(4) judicial review by the bankruptcy court.
The panel trustee also should be given the opportunity to
obtain interim relief based on an objective standard in
circumstances where the U. S. Trustee's decision becomes
effective before the review process is complete.
H.R. 2592 would provide meaningful due process
protections for panel trustees necessary to allow them to
maintain their independence. We support the bill and urge
approval by the Subcommittee.
Subsection (b) of the bill provides bankruptcy
trustees with a right to judicial review of a United States
Trustee decision to cease assigning the trustee future cases. It
amends section 324 of the Bankruptcy Code to provide that, in the
event the United States Trustee decides to cease assigning cases
to a panel trustee or a standing trustee, the trustee, after an
opportunity for an administrative hearing on the record, may seek
judicial review of such decision before the bankruptcy court.
Upon review, the court may reverse the decision only if the
United States Trustee has acted unreasonably or without cause.
The bill also provides that the court may grant injunctive relief
in favor of the trustee in appropriate circumstances.
We feel strongly that the due process protections of
the bill must be applicable to any decision by the United States
Trustee to suspend or terminate the assignment of cases to the
panel trustee, including where applicable any decision not to
renew the trustee's term appointment. The EOUST has acknowledged
in its rule that panel trustees should have the right to judicial
review in situations involving the decision not to renew the
trustee's term appointment, and we agree. Unless there is a
right to judicial review of a decision not to renew the trustee's
term appointment, the United States Trustee would be able to
circumvent the requirements of the law by simply refusing to
reappoint the panel trustee at the end of his or her one-year
Finally, I would like to address briefly some of the
arguments that I have heard offered by representatives of the
EOUST against this bill.
1. The EOUST argues that to grant the bankruptcy
judges the right to review decisions on removal, cessation of
assignment of cases, or non-reappointment would put the
bankruptcy judges back into the very administrative process
earlier removed by Congress with the adoption of the Bankruptcy
Code. This is not true. A dispute such as this is not
administrative. It is a controversy which may be determined by
the bankruptcy court, and appropriately so. The bankruptcy court
possesses the expertise in bankruptcy matters such as section 324
removals, fiduciary standards, business judgment, and estate
administration. Resolution by the bankruptcy court also will be
quicker and less costly. Furthermore, the bill would not
eliminate any authority granted to the United States Trustee
under Title 28, including the authority to appoint, maintain and
supervise private panel trustees. It only provides a check
against abuse and arbitrary action.
2. The EOUST maintains that sufficient safeguards
are provided under the EOUST's administrative procedures for the
suspension and removal of panel trustees. As I have said, the
EOUST's administrative procedures are totally inadequate.
3. The EOUST claims that panel trustees are seeking
an appointment for life. Trustees are not asking for a lifetime
appointment, and it is clear that under the bill a trustee can be
removed from the panel and denied cases for cause. We do feel
strongly, however, that given the investment that a trustee makes
in terms of both time and money, a trustee who is performing his
or her job well should not be removed or denied reappointment
arbitrarily and without cause.
I would like to thank the Subcommittee again for this
opportunity to testify, and I would be happy to try to answer any
questions you might have.
October 9, 1997