Bankruptcy Court Needs Special Masters to Manage Mass Tort Surge

Bankruptcy courts today are being asked to do something they were never designed to do: Handle some of the most significant and most sensitive mass tort cases in the country, including the cases involving Boy Scouts of America, USA Gymnastics, and the Roman Catholic Diocese of Rockville Centre.

Clergy abuse, opioids, toxic exposure, and long-term institutional misconduct cases have landed in Chapter 11. These cases often involve tens of thousands of claimants, insurance fights, massive discovery, and allegations that demand careful, trauma-informed handling.

Bankruptcy judges must navigate all of this without one of the tools federal civil courts regularly rely on: special heads.

That’s because Rule 9031, the rule that flatly bans special masters in bankruptcy, hasn’t been updated since it was adopted in the early 1980s.

The bankruptcy system has evolved. It’s time for the regulations to catch up.

Getting Here

When Rule 9031 was adopted, Chapter 11 cases were mostly about fixing balance sheets. Courts dealt with troubled businesses, trade creditors, and straightforward financial disclosures. Judges could handle the workload with the resources they had, and there wasn’t much need for outside help.

Today, Chapter 11 has become a venue for resolving nationwide mass tort liabilities. It offers tools that ordinary civil litigation can’t match when claims are numerous, long-tailed, and financially existential for the defendant.

Modern cases look less like corporate reorganizations and more like multidistrict litigations, but without the MDL tools. Judges now oversee thousands of claims, years of discovery battles, parallel mediation tracks, and heated disputes among debtors, insurers, survivors, and state attorneys general.

And they’re doing it without the ability to appoint special masters, even though Article III courts appoint them all the time in cases of similar scale and complexity.

Masters Versus Examiners

Special masters aren’t replacements for judges. They help courts manage parts of a case that are too technical, too sensitive, or too time-consuming to handle alone. Discovery disputes and insurance coverage disputes are recognized as factors that can prolong mass tort bankruptcies.

In large civil cases, special masters routinely manage massive discovery, resolve privilege disputes, review confidential or highly sensitive documents, oversee claims administration systems, help negotiate settlements, conduct fact-finding into technical or historical issues, and monitor compliance with court orders.

These are the challenges bankruptcy judges face in modern Chapter 11 cases—and precisely what they are prohibited from delegating.

Examiners have a much narrower role. They investigate a specific issue and write a report. They don’t manage discovery. They don’t run claims processes. They don’t help structure trauma-informed procedures. They don’t resolve evidentiary disputes. They don’t oversee negotiation frameworks.

In a mass tort bankruptcy—where the court is effectively running a litigation ecosystem—an examiner’s report is helpful, but it’s hardly a management tool. Special masters, by contrast, are built for continuous, hands-on oversight.

The Human Side

In sexual abuse bankruptcies, the stakes are exceptionally high. Survivors are navigating a system that feels foreign, fast, and often opaque. Filing deadlines are short. Discovery is limited. Negotiations happen behind closed doors. Many survivors understandably view the process with skepticism.

A special master with trauma-informed expertise can make a genuine difference. They can help ensure that communications, discovery, and claims procedures minimize harm and reflect respect for survivors’ experiences. They can also bring an independent, credible layer of oversight to a process where survivors may feel favored by institutions and insurers.

Efficiency and Fairness

There’s a misconception that appointing a special master slows things down or adds unnecessary cost. Quite the opposite. The most time-consuming parts of mass tort bankruptcy cases—privilege disputes, document review, discovery enforcement, and designing claims processes—are precisely the tasks for which special masters can be used.

By taking on these responsibilities, special masters allow judges to focus on legal issues that require judicial decision-making. That means faster dispute resolution, more transparent communication among parties, and more reliable claims processes.

Effective Reform

Updating Rule 9031 would require a narrowly drawn amendment that could authorize special masters in mass tort Chapter 11 cases, proceedings with heavy discovery burdens, cases involving sensitive survivor information, and situations requiring specialized technical or scientific expertise.

Judges would still control the appointment, scope, and review of any special master’s work—just like Article III judges do now. This isn’t a power shift. It’s an expansion of capacity.

Mass tort bankruptcies aren’t going away. In fact, more institutions facing systemic misconduct allegations are turning to Chapter 11 specifically because the system offers global resolution. That trend puts pressure on bankruptcy courts, which are being asked to handle cases far beyond what the existing rules anticipated.

If bankruptcy is going to serve as the forum for mass-tort resolution, it needs the tools to do the job well. Special masters offer expertise, transparency, and administrative support that modern cases demand.

Rule 9031 has outlived its moment. Modernization is essential to maintaining the integrity and effectiveness of the bankruptcy system.

Giving bankruptcy judges access to special masters would strengthen their ability to manage high-stakes cases that have become increasingly common. Special masters won’t solve every challenge in mass tort Chapter 11 cases, but they would address many of the most persistent bottlenecks.

Rule 9031 served its purpose. The time has come to modernize it.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Kenneth Rosen practices debtor and creditors’ rights law and advises companies on practical strategies for resolution of financial distress.

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