Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
What Does the Government Shutdown Mean for Bankruptcy Courts?
Author: Joel R. Glucksman
Date: October 11, 2013
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Several high-profile bankruptcy law cases are currently being deliberated across the country, ranging from Detroit’s historic Chapter 9 municipal bankruptcy to any number of large corporate filings. In light of the Oct. 1 government shutdown however – the first since 1996 – consumers, businesses, and third parties alike are wondering how the court system will be affected and whether landmark cases will be allowed to proceed.
The U.S. federal courts have announced that they will continue to hear cases without interruption, despite the government shutdown, albeit with more frugality in mind. The Administrative Office of the U.S. Courts reports that the courts will rely heavily upon fee revenues and funds from appropriations that aren’t expiring, in order to allow them to work without delays. The Justice Department noted that its attorneys also plan to postpone non-critical civil matters until the government resumes operations. These steps will enable the courts to function efficiently until Oct. 15. After that, however, full functioning of the legal system may become dicier.
In the Bankruptcy Courts, specifically, judges will continue to hear cases, and attorneys, clerks, and staffers will maintain their responsibilities. Due to a Constitutional provision, judges are automatically entitled to their salaries until Oct. 15, but must obtain authorization from the Secretary of the Treasury if the shutdown continues past this date. With regard to clerks and staffers, however, judges will be permitted to retain employees that are “essential to the resolution of cases.” However, these workers may not be paid until after the shutdown ends.
As each court will have some measure of discretion to determine which personnel will stay on during this period, it is unlikely that bankruptcy law cases whose outcomes may have a large impact on the economy will feel the heavy effects of the shutdown.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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