Interview with New NCBJ President James D. Gregg
ABI: In the 15 years that you have been on the bench, what have been the most significant changes you've observed?
Judge Gregg: One of the major changes I've seen is that the Administrative Office decentralized the budget and permitted the bankruptcy courts to receive and allocate funds to areas of their needs. Each district is somewhat unique, and as a result we have been able to become innovative, especially in areas such as automation and technology. Bankruptcy courts have been in the forefront of implementing new hardware and software to handle the growing caseload we are all encountering.
ABI: To continue with the technology theme, we note the recent mega-cases such as WorldCom, and here, in the Eastern District of Virginia, US Airways being filed electronically over a weekend. Electronic filing in the big cases seems to be coming into its own. Do you see this trend continuing and extending to smaller cases and even personal bankruptcy?
Judge Gregg: I think what will happen is that attorneys, and particularly the debtor's bar, will realize that while working at their offices late at night and needing to get a case filed to stop a foreclosure in a consumer setting, they will be able to do a filing electronically. I would note that even before the electronic case filing occurred there would be filings on weekends. For example, the largest case filed in the Western District of Michigan is a case called Quality Stores. In that case, an involuntary petition was filed on Sunday with the clerk of the court to commence the case. The bankruptcy rules have provided that the courts are always open. Although we do not always actually have our doors open, the judges and the court clerk may accept filings. I think it will become much more common with electronic filing.
ABI: Next October will mark the 25th anniversary of the enactment of the Bankruptcy Code, and though there have been some amendments, the basic framework of the law is still in place as it was in 1978. For the last several years, Congress has been struggling over the question of whether the Code is still working as intended. Obviously much has changed in the economy and to business structures, personal finance and the like during the past quarter century. From your perspective as a judge, one who has to use the Code every day, do you think the law still works as it was intended?
Judge Gregg: I first began practicing law in 1977. As a young lawyer, I was blessed to be involved in the
bankruptcy field at the time when the Code was adopted. I always thought that the Bankruptcy Act was like a short
story, whereas the Bankruptcy Code is extremely comprehensive. As each year has gone by, I appreciate what the
drafters of the
Bankruptcy Code have done more and more. When you look at it, with some exceptions, the Code fits together so well. It intends and accomplishes an overall debtor-creditor balance for the rights of the parties. I believe that the Code is still being applied as it was intended, although as we get more and more amendments, sometimes the amendments don't quite fit. It causes difficulties for both the bench and the bar to interpret those provisions. But I really think the architects of this Code were geniuses.
ABI: Notwithstanding the apparent genius of the existing law, Congress is seemingly close to an agreement on a significant overhaul of the law, the most significant in the last quarter century. One theme that seems to run throughout the bill is a distrust of judicial discretion—whether it's the bills resorting to an arithmetic formula to means-test eligibility in chapter 7 or the numerous strict time limits that would apply to business cases on exclusivity, rejection of leases and the like. Do you recognize this theme, and if so, why do you think Congress is headed in this particular direction?
Judge Gregg: I'm not as well versed about all of the provisions of the various amendments as some of my colleagues are, such as (Hon.) Gene Wedoff of Chicago and (Hon.) Bill Brown of Memphis who know quite a bit about this. It's my belief that some of the amendments are results of judicial decisions made by reasonable judges who could disagree based on the language of the Code. It seems clear that Congress has indicated a desire to tighten the access to the bankruptcy system based upon the notion that some debtors are less than fully honest. When §707(b) was passed, it was hoped that section would target many of the perceived abuses. Maybe it hasn't worked as well as intended. Whatever laws are ultimately passed, I am very confident that all judges will do their best to follow the law and interpret it fairly in accordance with statutory construction principals. And the law will continue to develop just as it did in 1978 and after the 1984 and 1994 amendments.
ABI: One lament of creditors either in business or consumer cases is that the law is too debtor-oriented or that judges are too debtor-oriented. Judges are criticized for seeming to resolve ambiguities in the law in favor of the debtor, whether it be a business debtor or a consumer debtor. That criticism sometimes comes through in portions of this bill. Are judges sensitive to that criticism? Do judges think their colleagues are debtor-oriented, all other things being equal?
Judge Gregg: I can't speak for other judges, but I think that there is a balance in the Code between the debtor's remedies and the creditor's rights. I've read many cases either for seminars or writing my book and contributing to a treatise. In certain instances it appears that a particular judge may be result-oriented, sometimes in favor of a debtor or sometimes in favor of a creditor. I firmly believe though that all judges are exercising their judicial responsibility in a fashion they believe is correct and that they are following the law. What other people may perceive as to certain judges being debtor-oriented or creditor-oriented, I do not know.
