The District's only federal bankruptcy judge, Roger M. Whelan, resigned yesterday with a blast at Congress for its failure to enact speedily a new law governing the bankruptcy courts.
The bankruptcy courts have operated in a legal limbo since the U.S. Supreme Court ruled last summer that the law then governing bankruptcies was unconstitutional. The courts are currently operating under an emergency rule adopted last December.
In his letter of resignation to Chief U.S. District Court Judge Aubrey E. Robinson Jr., Whelan, a bankruptcy judge for 11 years, said, "The oath of office which I took upon my entry involved a sincere commitment on my part to the dispensation of justice within the area of bankruptcy law. I regret that circumstances now compel me to terminate my judicial career."
"The independence of the bankruptcy court, of course, has been severely fragmented by reason of the Emergency Resolution currently governing the courts ," Whelan wrote, "and the pride and intellectual satisfaction which I once experienced as judge is now considerably diminished as a result of what has taken place . . . . "
In an interview, Whelan said that lawyers who appear before his court are unsure about whether the court has jurisdiction to decide their cases. As a precaution, many are asking U.S. District Court judges to approve decisions already made by bankruptcy judges. Because his ruling are often reviewed by another judge, Whelan said, the current system means that "what we have done is entitled to little or no respect."
Whelan said the Supreme Court could eventually rule that all bankruptcy actions taken since last December are unconstitutional.
"This is particularly perplexing when you are operating with complex cases," he said. "There is really no court that has valid jurisdiction . . . . I see this as an intolerable situation."
The federal bankruptcy courts ensure that the remaining assets of insolvent corporations and individuals are distributed equitably to creditors. They also protect corporations from creditors so they may have a chance to operate profitably again. There are no local or state bankruptcy courts.
As a secondary issue in his decision to resign, Whelan, who makes $63,600 a year as a judge, said he finds it difficult to put four of his children through college on his salary. "When one goes into public service, you expect a reduction in compensation," he said. However, Whelan said, the lack of cost-of-living increases has meant his salary is effectively being eroded.
"For me, it's a sad time. I always thought the pinnacle of a legal career is to be a judge," Whelan said in the interview.
Whelan's resignation is effective at the end of the year. He plans to join the Washington law firm of Verner, Liipfert, Bernhard, McPherson & Alexander.
In its ruling last summer, the Supreme Court struck down the 1978 Bankruptcy Reform Code because it did not grant lifetime tenure to bankruptcy judges. Last April the Senate approved a new law that would place bankruptcy judges in the role of administrative appendages to U.S. District Court judges. A bill approved by the House Judiciary Committee last February would give bankruptcy judges full powers and tenure.
The measures have run into opposition from some Democrats, who are reluctant to grant President Reagan the power to appoint a new set of judges, and from the consumer credit industry, which wants tougher standards imposed before individuals can declare bankruptcy, according to congressional aides.
Vern Countryman, a Harvard Law School bankruptcy professor who helped draft portions of the 1978 law, predicted that if Congress adopts the bankruptcy law passed by the Senate, it will be ruled unconstitutional for the same reasons the 1978 law was struck down.
Since the impasse began, the number of resignations and retirements in the 241-judge federal bankruptcy court has increased dramatically, rising from five in fiscal year 1981 to 20 the following year, according to the administrative office of the U.S. Courts. So far this fiscal year, 16 bankruptcy judges have announced their retirement. The number of bankruptcy cases filed has increased from 360,957 in fiscal 1980 to 527,811 in fiscal 1982. This year, 406,050 cases have been filed.
Federal Bankruptcy Judge Martin V.B. Bostetter Jr., who handles cases in northern Virginia called Whelan an "excellent" judge whose experience will be missed. "Our sworn obligation to uphold the law is becoming very difficult and frustrating to carry out ," Bostetter said yesterday. "Nobody knows what the true jurisdiction is."
Rep. Peter W. Rodino Jr., (D-N.J.), chairman of the House Judiciary Committee, said yesterday, "The real problem will be replacing these fine people under the present uncertain, unconstitutional conditions."
Chief Judge Robinson will appoint Whelan's replacement.