Congress, the federal appellate courts and the U.S. Supreme Court all need to recognize this historical reality:

• bankruptcy is an efficient and effective tool for resolving mass tort cases, as demonstrated by cases with huge-majority approval votes from tort victims.

And all those institutions need to prevent anti-bankruptcy biases, legal technicalities, and hold-out groups from torpedoing the huge-majority votes.

Supreme Court moving in the right direction?

This is the fourth in a series of four articles on why Fed.R.Bankr.P. 9031, titled “Masters Not Authorized,” needs to be amended to authorize the utilization of special masters in complex bankruptcy cases.

The focus of this fourth article is on how federal courts have inherent authority to appoint special masters—and why that inherent authority should not be denied in bankruptcy cases.[Fn. 1]

Inherent Authority of Courts of Equity

The Federal Court in Morgan, in the matter of Traditional Values Management Limited (in liq)[2024] FCA 74, approved an abridged process that allowed the liquidator to admit debts of a group of unsecured creditors without requiring a formal proof of debt.

Key Takeaways

This is the third in a series of four articles on why Fed.R.Bankr.P. 9031, titled “Masters Not Authorized,” needs to be amended to authorize the utilization of special masters in complex bankruptcy cases.

The focus of this third article is on how the evolution of the old bankruptcy referees into today’s bankruptcy courts shows why special masters are needed in complex bankruptcy cases—and should not have been prohibited.[Fn. 1]

The Evolution of Bankruptcy

This is the second in a series of four articles on why Fed.R.Bankr.P. 9031, titled “Masters Not Authorized,” needs to be amended to authorize the utilization of special masters in complex bankruptcy cases.

The focus of this second article is on how the exclusion of special masters from bankruptcy cases: (i) is without a sound reason, and (ii) is based on a history of haste and uncertainty.[Fn. 1]

Bankruptcy Rule 9031—The Prohibition

This is the first in a series of four articles on why Fed.R.Bankr.P. 9031, titled “Masters Not Authorized,” needs to be amended to authorize the utilization of special masters in complex bankruptcy cases.

The focus of this first article is on how special masters are already utilized, effectively, by federal district courts under Fed.R.Civ.P. 53 (titled, “Masters”).[Fn. 1]

Special Masters in Federal Courts

–A Brief History

The Federal Court has recently delivered judgment in the case of Cooper as Liquidator of Runtong Investment and Development Pty Ltd (In Liq)v CEG Direct Securities Pty Ltd [2024] FCA 6, a case where a liquidator was successful in having a mortgage declared as an unreasonable director-related transaction.

Key Takeaways

Can the contempt remedy for a creditor’s violations of the discharge injunction in multiple bankruptcy cases throughout the land be imposed in a class action lawsuit?

Here’s a due process question that’s percolating before the U.S. Supreme Court and a related mediation issue:

In Re Tucker, Quintis Leasing Pty Ltd [2023] FCA 1673, the administrators of a company successfully obtained orders from the Federal Court modifying the operation of section 443B of the Corporations Act 2001 (Cth).