Bankruptcy Judges

The Constitution gives Congress power to establish uniform laws on bankruptcies, and for much of the twentieth century bankruptcy cases were handled by referees appointed by district courts. The Bankruptcy Reform Act of 1978 created bankruptcy courts with expanded powers, but in Northern Pipeline v. Marathon in 1982 the Supreme Court held that judges without life tenure could not exercise the full judicial power of Article III. Congress responded with the Bankruptcy Amendments and Federal Judgeship Act of July 10, 1984, which made bankruptcy courts units of the district courts.

Bankruptcy judges are appointed by the court of appeals for their circuit to renewable 14-year terms and may be removed only for cause. There are about 345 authorized bankruptcy judgeships. They oversee liquidations under Chapter 7, business reorganizations under Chapter 11, debt repayment plans for individuals under Chapter 13, and cases for family farmers, municipalities, and others, deciding disputes among debtors and creditors and approving plans. District courts refer bankruptcy cases to them, and appeals go to the district court or, in some circuits, a bankruptcy appellate panel.

Because bankruptcy judges lack life tenure, the Supreme Court has continued to define which disputes they may finally decide, including in Stern v. Marshall in 2011. Major corporate cases have drawn scrutiny when companies file in a few districts known for business-friendly judges, and the use of bankruptcy to resolve mass injury claims against affiliated companies has been contested, with the Supreme Court in 2024 rejecting a plan that released claims against the Sackler family without victims' consent. Supporters say specialized judges resolve complex cases efficiently, while critics say forum shopping lets large companies choose their judges.