Article of the Week

“The Bankruptcy Court: A Unique Structure”

by Alan E. Ramos, Esq.

For non-bankruptcy practitioners, the subject of bankruptcy and the structure of the court often cause confusion and consternation. (Is the Bankruptcy Act the controlling law? Are cases heard by a "judge" or a "Referee"? What is "BAPCPA" and did it work?) The quick answers are: The controlling law is the Bankruptcy Code, 11 U.S.C., which was enacted in 1979 replacing the Bankruptcy Act of 1898. Bankruptcy judges are Article I judges, who serve fourteen-year terms, in contrast to District Court judges who are Article III judges with life-time appointments. "BAPCPA" is the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 which was signed into law April 20, 2005, and took effect October 17, 2005. The primary objective of BAPCPA was reduce the number of filings, to make filing Chapter 7 more difficult, and to encourage people to file Chapter 13. Although BAPCPA has generally made it more expensive to file consumer bankruptcy cases, the following statistics indicate that bankruptcies are on the rise. In the 12-month period ending 3/31/10, 1,531,997 cases were filed (1,100,032 Chapter 7s and 415,966 Chapter 13s) compared to the 12-month period ending 3/31/09 in which 1,202,503 cases were filed (819,362 Chapter 7s and 370,875 - Chapter 13s).

The structure of the bankruptcy court system is unique in American law. Pursuant to 28 U.S.C. §§ 1334(a) & 157(a), U.S. District Courts have original and exclusive jurisdiction of all bankruptcy cases and "may" refer those cases to the Bankruptcy Courts. In the Northern District of California all bankruptcy cases are referred to the Bankruptcy Court pursuant to U.S. District Court General Order No. 24: Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges and Authorizing Bankruptcy Appeals to be Decided by the Ninth Circuit Bankruptcy Appellate Panel.

The U.S. Bankruptcy Court for the Northern District of California has four divisions - Santa Rosa, San Francisco, Oakland (which includes Contra Costa County) and San Francisco. There are nine judges who sit in the Northern District, three of whom are in the Oakland Bankruptcy Court. The judges that sit in the Oakland Bankruptcy Court are the Honorable Randall J. Newsome, who will be leaving the bench at the end of the year, the Honorable Edward D. Jellen and the Honorable Roger L. Efremsky, who was transferred from the San Jose Bankruptcy Court when the Honorable Leslie Tchaikovsky retired on August 31, 2010. The Honorable Alan Jaroslovsky, who sits in the Santa Rosa Bankruptcy Court, is the Chief Judge of the Northern District Bankruptcy Courts.

In all courts, attorneys need to be aware of the rules, particularly the local rules (and the local, local rules). For bankruptcy practitioners, the applicable rules are: the Federal Rules of Civil Procedure; the Federal Rules of Bankruptcy Procedure; the Northern District Bankruptcy Local Rules; and the Northern District Civil Local Rules. In addition, each division, as well as many of the individual bankruptcy judges, have rules and procedural requirements that are posted on the court's website at Heads up to practitioners - the bankruptcy courts are in a time of turnover and rules and procedures are constantly changing.

One of the most unique features of the structure of the bankruptcy court is the appellate process. In bankruptcy, parties have two levels of appeals as a matter of right. At the first level, a bankruptcy court decision may be appealed to the Bankruptcy Appellate Panel (a three-judge panel made up of sitting bankruptcy judges, and commonly referred to as the "BAP") or it may be appealed to the District Court. (See 28 U.S.C. § 158(a) & (b)). The matter will be assigned to the BAP unless a separate writing is filed in which an election is made to have the appeal heard by the district court. (See F.R.B.P. 8001(e)). Some practitioners would say that which court one chooses is based on whether or not you want a District Court judge who may not be well versed in bankruptcy law to hear your case. At the second level, a decision of the BAP or the District Court may then be appealed to the Circuit Court of Appeals. Parties may also request that the lower court certify a direct appeal to the Court of Appeals (28 U.S.C. § 158(d)(2)(A) and F.R.B.P. 8001(f)). However, the Court of Appeals must grant permission before it assumes jurisdiction over the appeal (see Blausey v. U.S. Trustee, 552 F.3d 1124 (9th Cir.2009)).

So there you have it – the structure of the bankruptcy court – in a nutshell. Of course, there is quite a bit more to it, but that is the subject for many other articles.

Alan Ramos is a partner in the law firm of Nevin, Ramos & Steele. He represents debtors and creditors in corporate Chapter 7 and 11 matters and consumer debtor's in Chapter 7 and 13. He is a member of the Bankruptcy Dispute Resolution Panel in the Northern District of California and acts as a neutral in mediation.

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