How A Government Shutdown Will Affect Bankruptcy Courts

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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?

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.

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.

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