   7,095   6,078 1,017

This graph (click on it) is a representation of the number of chapter 11 case filed nationwide from 1980 to 2008.

 

Local’s Guide to Washington D.C.

Check out the Local’s Guide to Washington D.C. prepared by the Hon. S. Martin Teel, Jr., Bankruptcy Court for the District of Columbia, which you can find here:  DCLocalGuide Web Version. You can also review a less fancy version of the Local Guide here: DCLocalGuide-PDF Version.

The Local Guide is quite amazing. It includes Judge Teel’s recommendations, and has numerous links to websites that give more information about the venues and sites featured in the Guide.

Locations of Recommended Venues and How to Get There

The Local Guide includes extensive information about the locations of the recommended venues and how to get there. That portion of the Guide includes a lot of useful links to maps.

The Local Guide’s Recommended Venues

These are only some of the recommendations the Local Guide covers, complete with website links to learn more about each venue:

  • Bureau of Engraving
  • Civil War related sites
  • Libraries (incl. Library of Congress and Folger Shakespeare Library)
  • Gardens
  • Memorials and Monuments (there are many choices)
  • Museums and galleries (including many that are not as well-known as the numerous Smithsonian venues)
  • National Archives
  • National Cathedral
  • Nation’s Capitol
  • National Geographic
  • National Zoo
  • Neighborhoods
  • Pentagon tours
  • Restaurants
  • Theaters
  • Supreme Court tours
  • White House tours

For bicycle enthusiasts, the Guide also includes a suggested bicycle route.

There is an almost endless number of things to do in Washington DC. The hard part is narrowing it down to fit your schedule.

A Confluence of ABI, ABLJ, ACB, AIC, AIRA, CLLA, IWIRC, NAWJ, and NCBJ. Who are they?

 ABA, ABI, ABLJ, ACB, AIC, AIRA, CLLA, IWIRC, NAWJ, NCBJ

A remarkable diversity of organizations in the bankruptcy and insolvency field participate in NCBJ’s Annual Conference, perhaps more than at any other single bankruptcy conference. It is a great place to network and meet colleagues and bankruptcy judges. In addition to NCBJ, organizations presenting educational programs, presenting awards, hosting receptions, convening meetings, or sponsoring breakfasts, lunches or dinners or otherwise participating at this year’s Conference include:

  • ABA     American Bar Association
  • ABI     American Bankruptcy Institute
  • ABLJ  American Bankruptcy Law Journal
  • ACB    American College of Bankruptcy
  • AIC     American Inns of Court
  • AIRA  Association of Restructuring and Insolvency Advisors
  • CLLA Commercial Law League of America
  • IWIRC International Women’s Insolvency & Restructuring Confederation
  • NAWJ National Association of Women Judges
  • NCBJ  National Conference of Bankruptcy Judges

I compiled this information about each organization from their respective websites. The descriptions mostly consist of quoting language from the sites (without quotation marks) but in many cases with some edits.

American Bar Association (ABA)

The ABA has nearly 400,00 members. Its mission is to serve equally its members, the legal profession and the public by defending liberty and delivering justice as the national representative of the legal profession. ABA goals include serving its members, improving the legal profession, eliminating bias and enhancing diversity, and advancing the rule of law.

 American Bankruptcy Institute (ABI)

ABI is the nation’s largest association of bankruptcy professionals, made up of over 12,000 members in multi-disciplinary roles, including attorneys, auctioneers, bankers, judges, lenders, professors, turnaround specialists, accountants and others.

Founded in 1982, ABI plays a leading role in providing congressional leaders and the general public with non-partisan reporting and analysis of bankruptcy regulations, laws and trends. ABI is often called on to testify before Congress, analyze proposed bills, and conduct periodic briefings for congressional committees and legislative staff. ABI is engaged in numerous educational and research activities, as well as the production of a number of publications both for the insolvency practitioner and the dedicated to research and education on matters related to insolvency.

American Bankruptcy Law Journal (ABLJ)

The ALBJ is a peer reviewed journal that publishes learned articles focusing on bankruptcy law and related subjects. It promotes the exchange of ideas about and deeper understanding of bankruptcy issues, particularly among its core audience that includes judges, bankruptcy professionals, academics, legislators and other policymakers.

