Acting DOJ Bankruptcy Head Will See Less Staff, More Oversight

As Ramona Elliott steps into her role as acting director of the Justice Department’s bankruptcy watchdog following her predecessor’s firing earlier this year, she inherits an agency with a smaller workforce and greater oversight demands.

But Elliott’s Aug. 29 appointment brings stability and a familiar face to the job, industry practitioners said. She has 31 years of federal service, mostly with the US Trustee, including as acting director from April 2022 to February 2023.

Her second time in the role begins as the agency faces shrinking resources, with staff potentially dropping to just over 600. Hundreds of workers already accepted the Trump administration’s retirement or resignation offer that takes effect in late September, and more could be cut under the president’s fiscal 2026 budget request.

The announcement comes nearly six months after the firing of ex-director Tara Twomey, who is appealing her termination.

Elliott’s appointment shows a “desire for stable leadership,” said former US Trustee director Clifford J. White, whom she temporarily replaced after his retirement. “Ramona’s first order of business is to find innovative ways to achieve the USTP’s mission with fewer resources,” he said.

The bankruptcy monitoring agency oversees hundreds of trustees who distribute billions annually to creditors in liquidation and consumer bankruptcy cases, supervises enforcement programs to ensure compliance with bankruptcy law, and issues criminal referrals.

It also litigates and regularly challenges legal protections for nonbankrupt entities after its win at the US Supreme Court last year in Harrington v. Purdue Pharma LP.

While serving as deputy director for the Executive Office for US Trustees in Washington, Elliott signaled in July that the agency would consolidate functions to “lessen burdens” on individual field offices.

Facing a reduced staff, she would have to evaluate all US Trustee activities, prioritize them, and streamline work processes to ensure statutory mandates are met, White said. The task will require someone with experience managing a large organization, which she has, he said.

The US Trustee declined to answer a list of questions, including about staffing levels immediately before Trump took office. The office employed 960 people in fiscal 2022-23, the most recent public data available.

‘Calming Influence’

Melissa Davey, president-elect of the National Association of Chapter 13 Trustees, said Elliott’s appointment brings a “calming figure” to the role following the March firing of Twomey.

“Ramona is a calming influence, and obviously, she’s experienced,” Davey said.

The announcement comes as Twomey fights in court over protections for senior career employees.

“There’s a goal of finality to the situation,” said Ed Boltz, co-chair of the National Association of Consumer Bankruptcy Attorneys’ legislative committee. “It’s saying, ‘We’re moving ahead and appointing Ramona as the acting director.’”

Bankruptcy practitioners said the loss of resources and personnel creates challenges for some of the agency’s statutory responsibilities, now under Elliott’s purview.

“Chapter 13 trustees can do the work and help fill in some of the gaps,” Davey said. “I think the agency will be focusing on their core statutory duties and making sure that they’re active in the Chapter 11 space and the Chapter 7s.”

Matthew Bruckner, bankruptcy professor at Howard University School of Law, said he was pleased that Elliott appears likely to continue consumer-friendly initiatives instead of rolling them back.

“That is what I fear with each Trump appointee,” he said. “But whether she’ll have the necessary staffing to continue to pursue appropriate program priorities remains to be seen.”

Agency Challenges

Another challenge for an Elliott administration will be oversight of corporate bankruptcies, White said.

Chapter 11 attorneys are increasingly pushing the boundaries of bankruptcy law, often requiring litigation, with the US Trustee as the only party pushing back, he added.

White said the US Trustee has some “unfinished business” in labor-intensive, high-profile cases, including lawsuits stemming from the undisclosed romantic relationship between former Jackson Walker partner Elizabeth Freeman and ex-bankruptcy Judge David R. Jones in Houston.

“Helping to clean up the scandal” is part of that work, White said. “The USTP has been engaged in resource-intensive litigation to bring accountability to those involved and it appears that effort will require a trial in about 30 cases.”

Other statutory requirements that could be difficult to accomplish with limited resources include debtor audits in Chapter 7 and Chapter 13 cases under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, practitioners said. The initiative authorized the agency to contract independent firms to randomly review the accuracy and completeness of submitted documents.

The US Trustee designated 588 cases for audit in fiscal 2024, resulting in 14 formal enforcement actions, 71 informal inquiries, and four criminal referrals.

“I don’t think the money is there to do that anymore,” Davey said.

Boltz said many audits turned up little of consequence, with “material misstatements” rarely affecting what debtors paid or creditors received. Larger issues were usually already identified by trustees or creditors, he said.

He expressed more concern about the agency’s ability to oversee creditors trying to inflate amounts owed or taking improper actions in violation of the automatic stay.

“I worry that’s going to be curtailed even faster than the oversight of the debtors, because there is sometimes a prejudice that the debtors are the ones who did something bad,” Boltz said.