A Few Shots Astern

A Few Shots Astern

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The first "On Our Watch" column for the new year should perhaps summarize 1999 and describe U.S. Trustee Program (USTP) plans for 2000. Indeed, much happened last year, and much is anticipated for the coming year. But as many of you know, I will be retired by the time you read this. This column gives me the opportunity to thank the many people in the bankruptcy community who have supported the U.S. Trustees during my five-year tenure as director and who have worked with us to improve the USTP.

I have been fortunate as director to have the help of many good people among the U.S. Trustees and their staffs, the Executive Office staff, and the members of the bench, bar and private trustees corps. All of them contribute to the confidence I have in the USTP as I now leave.

My goal for the USTP when I first arrived was to direct a first-rate professional organization and have it recognized as such. Yet the first three years of my tenure were periods of almost constant crisis. At the time I arrived, the Office of Management and Budget had initially provided no money for the USTP in the administration's draft budget, there were some who were considering whether the USTP should be privatized or eliminated, and the National Bankruptcy Review Commission (NBRC) was considering alternatives to the USTP.

While challenges remain, the past several years—and the past year in particular—have, for the most part, been good ones for the USTP. There were many signs that things were changing, but I believe the report of the NBRC was a portent of things to come. A number of people within the USTP favorably impressed the members of the NBRC with the work the USTP does, and the NBRC's recommendations buttressed the USTP's role in the bankruptcy system, particularly in the administration of small chapter 11 cases. The NBRC's recommendations in this regard have largely been adopted in various bankruptcy proposals being considered by the House and the Senate, and Congress itself has turned to the USTP as an agent for many of the changes being considered for consumer bankruptcy cases.

These developments have allowed us in the USTP to place a greater focus on improving bankruptcy administration. In this regard, the past year has brought about a number of important developments.

The USTP has joined with several law enforcement agencies to create the National Bankruptcy Fraud Task Force, which will lead to new initiatives to reduce fraud and abuse in the bankruptcy system. Additionally, with the establishment of the National Bankruptcy Training Institute at the University of South Carolina in Columbia, we have the foundation for an ongoing program of course development and training for all USTP employees, and for improved bankruptcy administration overall.

The past year has also brought the continued development of a solid working relationship with private bankruptcy trustees and other bankruptcy professionals. While many of the U.S. Trustees' responsibilities raise issues with other trustees and professionals, I am glad to see a recognition by many that supervision does not necessarily mean confrontation. Those of us who work in government ultimately serve all the public, including individuals who may be the subject of our actions. All should be listened to with care, and their views should be weighed carefully before a government official takes action.

The distribution of reliable data on bankruptcy administration has also improved greatly over this past year, as readers of the ABI Journal have witnessed through the articles that have appeared in this column and other columns such as "Bankruptcy by the Numbers." The availability of reliable data not only improves the administration of bankruptcy cases, but will also improve the understanding and administration of the bankruptcy system by highlighting the important problems and issues and leading us away from bankruptcy policy based primarily on sound bites and anecdotes.

After five years, I believe it is clear that the USTP is here to stay. The challenge that remains, after all of this accomplishment, is to become the vanguard of improvement in the bankruptcy system. Over the past year, Deputy Director Kevyn Orr and I have had the opportunity to speak at a number of forums. Inevitably we are asked to predict the likelihood of substantial bankruptcy reform becoming law.

Our response has been to warn about what to expect if bankruptcy legislation does not pass. After all, as practitioners, we would read and interpret any new bankruptcy law, just as we would any other statute. While reasonable minds can disagree about the proposals currently before Congress, the danger for the bankruptcy system comes from a complacency that may emerge if bankruptcy reform is not passed.

Change is currently the focus of Congress. But if the proposed legislation does not pass, the concerns about the inadequacy of the bankruptcy system will remain. Many of the key legislative reforms are aimed at problems such as fraud, abuse, inefficiency and sloppy and incomplete filings—problems that are also at the core of much of the work done by the USTP. Even if significant bankruptcy legislation does not pass, the USTP will still be charged with addressing the concerns about the bankruptcy system's problems.

In this regard, I believe it is crucial that the USTP remain independent from the judiciary. In my mind, there can be no question that the integrity and efficiency of the bankruptcy system depends on the continued separation of the judicial and administrative functions. In the end, judges can only decide issues in cases brought before them. Only an executive branch agency, as an independent supervisor of administrative matters, can identify problems within the system and, through regulation, advocacy and moral persuasion, address them and bring to bear the forces needed to remedy shortcomings. Not the least, an independent USTP acts as a bulwark to protect judges from perceptions of favoritism in appointments and from involvement in non-judicial administrative matters that were prevalent in the distant past.

An independent regulatory body structure has caught the eye of bankruptcy law reformers in Mexico, Japan and other countries. It already exists in England, Australia, Hong Kong, Finland, Canada, Malaysia and many other places. Indeed, if the USTP had not already been established here, Congress undoubtedly would be including it among the reform proposals for the bankruptcy process.

I leave a strong and resilient USTP, consisting of many fine people dedicated to protecting and preserving the integrity of the bankruptcy system. I am proud of them all.

Journal Date: 
Tuesday, February 1, 2000