Judge Shopping in Bankruptcy
Several months ago, I did a long post about how Purdue Pharma's bankruptcy was the poster child for dysfunction in chapter 11.The gist of the argument is that the procedural checks and balances that make chapter 11 bankruptcy a fair and credible system have broken down because of a confluence of three trends:
- increasingly aggressive and coercive restructuring techniques;
- the lack of appellate review for many key issues; and
- the rise of “judge-shopping” facilitated by bankruptcy courts’ local rules.
I've written it up into a full length paper, forthcoming in the Texas Law Review and available here.
While writing the paper I was surprised to learn just how bad and concentrated the judge shopping has become in chapter 11. There are 375 bankruptcy judges nationwide. Yet last year, 39% of large public company bankruptcy filings ended up before a single judge, Judge David R. Jones in Houston. A full 57% of the large public company bankruptcy cases filed in 2020 ended up before either Jones or two other judges, Marvin Isgur in Houston and Robert D. Drain in White Plains.
I discuss the implications of the supercharged judge shopping in the paper, but let me say here what no no practicing attorney (or US trustee) is able to say, because I don't have to worry about appearing before these judges in the future: these judges should be recusing themselves from hearing any case that bears indicia of being shopped into their courtroom, if only to avoid an appearance of impropriety.
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