American College of Bankruptcy (ACB)

The ACB, formed in 1989, has over 800 Fellows. Its mission is to honor and recognize distinguished bankruptcy professionals who are qualified for membership in an effort to set standards of achievement for others in the insolvency community, and to fund and assist projects that enhance the highest quality of bankruptcy practice, including undergraduate and graduate programs related to bankruptcy and insolvency.

American Inns of Court (AIC)

AIC serves a legal profession and judiciary dedicated to professionalism, ethics, civility, and excellence. Its mission is to inspire the legal community to advance the rule of law by achieving the highest level of professionalism through example, education, and mentoring.

The strategic goals of the AIC are:

  1. To promote a high-quality member experience.
  2. To have a greater impact on the profession.
  3. To be a primary resource for mentoring and education focused on professionalism, which includes ethics, civility, and excellence.
  4. To be widely recognized as a leader in promoting professionalism, which includes ethics, civility, and excellence.
  5. To have effective ongoing communications with members and alumni of the American Inns of Court.
  6. To establish a highly effective governance structure and culture.
  7. To grow and diversify American Inns of Court revenue streams.

Association of Restructuring and Insolvency Advisors (AIRA)

 AIRA is a nonprofit professional association serving financial advisors, accountants, crisis managers, business turnaround consultants, lenders, investment bankers, attorneys, trustees and other individuals involved in the fields of business turnaround, restructuring, bankruptcy and insolvency.

AIRA’s mission is to unite and support professionals providing business turnaround, restructuring and bankruptcy services; and to develop, promote and maintain professional standards of practice, including a professional certification program.

Seven key AIRA objectives are:

  1. To aid members in developing competency in their practice areas
  2. To provide training for members entering into and continuing in their practice areas
  3. To develop and maintain standards of professional competency
  4. To develop and promulgate ethical standards of practice
  5. To develop and promulgate financial reporting standards
  6. To define and develop roles and responsibilities of financial advisors under the Bankruptcy Code
  7. To encourage cooperation among professionals with similar interests

Commercial Law League of America (CLLA)

CLLA [states that it is] the leading, nonprofit professional organization of collections, creditors’ rights and bankruptcy professionals. Since its inception, the CLLA has been associated with the representation of creditor interests, while at the same time seeking fair, equitable and efficient administration of bankruptcy cases for all parties in interest.

CLLA membership is comprised of national and international attorneys who handle commercial law, bankruptcy, insolvency, retail collections, construction law and complex commercial litigation matters. Membership also includes collection agency members, law list publishers, commercial credit professionals, judges, accountants, trustees, turnaround managers and other credit and finance experts.

CLLA membership is divided into practice sections − Creditor’s Rights, Bankruptcy, Commercial Collection Agencies. Young Members − each addressing the specialized needs of their respective constituencies.  Each section elects its own officers and Executive Council, and has a representative on the CLLA Board of Governors.

International Women’s Insolvency & Restructuring Confederation (IWIRC)

IWIRC is committed to the connection, promotion and success of women in the insolvency and restructuring professions worldwide. Through a global membership of more than 1,200 attorneys, bankers, corporate-turnaround professionals, financial advisors and other restructuring practitioners, members develop a powerful network of contacts, resources, mentors and friends.

Through events and interactive tools, IWIRC offers seminars, intellectual capital, career resources, leadership opportunities and guidance for personal and professional development.

National Association of Women Judges (NAWJ)

Since its formation in 1979, NAWJ has inspired and led the American judiciary in achieving fairness and equality for vulnerable populations.

NAWJ’s mission is to promote the judicial role of protecting the rights of individuals under the rule of law through strong, committed, diverse judicial leadership; fairness and equality in the courts; and equal access to justice.

