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New York Bankruptcy Court Faces Budget Constraints

Author: Joel R. Glucksman

Date: June 7, 2013

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Economic constraints and the federal sequester have impacted several governmental agencies and industries. Now, it appears that one of the nation’s most high-traffic bankruptcy courts is also experiencing financial pressure.

Dow Jones reports that budgetary constraints are making it more challenging for the U.S. Bankruptcy Court for the Southern District of New York to manage its costs. Funding for the court fell to $5.06 million for 2013 from $8.06 million in 2011, a 37 percent reduction over the two-year period, the news source explains. The court is also likely to experience another round of cuts in 2014, despite its high volume of Chapter 11 bankruptcy cases.

“Being a chief during the sequestration and during the financial issues that anyone in the federal court is facing, it’s very difficult,” Chief Judge Cecelia Morris told Dow Jones.”We’re hurting. But we’ve been stepping down for a period of time.”

New York is not the only state impacted by falling budgets. Other courts nationwide are also trying to maintain smooth and efficient operations under financial constraints. The widespread issues prompted the Judicial Conference of the United States to submit a request for $72.9 million in emergency funding, arguing that the additional funds are necessary to “address critical needs resulting from sequestration cuts,” according to the United States Courts.

Although many federal offices are operating under reduced resources, separate data compiled by analytics firm Credit2BTM indicates the number of businesses seeking bankruptcy law protection fell nationwide during calendar year 2012 and the first quarter of 2013. The company reports a 16 percent decline in business bankruptcy filings for calendar year 2012, and a 22 percent drop during the first three months of 2013 compared to the same period last year. The drop in bankruptcy filings may help offset some of the costs bankruptcy courts are facing until they are able to fully recover their budgets.

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