Turnover on NY bankruptcy court brings heightened uncertainty

Fri Nov 7, 2014 1:27am EST
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By Nick Brown

NEW YORK (Reuters) - The stable of judges on Manhattan's federal bankruptcy court is undergoing dramatic turnover that could bring more uncertainty to one of the go-to venues for rescuing companies on the brink of financial ruin.

In January, Robert Gerber, the judge overseeing litigation stemming from the General Motors' ignition-switch recall debacle, will assume "recall" status, allowing court administrators to hire a new judge, people familiar with the matter told Reuters.

Two more judges are expected to join the court early next year, meaning that by the end of 2015 a third of the nine-member bench will be new, and at least four veteran judges will have left the bench since 2012.

It is the first time since 2000 that at least three new judges will join the New York court within a year and the change may affect the pace of the court's proceedings, the lawyers' fees and even the court's case load.

Under recall status, common for long-serving bankruptcy judges, Gerber will technically retire but continue to serve. According to one person, Gerber is considering leaving for good at the end of 2015. His chambers declined to comment and he has not announced any such plans publicly.

Also gone or leaving are Judge James Peck, who handled Lehman Brothers' liquidation, and Judge Allan Gropper, who adjudicated Kodak’s restructuring and has announced his retirement.

Replacements for Peck and Gropper have been selected and are undergoing background checks, according to Karen Milton, circuit executive for the Second Circuit, which oversees judge succession in Manhattan.


A Plaque on the U.S. Bankruptcy Court building in New York, April 30, 2009. REUTERS/Brendan McDermid