Publisher’s Note: Judge Sheri Bluebond consented to be interviewed for the Receivership News’ issue that coincides with the 2019 Annual California Bankruptcy Forum Conference scheduled for mid-May in Rancho Mirage. Special thanks to insolvency lawyer extraordinaire Bill Lobel (Pachulski Stang Ziehl & Jones LLP), patriarch of today’s CBF conference, for facilitating the interview. Bob Mosier, Publisher, Receivership News

Veteran Bankruptcy Judge Bluebond is just completing a four-year term as Chief Judge of the United States Bankruptcy Court for the Central District of California with five locations – Downtown Los Angeles, Santa Ana, Santa Barbara, Woodland Hills and Riverside. This Central District serves a population of more than 19 million people spread out over seven counties – Los Angeles, Orange, Santa Barbara, Ventura, San Luis Obispo, Riverside and San Bernardino. Another project Judge Bluebond recently completed is a one-year term as Chair of the Ninth Circuit’s Conference of Chief Bankruptcy Judges (aka “Chief of the Chiefs”). This article will initially focus on Judge Bluebond’s role as Chief Judge and Chief of the Chiefs followed by a more general discussion of her role as a Bankruptcy Judge at the Edward R. Roybal Federal Building in Downtown LA, including how she got there. Finally, we are pleased to present a glimpse into Judge Bluebond’s personal life.

To Judge Bluebond, the four-year term as Chief Judge has been a great experience. The concentration of the Chief Judge is largely administrative and deals with everything from personnel issues to budgets and facilities. Judge Bluebond had the challenge of representing the interests of the Bankruptcy Court in connection with the remodeling of the Roybal Building to accommodate the addition of the Los Angeles-based Federal Magistrate Judges and assorted district court clerk’s office staff into a building already occupied by the Bankruptcy Court’s Los Angeles division. Planning and construction of the project took years, but, now that the dust has settled, Judge Bluebond perceives that all tenants seems happy in their newly-remodeled space. As a result, the two different types of Article I judges (Bankruptcy Judges and Magistrate Judges) are strengthening their ties with one another and enjoying their increased camaraderie. (Will select Magistrate Judges be available to mediate bankruptcy disputes?)

According to Judge Bluebond, administrative decision-making at the court is done largely through a comprehensive committee structure. The Chief Judge assigns judges to various court committees, chairs the Court’s executive committee and its quarterly board of judges’ meetings, and attends all of the committees’ meetings to ensure that the committees are functioning properly and that their interactions are coordinated. Are there enough hours in a day? Another aspect of being Chief Judge is interfacing with the Judicial Council for the Ninth Circuit and the National Judicial Conference’s Committee on the Administration of the Bankruptcy System with regard to such issues as the number of judges, temporary judgeships, and filling vacancies. At the height of the subprime meltdown, when bankruptcy filings in the Central District peaked at more than 143,000 for the year, Congress created three temporary judgeships for the Central District. Once these new judgeships were filled – a process which can take approximately 18 months – there were 24 active bankruptcy judges sitting in the Central District.

As these new judgeships were temporary, the first three positions that become open after the “lapse date” of May 25, 2017 are to be discontinued. Therefore, as Judges Peter Carroll and Meredith Jury retired from the district after this date, two of the district’s three temporary positions have lapsed. Judges Thomas Donovan and Richard Neiter also retired, but they did so before the lapse date. Therefore, although their positions have not been filled due to decreased filings in the district – the Court finished 2018 with a total of 37,208 filings or 27% of the 2009 high water mark – these positions remain open and available to be filled once filings in the district increase. As a result of these retirements, the district currently has 20 active bankruptcy judges and 5 retired judges serving on recall, which, at present, is sufficient to handle the workload in the district.

In light of budgetary constraints and heightened interest at both the circuit and national level in cost containment efforts, and during Judge Bluebond’s tenure, the Court made significant strides in its efforts to increase the level of shared administrative services between the Bankruptcy Court for the Central District of California and various other court units and federal agencies throughout the country. Over the course of the past few years, the Court has provided its expertise to other courts and agencies in such areas as space planning, building maintenance, IT support, furniture moving, fleet liaison services, web design, training, audit preparation, programming and software design. This Central District has emerged as a leader in this field by offering more services than most other courts.

Another question posed to Judge Bluebond: Has the Central District taken any steps in an effort to attract some of the larger cases currently being filed elsewhere in the country? Judge Bluebond explained that it has been difficult to obtain a consensus among the Central District judges whether to it would be desirable or appropriate to take such steps as the establishment of a specialized panel for complex chapter 11 cases. Instead, the Court has focused its efforts on streamlining and improving chapter 11 procedures district-wide for all judges, first through the adoption of General Order 05-05, which was later incorporated into the Local Rules, and later by encouraging judges to comply with local rules designed to facilitate the scheduling of first day and other emergency motions. To date, Judge Bluebond reports that not much progress has been made toward turning the Central District of California into the next Delaware or Southern District of New York. (Judge Bluebond opined that the only viable mechanism for reversing this eastward trend is likely to be a change in the venue statute.) Nevertheless, Judge Bluebond reports that, although the number of filings under chapter 13 of the Bankruptcy Code continued to decrease during the 2017/18 period, the number of chapter 11 filings actually increased in the district by 15.4 percent during the same period.