NAWJ is dedicated to the following ideals:

  1. Equal justice and access to the courts for all including women, youth, the elderly, minorities, the underprivileged and people with disabilities
  2. Providing judicial education on cutting-edge issues of importance
  3. Developing judicial leaders
  4. Increasing the number of women on the bench in order for the judiciary to accurately reflect the role of women in the democratic society
  5. Improving the administration of justice to provide gender-fair decisions for both male & female litigations

National Conference of Bankruptcy Judges (NCBJ)

NCBJ is an association of the Bankruptcy Judges of the United States which has several purposes: to provide continuing legal education to judges, lawyers and other involved professionals, to promote cooperation among the Bankruptcy Judges, to secure a greater degree of quality and uniformity in the administration of the Bankruptcy system, and to improve the practice of law in the Bankruptcy Courts of the United States.

A Relatively Short History of the Bankruptcy Laws in the United States

This article briefly summarizes the history of the bankruptcy laws in the United States.

Article I of the United States Constitution, sec. 8, cl. 4, gives Congress the power to “establish . . . uniform laws on the subject of bankruptcies throughout the United States.”

Bankruptcy Act of 1800

The first bankruptcy law in the United States was enacted in 1800, eleven years after ratification of the U.S. Constitution, but was repealed three years later. It was passed in response to financial crises in 1792 and 1797. The Bankruptcy Act of 1800 was very similar to English bankruptcy law. It was very pro creditor oriented. Only involuntary bankruptcy cases were allowed, and only merchants could be debtors. To obtain a discharge from debts, two thirds of creditors by number and value of claims had to consent to the discharge.

 Bankruptcy Act of 1841

The next bankruptcy law in the United States, in 1841, was even shorter lived. It was repealed in early 1843. Under the 1841 Act, debtors for the first time could initiate their own bankruptcy case, and any individual was eligible to be a debtor in bankruptcy. Bankruptcy jurisdiction was vested in the United States District Court “in the nature of summary proceedings in equity.” The debtor could claim newly created federal law exemptions but could not claim state law exemptions. Creditors could veto a debtor receiving a discharge by a majority in number and in value of claims. A preferential transfer by the debtor prior to bankruptcy was a ground to deny the discharge.

Bankruptcy Act of 1867

Next came the Bankruptcy Act of 1867 passed following a financial crisis in 1857. The 1867 Act provided for both voluntary and involuntary bankruptcy cases. Individuals and corporations were eligible to be debtors in bankruptcy. Bankruptcy jurisdiction was vested in the United States District Court. The district court appointed “registers in bankruptcy” to assist the district court. The “register” was the predecessor of the bankruptcy referee, which in turn was the predecessor to the bankruptcy judge. An “assignee,” the predecessor to the bankruptcy trustee, superintended the liquidation of assets for the benefit of creditors.

The 1867 Act introduced the concept of the composition agreement in American bankruptcy law. The composition agreement was the predecessor to the plan of reorganization under current bankruptcy law. For the composition agreement to bind creditors it required creditor consent by a majority in number and three fourths in value of claims.

In addition, for the first time under the 1867 Act the debtor could claim state law exemptions.

The 1867 Act was criticized for small dividends to creditors, high expenses for administering the bankruptcy case, delays, and only about one-third of debtors being granted a discharge due to the many exceptions to discharge. The 1867 Act lasted about eleven years until it was repealed in 1878.

Bankruptcy Act of 1898

 Twenty years after the repeal of the 1867 Act, Congress passed the Bankruptcy Act of 1898. It was a watershed in American bankruptcy law.

The 1898 Act included many provisions aimed at making the administration of the bankruptcy estate more efficient and the distribution of the debtor’s property to creditors more equitable.

Under the 1898 Act, federal district courts sat as “courts of bankruptcy.” District courts appointed “referees in bankruptcy” who performed much of the judicial and administrative work. Referees were compensated on a fee basis until 1946 when that changed to a salary basis. Creditors had the power to elect trustees and creditor committees. The trustee could avoid preferential and fraudulent transfers. Confirmation of a composition agreement in lieu of liquidation required creditor consent by a majority in number and a majority in value of claims, and approval of the court as being in the best interest of creditors. The Act of 1898 contained more generous discharge provisions for the debtor than under prior bankruptcy law, but permitted a debtor to claim exemptions only under State law, and provided for both voluntary and involuntary bankruptcy cases.

