Bankruptcy Law News

Bankruptcy Watchdogs at U.S. Trustee Office Leashed by Shutdown

Jan. 4, 2019, 8:33 PM

Because of the partial government shutdown, U.S. Trustee lawyers are limiting their work in bankruptcy courts to emergency matters, affecting some Chapter 11 cases, court officials said.

Bankruptcy courts will operate under the same limitations as the U.S. District Courts, said Una O’Boyle, clerk of court in Wilmington, Del., one of the busiest bankruptcy courts in the U.S.

The U.S. Trustee acts as a watchdog in corporate bankruptcies, putting together official creditor committees and organizing meetings between debt holders and bankrupt companies.

In Houston, Jan. 3, during a hearing in the Westmoreland Coal Co. bankruptcy, an attorney for the U.S. Trustee appeared in court while on furlough saying her work in the case may be slowed by standoff.

In Wilmington, the Department of Justice asked that the bankruptcy case of Promise Healthcare Group be halted temporarily because government lawyers couldn’t participate during the shutdown.

The partial government shutdown started on Dec. 22 after President Donald Trump declined to sign spending legislation without $5 billion for the border wall he campaigned on. With the president under pressure from conservatives to fill that promise and Democrats now in control of the House of Representatives, it could drag on.

©2019 Bloomberg L.P. All rights reserved. Used with permission

To contact the reporter on this story: Steven Church in Wilmington, Del., at schurch3@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Rick Green

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