Judge Bluebond identified the following as one of her greatest accomplishments as Chief Judge: During her term as Chief, the Bankruptcy Court underwent two cyclical audits by the Administrative Office of the United States Courts and emerged from each without a single adverse finding. This is a remarkable achievement for any court, let alone for a court the size of the Bankruptcy Court for the Central District of California. When asked at the beginning of her tenure as Chief Judge what she hoped to accomplish during her term as Chief, Judge Bluebond responded that she thought things had been running fairly nicely in the district and that her main objective would be not to “screw things up.” The consensus appears to be that she achieved that objective. But was there ever any doubt?

Enough of Chief Judge (but the author concludes that a giant “Congratulations” is in order), let’s turn our attention to Sheri Bluebond’s role as a Bankruptcy Judge. This requires a little traditional background information. She is a Los Angeles native with two degrees from UCLA: a bachelor’s degree, summa cum laude; and a JD, where she graduated 1st in her class and was elected to the Order of the Coif. With this impressive background, her work experience involves some of the area’s top insolvency firms. She started her career as a summer associate and then junior associate after graduation in 1985 at Gendel, Raskoff, Shapiro and Quittner. When the Gendel firm dissolved in 1991, she was part of the group that formed the Los Angeles office of what was then San Francisco’s premier bankruptcy boutique, Murphy, Weir & Butler. In 1995, she left the Murphy firm to chair the Creditors’ Rights and Insolvency Group at Irell & Manella LLP.

When Lisa Hill Fenning decided to retire from the bankruptcy bench in 2000, Judge Bluebond threw her hat into a crowded ring with 47 other applicants for the open position, understandably with low expectations (there were more candidates for this Bankruptcy Judge opening than are currently running for the Democratic nomination for President – and that is a lot). But, as you might have guessed based on her pedigree, she got the gig. She was reappointed to a second 14-year term in 2015. Among her more high-profile cases, Judge Bluebond recalled a chapter 11 case that she inherited when Kathleen March left the bench: Daewoo Motor America. The case involved, among other things, comity issues arising out of the Korean reorganization proceeding of the debtor’s parent company and hotly-contested litigation between the debtor and its parent in which the debtor attempted (unsuccessfully) to recharacterize a portion of its intercompany debt as an equity infusion. Other particularly memorable cases include two separate mass-tort asbestos cases that produced a wealth of appeals. Another was the chapter 7 liquidation of the holding company for Indymac Bank, in which she was called upon to interpret a tax-sharing agreement in order to determine whether the debtor or the FDIC would receive a multi-million-dollar tax refund. (The debtor, and its stalwart chapter 7 trustee, Alfred Siegel, emerged victorious in that one.)

Well, finally, it is time to focus on the third area of this interview – the personal side of Judge Bluebond. Recalling that Judge Bluebond became a Judge in 2001, she got married in 2003. When asked about her greatest accomplishment to date (professional or personal), she responded: giving birth to twins with the help of an entire team of doctors and donors in 2005. Her twins are now age 13. Most of us know Judge Bluebond for her enthusiastic, high energy skills as a moderator/master of ceremony at Bankruptcy Forum events. She admits that she enjoys it. What about short-term personal goals? More sleep; less business travel; more personal travel; and more singing. (Second only to her role as master of ceremony, we have all been treated to the musical prowess of this singing judge, who spent her high school days in the performing arts department at El Camino Real High School in Woodland Hills and worked after school and weekends as a song leader at camps and synagogues.)

Any interview with Judge Bluebond would not be complete without a bonus section, so here you go. Does she like receivers? (After all, this is the Receivership News). More on point, will she allow a receiver to remain in charge of an asset or company if the conditions warrant it? Well, it turns out that she absolutely loves one receiver – her husband Brad Smith – and she reports that she has granted relief under Bankruptcy Code § 543(d) and permitted receivers to retain possession of estate assets on multiple occasions. This undoubtedly makes Judge Bluebond one of the smartest and most accomplished judges since formation of the Bankruptcy Act in 1800. Congratulations Judge Bluebond and we are looking forward to at least another 25 years (her remaining current term and the next).

*Robert P. Mosier is a Southern California receiver and trustee and principal of Mosier & Company, Inc., a firm that has specialized in managing and turning around troubled companies and real estate projects for more than 35 years.