During his four-year tenure as U.S. bankruptcy judge for the district, George Francis Bason Jr. ruled on thousands of corporate and individual bankruptcy cases, including the corporate reorganization of United Press International.

Bason, who left the bench Feb. 8, has more than 31 years of legal experience, including a 12-year stint in bankruptcy law practice representing both creditors and debtors.

Bason is perhaps best known for a series of controversial rulings against the Justice Department in a case involving a Washington software company, Inslaw Inc. In his last action as judge, Bason ordered the Justice Department to pay Inslaw $6.8 million plus legal fees for misappropriating a legal software program. He had earlier ruled the department used "trickery, fraud and deceit" to steal the company's software and drive it out of business, a charge the Justice Department has denied. Some local lawyers have suggested that Bason was not reappointed in part because of his Inslaw rulings.

Last week, Washington Post Staff Writer Elizabeth Tucker discussed with Bason the trends that affected the local bankruptcy court during his time on the bench. Edited excerpts of that interview follow.

Have you seen an increase in bankruptcy cases during your four years on the bench?

The number of cases that were filed in 1984 was somewhat over 600 cases. In 1987 calendar year there were over 1,100 cases. So there was almost a 100 percent increase in the number of new cases filed during that short four-year period. And before I came on the bench, when I first started practicing bankruptcy law in the 1960s, there were something under 200 cases per year that were filed, and most of those were relatively simple no-asset Chapter 7 consumer debtor cases. Whereas, of course, in addition to a vast increase in the number of cases filed every year, the complexity of the cases has also increased enormously.

To what do you attribute the increase in bankruptcy cases?

It's difficult to know. One large factor, I think, is that as a result probably of publicity {about} some of the very large corporate bankruptcies, such as Continental Airlines and the recent Texaco case, there has become an increasing public awareness of the availability of bankruptcy as an avenue of escape and as an avenue for corporations of dealing with problems which otherwise would be overwhelming.

There has been an awareness that someone like Continental Airlines or Johns Manville or A.H. Robins, presumably, can go through a Chapter 11 bankruptcy and emerge as a going concern and, of course, individuals through the medium of Chapter 13 and, to a lesser extent, Chapter 11, can do the same thing. ...

Along with that {has been} a sort of social acceptability of going through bankruptcy. The analogy I like to make is to the social attitudes towards divorce that, say 50 years ago, divorce was something that simply was not socially acceptable amongst a large majority of the population, whereas nowadays there has been an increasing social acceptability of it. I see the same thing now happening in terms of the social acceptability of going through a bankruptcy proceeding... .

Is there any relationship between an increase in the number of bankruptcies in the District and the economy?

Obviously, there is. There was a great increase in the number of bankruptcies in the District of Columbia when there was an economic downturn. When the economy started picking up again, we had a slight downturn one year in the number of bankruptcies that were filed. But then they started climbing again. ...

Traditionally, the District of Columbia has been thought of as being a very stable employment area, simply because of the existence of the federal government. I'm not aware, for example, of anything in the District of Columbia area that would be comparable to the problems with the farm economy in Iowa, or the problems with manufacturing -- in particular steel -- in Pennsylvania, or the problems in the oil industry in Oklahoma and Texas. I'm not aware of anything in the District of Columbia, economically, that would be comparable to those, and yet our increase in the number of bankruptcy filings closely parallels the national average.

Were most of the bankruptcy filings in the District last year by individuals or businesses?

Most of those were individuals and most of them were Chapter 7. A larger portion were Chapter 7, no-asset cases than any other category. Now, I don't have precise statistics, but in general, approximately 50 percent of the cases in 1987 were Chapter 7 cases, approximately 40 percent would be Chapter 13 cases and approximately 10 percent would be Chapter 11 cases.

Those are in a sense misleading statistics because the Chapter 7 no-asset cases take a minimal amount of time and effort either in the clerk's office or by the judge. Whereas a Chapter 11 case can take up a huge amount of time.

What kind of businesses tend to file for bankruptcy?

I suppose that most of our cases involve small businesses and probably more restaurants than any other type of business. I remember we had a hardware store; we've got now, I think, a grocery store in a Chapter 11 case, there was a taxi company, some movie theaters -- including one X-rated theater whose business actually was doing very well but they got into some problems with the Internal Revenue Service and wanted to take advantage of the provision in Chapter 11 that allows payment over a six-year period for tax obligations. But I'd say probably a majority of the business bankruptcies involve restaurants.

What factors seem to drive them to this?

With restaurants -- and I'm certainly not an expert in analyzing the restaurant business -- but as I understand it's a very iffy proposition {for a restaurant to be successful}, depending not only on location but also what happens to grab the public fancy at any given moment.