ABI: One thing all judges agree on is the need for additional judicial resources, particularly in districts where there is a severe caseload burden. We haven't had a general judgeship authorization bill in more than five years. How well do you think courts have managed, particularly the busy courts using visiting and recalled judges?
Judge Gregg: Based on my personal knowledge and knowledge from speaking to my colleagues, bankruptcy courts have coped extremely well. Many judges have volunteered to serve as visiting judges. I have served as a visiting judge in the Southern District of Florida and have spent over three years serving in the Eastern District of Michigan. I know of at least 15 of my colleagues who have also served as visiting judges. All of them take time out of their busy schedules at their own courts and make sacrifices to travel and be away from home. None of us receive any extra pay. I think all of my colleagues are to be commended for their efforts. It's sad that it has taken so long for us to get the judicial resources that we need in courts that are overloaded, such as New York, Delaware and Detroit, for example. I hope that this will be corrected soon. If the legislation passes and is signed into law, we will soon have some 25 new judges. A continuing problem exists though, because the judges that may be authorized now are based upon caseload statistics from some years ago. The current caseload statistics where we now have more than 1.5 million bankruptcy cases would mandate there should be additional judges appointed in other areas of the country.
ABI: The workload issue sometimes ties into reappointment. You mentioned the Eastern District of Michigan being short a judge. This is a district where judges have been denied reappointment. How do you think the reappointment process has worked, generally speaking in the circuits?
Judge Gregg: As an outsider looking at other circuits and in particular my Sixth Circuit, I think the reappointment process overall has worked quite well. The majority of the judges who have reapplied have been reappointed. There have been some instances where the given judge was not reappointed. It seems to me that the common thread in such cases was criticism of judicial temperament. I think overall that the reappointment process is working quite well.
ABI: Sometimes big cases follow judges and perceptions of how judges in a particular jurisdiction treat debtors, and debtor's counsel in particular. The debtor has the initial control of where the case is filed, and this brings up the perennial issue of the ability of Delaware and New York to be the proper venue in business cases simply based on place of incorporation. There is a new bill pending in Congress that would limit the ability of Delaware and New York to be the proper venue in such cases. There have been academic studies done which suggest that Delaware and New York are not the best venues in terms of successful reorganizations, although those studies are quite controversial and subject to other interpretation as well. Do you think we have a venue problem in bankruptcy that should be fixed by legislation, or do the existing transfer rules adequately address cases of abuse?
Judge Gregg: You may think I am ducking your question, but my truthful answer is that I have read comments about both sides of the issue and I've heard people argue both sides of the issue. I don't have a real strong opinion. Persuasive arguments can be made on both sides. Ultimately Congress will decide to either change the law or leave it as it is now.
ABI: Recently, some major cases have been filed in New York as opposed to Delaware, suggesting that the dockets are getting so crowded in Delaware even with visiting judges that it no longer has some of the appeal that it did in the past. We have seen a few large cases filed in venues that are closer to the corporate home base, such as US Airways here in the Eastern District of Virginia, Consolidated Freightways in the Central District of California and Kmart in Chicago. Do you think this signals a trend away from Delaware and New York and that this really is not much of a problem anymore?
Judge Gregg: I don't want to characterize this as a problem, but my comment would be that debtor's counsel will always view where to file as a prime issue. Under the current Code there are choices to be made, whether it be Delaware or New York, or it may be closer to the home of the corporate operations. I don't know any pattern or trend right now. I think after another year or two, if the economy continues to lag and there are more large filings, perhaps we'll discern a trend then.
ABI: You are about to take the reigns as the NCBJ president. There are some 320 authorized judgeship positions. What are your plans for those constituents? What do you hope to achieve during your one-year term as NCBJ President?
Judge Gregg: First I hope to survive a very challenging job. All of my colleagues who have served in this capacity have worked very hard and have always said it was a very rewarding and demanding job. As for particular goals, I've always been an educator and I'm a former schoolteacher, so I especially favor bankruptcy education. I want to compliment the ABI in that field, as one who's been involved with the ABI as a speaker and participant at some of your seminars. We are looking at our educational programs for the annual convention we will be holding in San Diego in October 2003 and we hope to partially follow the ABI model by offering concurrent programs for the attendees. The idea is that there are many different sorts of educational needs in the insolvency professional community. By offering only one session, as we do now, many of the attendees' needs are not met. What we hope to have is a cafeteria-style educational program that will offer something for everyone, based on the experience of the successful ABI education programs. We will have smaller breakout sessions that are more conducive to learning as well as practical advice.
ABI: That sounds great. We are flattered to be the model for the change in the format and look forward to working with you in the year ahead.