How A Government Shutdown Will Affect Bankruptcy Courts

Sunday, September 29, 2013

How A Government Shutdown Will Affect Bankruptcy Courts

Subject: How A Government Shutdown Will Affect Bankruptcy Courts
Reply-To: "Bankruptcy Law Network" <bankruptcylawnetwork@gmail.com>

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How A Government Shutdown Will Affect Bankruptcy Courts

Will the Federal Government shutdown on October 1, 2013? If so, how will it effect the Bankruptcy Courts?

Jack Nicholson as President Dale

In the movie “Mars Attacks”, after the Martians use their Ray Guns to blast both Houses of Congress (a possible solution to Congressional gridlock?), President Dale (Jack Nicholson) states: “I want the people to know that they still have 2 out of 3 branches of the government working for them, and that ain’t bad.”
On Thursday, the Administrative Office of the U.S. Courts for the Federal Judiciary issued an equally assuring statement:
“In the event of a government shutdown on October 1, 2013, the federal Judiciary will remain open for business for approximately 10 business days. On or around October 15, 2013, the Judiciary will reassess its situation and provide further guidance. All proceedings and deadlines remain in effect as scheduled, unless otherwise advised. Case Management/Electronic Case Files (CM/ECF) will remain in operation for the electronic filing of documents with courts.”
U.S. News and World Reports has listed the delay of bankruptcy court proceedings as a likely result of a government shutdown.

Treasury Secretary Jacob Lew

In a recent letter to Congress, Treasury Secretary Jacob Lew advised Congress that October 17, 2013 will be the date that the government will have insufficient funds to operate all but the most essential services which is why the Judiciary intends to reassess its situation on October 15, 2013.
If a shutdown does occur, individuals that have filed bankruptcy can expect the following:

Delays or cancellation of Meetings of Creditors;
Delays in confirmation of Chapter 13 Plans; and,
Delays or cancellation of bankruptcy court hearings.

It should be noted that even if there is not a shutdown of government services, the bankruptcy court system is already a target of budget reductions.
In the Eastern District of Louisiana where I practice, we lost three members of the court staff in 2012 and another three in 2013. Other cost containment measures are being explored including shifting the costs involved in certain notice requirements from the court to the party requesting the notices.
by Kevin Gipson, New Orleans, Louisiana bankruptcy lawyer.