[Congressional Record Volume 143, Number 10 (Thursday, January 30, 1997)]
[Senate]
[Pages S879-S880]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SARBANES (for himself and Ms. Mikulski):
  S. 245. A bill to amend title 28, United States Code, to authorize 
the appointment of additional bankruptcy judges for the judicial 
district of Maryland; to the Committee on the Judiciary.


                         JUDGESHIP LEGISLATION

  Mr. SARBANES. Mr. President, I rise for myself and my distinguished 
colleague from Maryland, Senator Mikulski, to introduce a bill crucial 
to the administration of justice and the economy in our State. This 
bill provides for two additional bankruptcy judgeships in the Federal 
Judicial District of Maryland. A look at the conditions currently 
facing Maryland's bankruptcy judges reveals the critical need for these 
new judgeships.
  Recent years have witnessed a sharp rise in bankruptcy filings 
nationwide. Last year, for the first time in our history, filings 
during a 12-month period--June 1995-June 1996--exceeded 1 million, a 
21.4-percent rise from the prior 12-month period. This trend has many 
causes, including greater access to credit, a lagging economy in some 
regions, and public and private downsizing. Such sharp increases in 
filings strain the ability of bankruptcy judges to administer justice 
promptly and effectively, and jeopardize the stabilization of creditor-
debtor relations that is, after all, the goal of bankruptcy law.
  No State has been more affected by these trends than Maryland. 
Bankruptcies there have quadrupled in the past decade. As filings rise 
nationwide, Maryland rates of increase have significantly exceeded 
Federal rates. No end appears to be in sight. Maryland filings during 
January-November 1996 exceeded State filings during the same period in 
1995 by 36 percent; in the July-November 1996 period, State filings 
exceeded by 45 percent filings during the same period in 1995.
  In 1991, the U.S. Judicial Conference, using a 1990 Federal Judicial 
Center time-management study, adopted a case-weighting system for 
bankruptcy judges, under which different types of cases were assigned 
different degrees of difficulty and overall weighted case-hour goals 
were established for the judges. Under this system, the average U.S. 
bankruptcy judge has a weighted case-hour load of about 1,250 hours per 
year. The Judicial Conference generally does not consider a request for 
new bankruptcy judgeships by a Federal judicial district unless the 
average case-hour total for the district's judges exceeds 1,500.
  Given these yardsticks, the burdens facing the district of Maryland's 
bankruptcy judges are truly astounding.
  In 1993, the national weighted case-hour average was 1,362 hours; by 
contrast, the Maryland average for that year was 59 percent greater--
2,168 hours.
  In 1994, the national average was 1,227 hours; the 1994 Maryland 
average was 75 percent greater--2,143 hours.
  In 1995, the national average was 1,149 hours; the 1995 Maryland 
average was 72 percent greater--1,982 hours.
  In 1996, the national average was 1,272 hours; the Maryland total for 
that year was 75 percent greater--2,230 hours.
  So for each of the last 4 years, the average weighted case-hours for 
Maryland's bankruptcy judges have exceeded by a wide margin not only 
the national average, but also the 1,500-hour yardstick used by the 
Judicial Conference to rate requests for additional judges.
  Other States have faced temporary overloads, but only Maryland can 
claim the dubious distinction of having one of the Nation's most 
overworked bankruptcy courts for each of the last 4 years. In fact, 
only the District of Maryland has ranked in the top 3 among the 91 
Federal judicial districts during each of the 8 biannual evaluations of 
bankruptcy judges' case-hours since September 1992.
  This situation cries out for remedial action. Recognizing as much, 
the Judicial Conference recommended to the 104th Congress that Maryland 
receive an additional bankruptcy judgeship. Unfortunately, this 
proposal was not enacted into law and, as a result, the problem has 
worsened considerably.
  I have cited data on increased bankruptcy filings in Maryland during 
late 1996. If Maryland received one additional bankruptcy judge 
tomorrow, the case-hours per judge in the district would still be 
1,784, 141 percent of the national average and well in excess of the 
1,500-hour mark used to rate a district's need for new judges.
  In fact, even if Maryland received two new bankruptcy judges, its per 
judge caseload would still exceed the national average by 18 percent. 
To place Maryland at the national average, three additional bankruptcy 
judges would be required. Yet this bill adds only two judgeships, the 
minimum response according to those most familiar with the problem. 
This is the number recommended to the Judicial Conference by the Fourth 
Circuit Judicial Council, and I fully expect the Judicial Conference to 
include two new Maryland judgeships in its spring recommendations to 
Congress.
  New judgeships are essential not only for effective judicial 
administration,

[[Page S880]]

but also for Maryland's economy. Bankruptcy laws are crafted to foster 
orderly, constructive relationships between debtors and creditors 
during times of economic difficulty. This in turn results in businesses 
being reorganized, jobs--provided by creditors and debtors--preserved, 
and debts managed fairly. Overworked bankruptcy courts have a 
destabilizing effect on this system.
  Consider an example. Bankruptcy law provides debtors temporary relief 
from the claims of creditors, allowing the debtor to adopt a 
reorganization plan, thereby improving its chances of recovery, and 
keeping creditors from cutting in line in front of other creditors who 
have priority claims on debtor assets. But the law also allows a court 
to grant creditors relief from a stay where the creditor shows that its 
claim will not receive adequate protection under normal procedures. 
Under this procedure, a court must hold a hearing 30 days after an 
application for relief from the stay, or automatically grant relief.