Chandler Act Amendments to the Bankruptcy Act of 1898

The Chandler Act was passed in 1938 during the Great Depression. It substantially revised the Act of 1898. Under the Chandler Act amendments, Chapters X and XI governed corporate plans arrangement, Chapter XII governed real property plans of arrangement, and Chapter XIII provided for individual wage earner plans. Chapters X and XII were the precursors to modern day Chapter 11. Chapter XIII was the precursor to modern day Chapter 13.

Among other things, the Act of 1898 as amended by the Chandler Act included the concepts of classification of claims under plans of arrangements, cram down, voluntary and involuntary bankruptcy cases, the appointment of trustees, modification of both secured and unsecured claims.

The Bankruptcy Reform Act of 1978

In 1970 Congress created the Commission on the Bankruptcy Laws of the United States to study the then existing bankruptcy law and report on recommended changes. The Commission’s report ultimately led to passages of the Bankruptcy Reform Act of 1978.

Under the 1978 Act, bankruptcy judges instead of referees in bankruptcy preside over bankruptcy cases. Bankruptcy judges no longer are involved in the administration of the estate. Bankruptcy courts are granted expanded jurisdiction. Features of Chapters X and XI are combined into a single Chapter 11. The principle of “the economy of the estate” is eliminated, which had limited the amount of compensation paid to bankruptcy attorneys and other bankruptcy professionals. Chapter XIII become Chapter 13, which for the first time includes a super discharge.

The 1978 Act, with some later amendments, is the bankruptcy law in effect to today in the United States. Eligible debtors may commence bankruptcy cases under Chapters 7, 11, 12, 13, or 15. Certain creditors may commence involuntary bankruptcy cases under some of the chapters. A trustee is always appointed in Chapter 7, 12 and 13 cases and may be appointed in Chapter 11 cases. Debtors may obtain a discharge of debts to attain a “fresh start” upon meeting certain requirements, with exceptions. Individual debtors can claim federal law exemptions, or alternatively State law exemptions if permitted by State law. Each class of creditors must accept a chapter 11 plan by a majority in number and at least two-thirds in amount of claims, subject cramdown provisions that allow confirmation of a plan over a dissenting class of creditors.

 Bankruptcy Amendments and Federal Judgeship Act of 1984 (BAFJA)

In 1982 the United States Supreme Court curtailed bankruptcy court jurisdiction in Northern Pipeline Construction Co. v. Marathon Pipe Line Co. by ruling that the 1978 Act unconstitutionally gave powers reserved to Article III judges to non-Article III judges. The Marathon decision led to the enactment of BAFJA. BAFJA made bankruptcy judges in each judicial district a unit of the United States district court for that judicial district, vested bankruptcy jurisdiction in the district court, created the concept of “core,” “noncore” and “related to” matters, and authorized district courts to refer the exercise of bankruptcy jurisdiction to bankruptcy courts. In all judicial districts, district courts have referred the exercise of bankruptcy jurisdiction to bankruptcy courts to the fullest extent permitted by law.

BAFJA also added a new section to the Bankruptcy Code relating to rejection of collective bargaining agreements.

Bankruptcy Judges, United States Trustees and Farmer Act of 1986.

In 1986 Congress enacted the Bankruptcy Judges, United States Trustees and Farmer Act of 1986. It created a new chapter 12 for “family farmers” and made the United States Trustee System permanent (except in Alabama and North Carolina).

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) made substantial amendments to the 1978 Act, particularly for consumer and international (cross border) bankruptcy cases. For individual debtors, it makes credit counseling a condition for relief; requires financial management training for Chapter 7 and 13 debtors to obtain discharge; creates the role of consumer privacy ombudsman; establishes a means test; introduces automatic dismissal of a bankruptcy case if required documents are not filed timely; curtails the Chapter 13 “super discharge,” prevent bifurcation of car loans in Chapter 13 for vehicles purchased within 910 days prior to commencement of the bankruptcy case; contains limitations a debtor filing multiple bankruptcy cases; and adds provisions on reaffirming debts.

