Bankruptcy Court

In Northern Pipeline Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), the United States Supreme Court ruled unconstitutional certain provisions of the law relating to bankruptcy judges (who are not life-tenured "Article III" judges). Congress responded in 1984 with changes in the statutes to remedy the constitutional defects. Under the revised law the bankruptcy judges in each judicial district in regular active service, as the United States bankruptcy court, constitute a "unit" of the applicable United States district court (see 28 U.S.C. § 151). The judge is appointed for a term of fourteen years by the United States Court of Appeals for the circuit in which the applicable district is located (see 28 U.S.C. § 152).

Formally, the United States District Courts have subject matter jurisdiction over bankruptcy matters (see 28 U.S.C. § 1334(a)). However, each such district court may, by order, "refer" bankruptcy matters to the Bankruptcy Court (see 28 U.S.C. § 157(a)).

As a practical matter, most district courts have a standing "reference" order to that effect, so that all bankruptcy cases in that district are handled, at least initially, by the Bankruptcy Court. In unusual circumstances, a district court may in a particular case "withdraw the reference" (i.e., take the case or a particular proceeding within the case away from the Bankruptcy Court) and decide the matter itself under 28 U.S.C. § 157(d).

Decisions of the bankruptcy court are generally appealable to the District Court (see 28 U.S.C. § 158(a)), and then to the Court of Appeals. However, in a few jurisdictions a separate court called a bankruptcy appellate panel (composed of bankruptcy judges) hears certain appeals from bankruptcy courts (see 28 U.S.C. § 158(b)).