President Obama Signs Senator Coons' Bill to Avert Crisis in America's Bankruptcy Courts

Press Release

President Obama signed into law the Temporary Bankruptcy Judgeship Extension Act on Friday, averting a crisis in America's bankruptcy court system by reauthorizing 29 temporary judgeships in 14 states and Puerto Rico -- including five judgeships in Delaware. The law, which was introduced in the Senate in November by U.S. Senator Chris Coons (D-Del.), will ensure that the judgeships are not lost due to the retirement, resignation, death or removal of the judge. With the President's signature, the judgeships' authorizations have now been extended until May 21, 2017 -- five years from today.

"No one wants to see people and companies file for bankruptcy, but when they do, it's important that their cases be handled expeditiously and with appropriate consideration of all parties involved," Senator Coons said. "This law will stave off a grave shortage of bankruptcy judges in many districts around this country, which could have impaired the abilities of courts in those districts to do just that. Our federal bankruptcy courts protect American jobs every day, and they were facing a crisis that I am relieved to be able to say we have now averted. I am grateful to my colleagues in the Senate and in the House for lining up behind this bill, and to President Obama for signing it into law and giving America's bankruptcy courts system the certainty it needs to continue supporting our economic recovery."

Delaware's bankruptcy judges, who are hailed for their experience, speed and predictability, handle more than one-third of the nation's largest bankruptcies. Five of Delaware's six judgeships have temporary authorizations that had expired. One additional Wilmington-based bankruptcy judge is on loan from the eastern district of Pennsylvania, which district also had a temporary authorization that had expired.

Faced with increasing demand on the federal court system, Congress has created dozens of temporary bankruptcy judgeships over the last 20 years to help the courts keep pace. The Temporary Bankruptcy Judgeships Extension Act of 2012 heeded the recommendations made last year by the non-partisan Judicial Conference of the United States, whose biennial review urged Congress to prevent the expiration of 30 temporary bankruptcy judgeships by extending each by five years. The statutory authorizations to fill these judgeships, had they been vacated, had all lapsed.

One of the bankruptcy judgeships identified by the Judicial Conference and covered in the original version of the bill -- in the Southern District of New York -- had lapsed after its authorization had expired. With Senator Coons' support, the legislation was modified in the House of Representatives last week to reflect the judge's retirement.

"Having a full bench of bankruptcy court judges will allow for a renewed economic stability for many who have fallen into financial hardships," Senator Coons said. "Talented bankruptcy judges can help turn a likely economic loss into a successful reorganization that protects jobs and creditors. This legislation will ensure that these judgeships remain in place and continue to fairly and expeditiously resolve bankruptcy claims -- a key component of our economy as companies and individuals get back on their feet."

The Temporary Bankruptcy Judgeship Extension Act of 2011 was introduced in the Senate in November and passed out of the Senate Judiciary Committee in December. The House of Representatives passed the legislation on December 8. Amended and passed unanimously by the Senate on April 19, 2012, the House made a technical change to the bill and passed it again on May 9. The Senate then passed the final version unanimously on May 10.

Nineteen districts in 14 states, plus Puerto Rico, have temporary judgeships extended by the law, including:

The central district of California: 3 judgeships

The eastern district of California: 1 judgeship

The district of Delaware: 5 judgeships

The southern district of Florida: 2 judgeship

The southern district of Georgia: 1 judgeship

The district of Maryland: 3 judgeships

The eastern district of Michigan: 1 judgeship

The northern district of New York: 1 judgeship

The eastern district of North Carolina: 1 judgeship

The middle district of North Carolina: 1 judgeship

The eastern district of Pennsylvania: 1 judgeship

The western district of Pennsylvania: 1 judgeship

The district of Puerto Rico: 2 judgeships

The eastern district of Tennessee: 1 judgeship

The western district of Tennessee: 1 judgeship

The district of Nevada: 1 judgeship

The district of New Jersey: 1 judgeship

The district of South Carolina: 1 judgeship

The eastern district of Virginia: 1 judgeship

The Temporary Bankruptcy Judgeship Extension Act was co-sponsored by Senators Richard Burr (R-N.C.), Lindsay Graham (R-S.C.), Tom Carper (D-Del.), Kay Hagan (D-N.C.), Lamar Alexander (R-Tenn.), Dianne Feinstein (D-Calif.), Kirsten Gillibrand (D-N.Y.), Johnny Isakson (R-Ga.), Bill Nelson (D-Fla.), Dean Heller (R-Nev.), Chuck Schumer (D-N.Y.), and Bob Corker (R-Tenn.).

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