Journalist's Guide

District
Appellate
Bankruptcy
Glossary

uscourts.gov

Federal courts have exclusive jurisdiction over bankruptcy cases. The primary purposes of the federal bankruptcy laws are to give an honest debtor, either a person or a business, a "fresh start" in life by relieving the debtor of most debts, and to repay creditors in an orderly manner to the extent that the debtor has property available for payment. That can be done using several different methods, as identified by chapter numbers of the U.S. Bankruptcy Code, Title 11 of the United States Code.

There are 90 U.S. bankruptcy courts, which, by statute, are units of the U.S. district courts. A U.S. bankruptcy judge presides over a bankruptcy case. The judge is appointed to a 14-year term by the judges of the local U.S. Court of Appeals and can be reappointed. Like district courts, bankruptcy courts have their own local rules. Each court's local rules are available at the court's web site, all of which can be accessed at www.uscourts.gov. A publication, Bankruptcy Basics, offers a good explanation of bankruptcy law and bankruptcy court proceedings.

Bankruptcy court proceedings are open to the public and the news media unless some extraordinary circumstance exists, such as the judge considering a matter under seal. As in other federal courts, all bankruptcy proceedings are recorded. Bankruptcy judges are authorized to use either contract court reporters (not employees of the court) or electronic sound recording equipment. You may order a transcript of a bankruptcy proceeding through the contract court reporter or through a professional transcription service chosen by the court.

All documents filed in connection with a bankruptcy case generally are considered public documents and can be viewed at the court clerk’s office or through the court's PACER system.

Bankruptcy courts generally have their own clerks, but in some judicial districts the clerk's operations of the district and bankruptcy courts are consolidated.

Bankruptcy generally provides two options: liquidation or reorganization. Liquidation means selling off a debtor's assets, if there are any available, to raise cash for creditors. Chapter 7 of the Bankruptcy Code is designed for that purpose. When a Chapter 7 case is filed, a trustee is appointed by the United States Trustee to take over the debtor's property for the benefit of creditors. A debtor who is an individual, however, is allowed to keep a limited amount of "exempt" property specified by law. The great majority of cases filed under Chapter 7, however, are "no assets" cases, in which the debtor has no assets available for distribution to creditors.

Reorganization involves obtaining a bankruptcy judge's approval of a plan for repayment over time of all or a percentage of the debts owed to creditors. Chapters 11 and 13 govern the reorganization of a debtor's financial affairs. Chapter 13 cases involve obtaining a bankruptcy judge's approval of a plan for repayment over time of all or a percentage of the debts owed to creditors. Chapter 11 cases, nearly always filed by corporations or other business entities, involve a plan of reorganization of the debtor's liabilities, which must be voted on by creditors and approved by a bankruptcy judge.

In all cases, no matter what chapter, a "meeting of creditors" must be held, usually from 20 to 40 days after a bankruptcy petition is filed. The debtor must attend this meeting, at which creditors may ask questions regarding the debtor's financial affairs and the extent of the debtor's holdings. A trustee, not a bankruptcy judge, presides over this hearing.

There are several types of bankruptcy proceedings that may interest journalists. The first is a hearing on first day orders, which are sometimes held in Chapter 11 cases. At this hearing, a bankruptcy judge is asked to approve important matters that determine how the debtor will operate while the case is pending. Another hearing in a Chapter 11 case is held for confirmation of the debtor’s plan of reorganization. During this hearing, the debtor's lawyer attempts to obtain the judge's approval of the plan, and creditors have a chance to present their objections to the plan.

Still another proceeding of interest is an adversary hearing – something of a mini-trial involving a particular issue related to the main bankruptcy case. Adversary proceedings can focus, among other things, on requests for injunctions, environmental issues, and fraud on the part of the debtor.

Appeals of a bankruptcy judge's rulings can be made to the district court, or, in certain circuits, to a bankruptcy appellate panel composed of three bankruptcy judges. Further appeals to the court of appeals and the Supreme Court are then available. If certain statutory requirements are met, the court of appeals also has jurisdiction to authorize a direct appeal from a bankruptcy judge's ruling to the court of appeals.

Bankruptcy court records are available online through the PACER system or through each court's web site, accessible through www.uscourts.gov. The court web sites also contain local rules, practice preferences of individual judges, and other useful information.

This page is maintained by the Administrative Office of the U.S. Courts on behalf of the U.S. Courts. The purpose of this site is to function as a clearinghouse for information from and about the Judicial Branch of the U.S. Government.

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