BAPCPA amendments also allow direct appeals to the court of appeals in certain circumstances; add family fisherman to chapter 12, make Chapter 12 permanent, and create a new Chapter 15 for cross border insolvencies.

Judge Thomas Small aptly described consumer provisions of BAPCPA by comparing them to a Rubik’s Cube: “The amendments are confusing, overlapping, and sometimes self-contradictory. They introduce new and undefined terms that resemble, but are different from, established terms that are well understood. Furthermore, the new provisions address some situations that are unlikely to arise. Deciphering this puzzle is like trying to solve a Rubik’s Cube that arrived with a manufacturer’s defect. Fortunately, after many twists and turns, a few patches of solid color emerge.” In re Donald, 343 B.R. 524, 529 (Bankr. E.D.N.C. 2006).

BAPCPA has resulted in a tremendous amount of litigation to interpret its meaning.

Forty Years Ago the Bankruptcy Code Abolished the “Economy of the Estate”

Forty years ago, the Bankruptcy Code, in § 330(a)(3) (F), abolished the notion of the “economy of the estate.”

Prior to enactment of the Bankruptcy Code, the court in allowing or disallowing attorneys’ fees and compensation to other bankruptcy professionals did not need to allow as much compensation as the professionals could earn in the free market representing non-bankruptcy clients. The thinking was that determining what is reasonable compensation should balance the interest of economy in administering a bankruptcy estate for the benefit of creditors with getting competent professionals to represent trustees and debtors in bankruptcy cases.

Under Bankruptcy Code § 330(a)(3) (F), in awarding compensation to bankruptcy attorneys and other bankruptcy professionals, the court must take into account “whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.” The legislative history of this provision explains that the notion of the economy of the estate in fixing professional fees is outdated and has no place under the Bankruptcy Code.

Abolishing the “economy of the estate” has drawn some of the nation’s best attorneys and other professionals to bankruptcy court and has contributed to innovation, the development of the law, and fair and just bankruptcy proceedings.

When was a Bankruptcy Judge a Judge Some of the Time? So, what’s in a name?

The Bankruptcy Act of 1898, as amended, provided that “Judge shall mean a judge of a court of bankruptcy, not including the referee.” 11 U.S.C. § 1(20).

On April 24, 1973, the Supreme Court of the United States issued new Bankruptcy Rules applicable in Chapters I to VII and in Chapter XIII of the Bankruptcy Act. The new Rules went into effect on October 1, 1973.

New Bankruptcy Rule 901(7) provided that the term “bankruptcy judge” is used in the rules to mean “the referee of the court of bankruptcy in which a bankruptcy case is pending, or the district judge of that court when issuing an injunction under § 2(a)(15) of the Act and when acting in lieu of a referee under § 43(c) of the Act or under Rule 102.” To my knowledge, this is the first time that referees in bankruptcy were called bankruptcy judges.

Thus, starting in 1973 a referee in bankruptcy was a judge, at least most of the time, notwithstanding the Bankruptcy Act which said that a referee is not a judge.

But how could the Supreme Court issue a rule making a referee a judge in contravention of 11 U.S.C. § 1(20)? The answer lies in what was then Section 2075 of the Judicial Code. The Supreme Court could call a referee a judge because, under Section 2075, the Supreme Court could promulgate rules that superseded conflicting statutory provisions, so long as the rules did not “abridge, enlarge, or modify any substantive right” and was not expressly rejected by Congress.

Shakespeare said in Romeo and Juliet, “What’s in a name? That which we call a rose by any other name would smell as sweet,” and So, what’s in a name?

So, what’s in a name?

The Bankruptcy Code Turns Forty – Happy Birthday

The Bankruptcy Reform Act of 1978, which adopted the Bankruptcy Code, went into effect on October 1, 1979. By my count, the Bankruptcy Code turns 40 on October 1, 2019. So October is the Bankruptcy Code’s birthday month.

What is more patriotic than celebrating the birth of the Bankruptcy Code? And what place is better to do it than in October during the NCBJ Annual Conference in Washington D.C.?