  Because of the importance of these hearings, Maryland's bankruptcy 
judges routinely set aside 1 day per week to conduct them. One such 
judge, on December 6, 1996, had on his calendar 125 motions for relief 
from stay, a caseload that obviously precludes these cases from being 
fully heard. Thus, creditors seeking to cut in line, to the detriment 
of the debtor, other creditors, and the orderly administration of the 
bankrupt estate, may file for relief from stay, knowing that the case 
will not likely be heard and that the creditor will receive automatic 
relief under the law. Failure to hold a timely hearing may result in 
the inability of a debtor to reorganize, or in the cheating of other 
worthy creditors.
  Similarly, the extreme caseloads faced by Maryland's bankruptcy 
judges allow dishonest debtors to dissipate assets, again at the 
expense of worthy creditors.
  In short, the inevitable delays occasioned by the lack of judges harm 
both creditors and debtors, thereby imperiling businesses and the 
people employed by them. Is it any wonder that private bankruptcy 
practitioners and business groups also support additional bankruptcy 
judges for the District of Maryland? To quote Susan Souder, president 
of the Maryland Federal Bar Association, ``Maryland citizens, 
businesses, and lenders should be entitled to the same protection of 
the courts as their counterparts in other States.'' Currently they do 
not receive such protection. Two new bankruptcy judges in the District 
of Maryland are imperative if we are to address this critical problem.
  In closing, let me commend the dedicated efforts of Maryland's four 
sitting bankruptcy judges--Chief Judge Paul Mannes and Judges Duncan 
Kier, James Schneider, and Steve Derby. Their dedication to the 
administration of justice is especially impressive given the 
extraordinary burdens placed upon them.
  Ms. MIKULSKI. Mr. President, I am pleased to join with my colleague, 
Senator Paul S. Sarbanes, in sponsoring this important legislation. 
This bill would authorize the appointment of additional bankruptcy 
judges for the state of Maryland.
  Bankruptcy filings nationwide have dramatically increased. In my 
State of Maryland, over 20,000 individuals and businesses filed 
bankruptcy last year. Unfortunately, bankruptcy filings have hit a peak 
nationwide with both individuals and businesses seeking relief from 
financial debt. While the economic climate in Maryland is much better 
than in many parts of the country, the recent recession has had an 
impact on consumers in my State.
  This bill will give relief to bankruptcy judges, who hear cases in 
Maryland. These judges have had a growing caseload to process. This is 
good news for consumers, who are seeking a reorganization of their 
debts and creditors seeking to protect their rights. It is critical 
that consumers are able to have their bankruptcy petitions processed in 
a timely manner. For the debtor seeking to protect his home under a 
chapter 13 filing, this bill will help expedite the process and allow 
the bankruptcy judge to give full consideration to the petition.
  Maryland's bankruptcy judges have had to struggle to keep up with the 
growing docket. Because of the current heavy caseload, judges cannot 
schedule hearings in a timely manner. This adversely affects the 
debtor's reorganization and delays distributions to creditors.
  The District of Maryland currently has four bankruptcy judges. The 
Judicial Conference recommended the authorization of an additional 
judge. Their findings were based on the weighted caseload per judge, 
which is a good indicator of a judge's workload.
  Maryland's judges are working strenuously in the best interests of 
both debtors and creditors. But, their caseload requires additional 
assistance. Maryland needs at a minimum one more bankruptcy judge, but 
would prefer two more judges.
  Judges from other districts have helped Maryland's bankruptcy judges. 
However, these judges have had to struggle with their own increasing 
caseloads.
  The Judicial Conference found that Maryland's judges have a caseload 
per judge that is 70 percent above the national average. Clearly, the 
bankruptcy judges in Maryland's district are overwhelmed by the 
caseload. Even with the addition of another bankruptcy judge, 
Maryland's judges would still have a caseload that is above the 
national average. So, I hope we will be able to provide two additional 
slots.
  I hope my colleagues will support this legislation. It is important 
for consumers and creditors to process their claims. It is also 
important to provide equity in handling the caseload in Maryland's 
bankruptcy courts.
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