New Jersey Court Responds to CRC Letter

On February 8, the Creditor Rights Coalition joined leading academics, industry associations and former government officials in submitting a Letter to Chief U.S. Bankruptcy Judge Michael B. Kaplan to follow leading Bankruptcy Courts and adopt a local rule requiring random assignment of large bankruptcy cases among all bankruptcy judges in the district. The signatories recently submitted a Proposal to the Judicial Conference to adopt a Federal Rule to provide uniformity across all bankruptcy courts to provide a level playing field and to avoid debtors creating the perception of a two-tiered justice system.

Chief Judge Michael Kaplan responded to the Letter by committing to a random assignment system of bankruptcy judges to large bankruptcy cases.

His response is excerpted below (emphasis added):

“I want to thank you for the concerns and interest expressed in your correspondence this morning on behalf of the Creditor Coalition. I would like to address your inquiries by repeating my comments that I made to our Rules Committee last week during an initial call:

Pertinently, our District’s chapter 11 practice rules, including those for complex cases, have not been updated since I went on the bench, seventeen years ago. We are long overdue, and since we have the opportunity now to make needed changes and improvements, we are looking for insight from all practitioners, representing all constituencies in chapter 11 cases. That said, I have emphasized that our District will never change our rules to create “complex case panels” or limit assignment of cases in any fashion. All of our judges are more than capable and experienced to handle complex cases. This should be evident with respect to recent assignments of more notable cases such as We WorkRite AidBed Bath & BeyondDavid’s Bridals and Z Gallerie– each of which to different judges in our Court.

Our case assignment procedures for complex cases will remain as is, consistent with all of our cases, randomly assigned based on the debtor(s)’ location in our vicinages.

Dan Kamensky, Founder, Creditor Rights Coalition, responded, “We appreciate the engagement and response by the court to our Letter and hope this action is followed by other courts in requiring random assignment of all large bankruptcy cases. We look forward to further engagement with the court to ensure a fair and transparent rule making process.”

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About The Creditor Rights Coalition

The Creditor Rights Coalition is a nonprofit association established to serve as the leading voice representing all stakeholders with an interest in protecting creditor rights. The Coalition promotes transparency, accountability and equality to ensure fair and robust stakeholder participation in bankruptcy proceedings by monitoring judicial, legislative and regulatory matters associated with bankruptcy-related issues. More information about the Coalition can be found at www.creditorcoalition.org. The Advocacy efforts of the Coalition do not necessarily reflect the views of any individual Contributor or Advisory Board Member.