NCBJ Legislative Successes—Now and in Our Past
Hon. Deborah Thorne, Northern District of Illinois
As we celebrate the last 100 years of our NCBJ history, we should once again reflect upon the parts of our mission which involve protecting bankruptcy judges and the bankruptcy system. Much of this work has been done by the NCBJ Legislative Committee which was formed as an original committee of the National Association of Referees in Bankruptcy (NARB). Since that time, members of the Committee have continued to educate and discuss proposed legislation with members of the House and Senate and most particularly with staff.[1] This article cannot do justice to all of the work members of the NCBJ have done over the last 100 years to improve the bankruptcy system and what is now known as the Bankruptcy Code.
Just this week we received news that after many trips to Washington D.C., telephone calls and emails to House and Senate staffers, the NCBJ has nearly achieved success in seeing that the Subchapter V debt limits are raised back up to $7.5 million as explained below. This is only one of the many legislative successes that the NCBJ can celebrate in San Diego.[2]
Professor Grohsgal in the most recent NCBJ Journal[3] has provided a thorough description of much of the legislative work of the NCBJ and its predecessor, the NARB. The “Committee on Legislation” was established early in our history and through its members has worked tirelessly during the late 1960s and throughout the 1970s to shape what became the Bankruptcy Act of 1978. Leading up to the enactment in 1978, the Bankruptcy Reform Commission undertook a systematic rewriting of the bankruptcy law. The Commission did not include any bankruptcy referees although a number did testify before the Senate Subcommittee in July 1968.[4] The testimony urged Congress to modernize the bankruptcy system which increasingly was taking on more complex matters and among the changes urged was to begin calling bankruptcy referees bankruptcy judges and in 1973, bankruptcy referees were renamed “judges”. Although bankruptcy judges were not included as members of the Commission, the Commission’s Executive Director, Professor Frank R. Kennedy, solicited views of bankruptcy judges through questions sent to the NCBJ which were answered by the “Liaison Committee” which became the “Legislative Committee” [5]
In detail which cannot be included in this short article, Professor Grohsgal captures the work the Legislative Committee to formulate the “Judges Bill” which was in large part introduced by Representative Edwards and Senator Burdick in 1975 and in many ways was the essence of what became the Bankruptcy Act of 1978. It provided practical solutions to the problems that were faced by the Chandler Act. The hard work to obtain passage and the signature of President Carter is described in detail by Professor Gohsgal’s article. Needless to say, the NCBJ did not get everything in the legislation that it wanted. The 1978 Act did not contain retirement provisions and bankruptcy judges were not elevated to Article III status (although many in the NCBJ were not in favor of that anyway), but the opponents of the bill including Chief Justice Burger did not get everything they wanted either.
Throughout the years since the 1970s, the NCBJ Legislative Committee has continued to establish relationships on Capitol Hill and provide insight on the bankruptcy system to members and staff. Through its work, it did gain passage of the Bankruptcy Amendments and Federal Judgeship Act of 1984 (BAFJA). Although once again, Article III status was denied, the bankruptcy courts became eligible to have court clerks, law clerks and administrative assistants, judges gained protection against removal, salaries were set pursuant to the Federal Salary Act, and judges began to obtain improved retirement benefits. The fight between Chief Justice Burger and others over the status of bankruptcy judges did not end and continued throughout the eighties until in 1987, when the Retirement and Survivors’ Annuities for Bankruptcy Judges and Magistrates Act was introduced by Senator Howel Heflin. The bill was signed into law by President Reagan and became law in November 1988. It provided for cost-of-living increases in retirement benefits and survivors’ annuities for bankruptcy judges and authorized the recall of retired judges. Bankruptcy judges also gained salaries at 92% of the District Court judges’ pay rate.
While the NCBJ, with considerable work found success in supporting much legislation, it certainly failed when the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed and became law in 2005. And although BAPCPA passed over NCBJ opposition, the much later enactment of the Small Business Reorganization Act of 2019 was enacted. Through the leadership of Judge Thomas Small and the ABI Commission, the SBRA became law just before the COVID-19 shutdown of many businesses.[6] Through several sunsets of the debt limits, the SBRA has continued to aid small business, to streamline chapter 11 and many, many plans have been confirmed consensually. The last sunset was in June 2024 and as a result, potential debtors have not been able to avail themselves to relief if the debt exceeded approximately $3 million.
During the last two years the NCBJ Legislative Committee has continued to work with the Senate and the House to reinstate the $7.5 million debt limit. Several times, the NCBJ thought it was close, but it was not. Finally, after several years of perseverance and many trips between the House and the Senate, both bodies have passed the increased debt limits with the nearly identical language. The legislation would permanently raise the debt limit for Subchapter V cases to $7.5 million and raise the cumulative debt limit for chapter 13 cases to $2.75 million. Because the legislation has slightly different language, it is expected that the Senate will adopt the House language (as the House has adjourned until after the November election). Once that happens, we can only hope that it is signed quickly by the President. It will become effective upon the date of enactment. Many thanks to the tireless work of NCBJ members who have consistently stayed in touch and met with House and Senate members and staff and consistently pushed for this legislation which will once again provide for greater opportunities for reorganization for small businesses.
[1] This article only describes a portion of the legislative work the Legislative Committee has embraced. It has also worked to maintain temporary judgeships and make them permanent. It continues to work to protect personal data which might threaten the personal safety of judges and their families. Importantly the NCBJ worked with other federal judges to see passage of the Daniel Andrl Act to protect the safety of all federal judges.
[2] I recommend that all NCBJ members should read the two articles published by the NCBJ in the American Bankruptcy Law Journal and written by Professor Bruce Grohsgal. Both articles provide a terrific reflection of our last 100 years.
[3] A detailed and fascinating account is contained in Working to Make Bankruptcy Work: The First Hundred Years of the National Conference of Bankruptcy Judges, Part II, American Bankruptcy Law Journal, Vol 100:2. Several of the accomplishments and challenges faced by our members are described in detail. I recommend it to your reading.
[4] These included Asa Herzog, Russell L. Hiller, Daniel R. Cowans, Clive W. Bare, John T Copenhaver and Conrad K. Cyr. See ABLJ (Vol.100:2 2026, p. 205)
[5] ABLJ p. 215
[6] The debt limit was increased as a part of the CARES Act which became effective shortly after COVID-19 shutdown.