One of the nation's leading bankruptcy judges resigned Wednesday, saying that the constitutional crisis over jurisdiction in bankruptcy cases will lead to "thorough confusion" at a time when the number of bankruptcies is the highest since the Great Depression.
Judge Dean Gandy of Dallas, the outgoing president of the National Conference of Bankruptcy Judges, said the impasse over judicial jurisdiction will result in an "extreme slowdown" in bankruptcy cases.
"This is extremely unfortunate at a time when bankruptcy courts are administering more than $100 billion in assets" of failing U.S. companies, Gandy said. Bankruptcy filings are running at a rate almost twice as high as two years ago.
Gandy said he resigned in anticipation of the Supreme Court's refusal yesterday to grant a further delay in its June, 1982, ruling that the nation's bankruptcy laws were unconstitutional in their treatment of judges.
Gandy, whose resignation is effective as of April 15, predicted other resignations among the nation's 220 bankruptcy judges, saying they now will spend "an inordinate amount of time deciding where a decision should be made instead of deciding the merits of a case." This will remove "all the intellectual attraction" of handling bankruptcy cases, he said. Gandy intends to return to private law practice in Dallas.
Until Congress acts to revise the 1978 Bankruptcy Act, bankruptcy cases are expected to be handled under a "model rule" proposed by the Judicial Conference of the United States, under which federal court judges will have review authority over bankruptcy court decisions.
At the U.S. courts' administrative office, the interim rule was described as a "good, safe effort to keep the system going." The rule still has to be approved by the circuit court districts, and each could modify it.