“Special Masters” Are Needed In Bankruptcy: An Interview With Judge Kaplan

By Donald L. Swanson

Hon. Michael B. Kaplan is Chief Bankruptcy Judge for the U.S. Bankruptcy Court in New Jersey.

Beginning with his appointment as Bankruptcy Judge in 2006, and throughout his judicial career, Judge Kaplan has presided over many complex bankruptcy cases—both large and small.

Because of that experience, Judge Kaplan sees a need for improving bankruptcy laws to deal more effectively with complex cases of all types and sizes. 

“Special Masters” Needed

One specific need is in the realm of “special masters,” which are commonly used in federal court cases—but outside bankruptcy.

Fed.R.Civ.P. 53, titled “Masters,” allows for the appointment of special masters, by U.S. district courts, to perform assigned duties in complex cases.  Such duties include accounting and computation, determining relevant issues where evidence is voluminous, and advising the court on highly technical issues.

Asbestos Illustration

One illustration of the special master role is in asbestos cases, where district courts have appointed special masters to, (i) summarize and evaluate claims, and (ii) develop and implement case management and evaluation plans.

The asbestos illustration is important in bankruptcy, because § 524(g) of the Bankruptcy Code authorizes bankruptcy courts to reorganize asbestos defendants.

Yet, unlike their district court counterparts, bankruptcy courts cannot appoint special masters in asbestos cases.  That’s because of Fed.R.Bankr.P. 9031, which:

• is titled, “Rule 9031.  Masters Not Authorized”; and
• says, “Rule 53 F.R.Civ.P. does not apply in cases under the Code.”

Proposed Change to Rule 9031

So, in January of 2024, Judge Kaplan proposed changing Bankruptcy Rule 9031 to allow for the appointment of special masters in bankruptcy.

Interview

Linked above is an interview with Judge Kaplan, in which he explains:

1. What special masters do in non-bankruptcy cases;
2. Why special masters have been excluded, thus far, from bankruptcy cases; and
3. Why special master appointments should now be allowed in bankruptcy cases.

Conclusion

Here’s a huge, “Thank you,” to Judge Kaplan for his initiative on this special masters issue . . . and for his willingness to talk with us about it!

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