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Government Shutdown Not Likely to Affect Bankruptcy Court for Two Weeks; UST Office Less Clear

With a likely federal government shutdown just hours away, it is still unclear of the potential impact on bankruptcy cases, the court clerk's office, the Office of the US Trustee, and the bankruptcy court. However, it would appear that the court itself will continue to operate as normal for at least two weeks.  The status of the UST is less clear.

The United States District Court for the Western District of New York, which would include the Rochester and Buffalo bankruptcy courts, posted today the following statement on its website:

Absent an agreement today between Congress and the President on funding, the current Continuing Resolution funding the operations of the federal government will expire at midnight and many activities of the federal government will be suspended until a funding agreement is reached. Nevertheless, litigants, attorneys, jurors and other members of the public are advised the federal courts will continue to operate without interruption or reduction of services should this funding lapse occur. The courts have authority under law to continue full operations by funding operations through the revenue obtained through court fees. This fee balance for federal courts is estimated to fund full operations for an additional two weeks.

Only if a lapse in appropriations extends beyond two weeks will the federal courts be required to reduce services. Further guidance on that possibility will be given if and when it occurs.

NBC is also reporting that the federal judiciary has fees on hand to operate normally for ten days to two weeks, according to spokesman for the administrative Office of the U.S. courts.

The U. S. Courts website posted a similar statement three days ago that the judiciary appears prepared to operate for up to two weeks on "non-appropriated fees", which, mostly, means bankruptcy filing fees will keep all the federal courts operating for two weeks. The statement, in full, states:

What Happens to Courts if the Federal Government Closes?

If Congress is unable to agree on the continued funding of government before April 8th, the Judiciary is prepared to use non-appropriated fees to keep the courts running for up to two weeks.

Once that funding is exhausted, however, the federal court system faces serious disruptions. Following their own contingency plans, federal courts would limit operation to essential activities.

For the federal courts, this would mean limiting activities to those functions necessary and essential to continue the resolution of cases. All other personnel services not related to judicial functions would be suspended.

The jury system would operate as necessary, although payments to jurors would be deferred. Attorneys and essential support staff in federal defender offices and court-appointed counsel would continue to provide defense services as needed, but again, payments would be deferred. Courts would determine the number of probation office staff needed to maintain service to the courts and the safety of the community.

These statements appears to be in line with recent postings in other courts around the country.

Nevada: "The U.S. Bankruptcy Court will remain open and in operation, in the event there is a government shutdown. All updates regarding the operation of the U.S. Bankruptcy Court will be posted to our website."

Missouri: "For the week of April 11, 2011, it will be business as usual at the Western District of Missouri."

Maryland: "Please be advised that in the event of a Federal Government shutdown after Friday, April 8, 2011, the United States Bankruptcy Court for the District of Maryland will continue as normal and at full staff from Monday, April 11, 2011 through Friday, April 22, 2011.
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Paul Warren, Chief Clerk for the Bankruptcy Court for the Western District of New York, has reported to me that he has no update beyond the comments he made at the Bankruptcy Committee meeting March 29, but he will keep me posted if there are any developments to report.

The Office of the United States Trustee is a division of the Justice Department, not the federal courts. As of this afternoon, there is no information on either the US DOJ or the UST websites as to the effect of a shutdown. I have placed a call with a public relations person at the Executive Office of the UST in Washington, and if I get additional information I will report it here. The Rochester Office of the UST was unable to comment on the subject, other than to say 341 hearings next week should not be effected.

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