30 Jan What the Heck Is Bankruptcy’s Order of Reference?
Every federal district court has a standing order of reference which refers all bankruptcy cases to the bankruptcy court for its district. The reference can be withdrawn by the district court at any time, usually because a case requires resolution of a conflict between bankruptcy laws and other laws affecting interstate commerce.
These local standing orders resolved a 1982 constitutional ruling by the Supreme Court, which said that a bankruptcy judge, not having constitutionally required lifetime tenure and protection from a decrease in compensation, could not rule on the state law matters which commonly arise in bankruptcy disputes.
Enforcement of that decision was delayed four times over two years to give Congress time to restructure the bankruptcy system. It didn’t happen, so the Court finally ordered enforcement of its decision and we had no bankruptcy system for ten days.I remember the late U.S. Bankruptcy Judge Harold Lavien, of Boston, coming out to the bench during that time to say that “I would reschedule all the hearings on the court’s calendar that day if he had the jurisdiction to do so, but I don’t.” He wished us all a good day and went back to his chambers.
The appellate courts then published a standard rule for use by the district courts if the district courts desired, and just about each one did. Congress finally acted to create a bankruptcy court “unit” of each district court, and the orders of reference require that each bankruptcy case be filed with that “unit.”
And that’s “The Rest of the Story.”
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