We had a rather amusing incident with one restaurant {Au Pied de Cochon} that was in a Chapter 11 proceeding. And it just so happened that there was a Russian defector {Vitaly Yurchenko}, who was seated in this particular restaurant and excused himself to go to the men's room and disappeared from sight. The next thing he was heard from, he was in Moscow again. As a result of the news coverage of this incident, that particular restaurant's business suddenly picked up, where previously their prospects were rather dim. In fact, they now have had a confirmed plan of reorganization, and so far as I'm aware, are prospering. They were in Chapter 11 bankruptcy at the time that this Russian fellow redefected.

Do you think some bankruptcy filings really are scams to avoid paying off debts?

I'm sure that happens, and I have a particular case in mind, not by a business as such but by the president of a corporation who filed for bankruptcy.

There was also another case that was filed by a business, and the president of the business was incarcerated at, I believe, Allenwood. We got a flurry of papers from a number of sources indicating that this man's guidance and direction for the corporate debtor was absolutely essential to any prospect of the corporation being able to reorganize and being able to rehabilitate itself, and therefore he should be released from Allenwood and returned to the District of Columbia so that he could do the creditors of the corporation the favor of trying to get them paid in full. And I had the impression that this was a scam to get the guy out of Allenwood. I think that impression was born out by subsequent events.

The other case that I thought of involved an individual who was the subject of a criminal prosecution for having embezzled funds from the corporation he was the president of, and he filed bankruptcy shortly before a civil suit against him in Baltimore, I believe, was scheduled to come to trial.

There have also been other cases by both corporations and individuals where I had had occasion to point out to the debtors and sometimes their attorneys that the law does require -- under penalty of perjury with a penalty of up to $65,000 or 5 years {in prison} or both -- a complete listing of all assets and a complete listing of all debts. And these are very important things.

Do most corporate reorganizations approved by the bankruptcy court work?

Unfortunately, I don't know the answer to that. I think it would be an interesting subject to follow up on. In fact, I had discussed with the clerk of our court not too long ago the need to try to follow up on what happens with the Chapter 11 cases after the plan has been confirmed; whether they're able to actually carry through, because normally the case would be closed out or should be closed out fairly soon after the actual confirmation order in a Chapter 11 case. And so, we just don't know what happens to them. ...

We have a much higher success rate of Chapter 13 {personal bankruptcy} cases here in the District of Columbia than in most of the jurisdictions in the country. I think the reason for that has been that we have -- if you want to look at it this way -- been more lenient towards debtors than many other courts have been willing to be.

My own feeling is that the leniency towards the debtors is also beneficial to the creditors in that, in the typical Chapter 13 case, what is involved is a mortgage foreclosure. If the Chapter 13 is successful, the creditor doesn't have to go through the expense of foreclosing on the property again, doesn't have to bid the property in at the foreclosure, which is what usually happens, doesn't then have to hold the property for a period of time and spend more money to fix it up so they can sell it and then go through the process of finding somebody to buy it and so forth. My feeling is that in most Chapter 13 cases, the debtors wouldn't file for Chapter 13 if they didn't have a tremendous interest in {saving their homes} because they're strapping themselves financially for a long period of time.

And that house is probably worth more to those people than it is to anybody else in the world. So that's why it seems to me it's in the best interest of the creditor, because those people are willing to strap themselves and to pay the full amount of the debt in order to have the privilege of remaining in their house.

Do you feel that businesses should be given a chance to reorganize at all costs?

Not at all costs. ... I think Congress certainly intended that businesses be given every reasonable opportunity to rehabilitate themselves and reorganize, and they did that in a variety of different provisions in Chapter 11 of the bankruptcy code that allows rather an extraordinary degree of indulgence towards debtors that are attempting to reorganize.

Now, on the other hand, it seems to me some businesses are -- well, one example that comes to my mind is the United Press International case. It seems to me in that case that there was more involved than simply the policy of the bankruptcy code itself, and that also in that case was involved the whole question of freedom of the press, freedom of expression, the right of the public to know. ... So I felt that in the UPI case there was more than an ordinary interest in the rehabilitation of this particular debtor.

In all cases of Chapter 11, I think Congress has -- both in its statute and in the legislative history -- indicated that the preservation of jobs, the utilization of resources, are things that are worthwhile goals and therefore if rehabilitation is reasonably feasible, it should be encouraged.

By the same token ... for example, with regard to union labor-management contracts, Congress, in response to a decision by the Supreme Court, {has} basically said 'Yes, we think corporate reorganization is a good idea, but not at the expense of union busting.' And so Congress added a provision to the statute to make it more difficult for a corporation to change the terms of labor-management agreements than it is ordinarily in a Chapter 11 case to change the terms of other types of agreements.