DOJ Bankruptcy Head’s Firing Unleashes Politics in Debt World

The firing of the director of the Justice Department’s US Trustee Program, Tara Twomey, casts a partisan shadow onto the bankruptcy watchdog—an otherwise inconspicuous role within the federal government.

Twomey, who was appointed head of the program in February 2023, was fired March 7, a person familiar with the matter confirmed to Bloomberg Law. Her departure came amid a blitz of terminations and layoffs across federal agencies, and specifically the Justice Department, since President Donald Trump took office in January.

Twomey’s firing indicates the role of the US Trustee is politically vulnerable at a time of larger economic fears, concerns over heightened partisanship, and an increase in commercial and consumer bankruptcies.

Sen. Elizabeth Warren (D-Mass.), a former bankruptcy law professor, criticized the move.

“President Trump’s decision to fire our nation’s bankruptcy watchdog will leave families in financial crisis unprotected from abuse and allow giant companies to cheat the system and skirt accountability,” Warren said. “The American people lost a true public servant with Tara Twomey’s firing, one who cared deeply about safeguarding families and served with great integrity.”

Warren, a frequent Trump critic, touted the need for a stable bankruptcy system, which helps individuals and companies alike shed untenable debt loads. Twomey’s predecessor, Clifford White, had spent 17 years in the role before his 2022 retirement.

Twomey didn’t respond to requests for comment.

US Trustee Program

The US Trustee Program began as a pilot in 18 judicial districts through the 1978 Bankruptcy Reform Act and was expanded by Congress in 1986 to all states but North Carolina and Alabama. Regional assistant US Trustees head local offices and the program is overseen by the director of the Executive Office for US Trustees, which serves under the attorney general.

Twomey was tapped from outside the Justice Department. She was previously the executive director of the National Consumer Bankruptcy Rights Center and of-counsel at the National Consumer Law Center, a national research and advocacy organization that focuses on justice in consumer financial transactions, especially for low-income and elderly consumers.

The US Trustee’s office monitors consumer and corporate bankruptcy cases and seeks to root out jurisdictional misconduct, fraud, and abuse, and combat local issues that affect the bankruptcy system.

The program appoints court-supervised trustees to liquidate companies that aren’t operating. The office also organizes committees to represent low-ranking creditors in larger corporate reorganizations and takes positions in court on enforcement of the bankruptcy code.

As of 2023, the US Trustee Program included an executive office in Washington and about 1,000 employees in about 90 field offices across the country, according to the Justice Department.

Following Twomey’s firing, White said he has confidence in the program’s career professionals.

“The leadership and staff at the USTP are consummate professionals,” White said. “They are experts in bankruptcy law and are well equipped to move forward the policy agenda of this Administration as they have in the past.”

‘Fresh Blood’

While the US Trustee has generally not been seen as highly political, it hasn’t been immune from the pressures of Washington either.

Before Twomey’s appointment, the National Association of Consumer Bankruptcy Attorneys had urged the Biden administration to change the head of the US Trustee Program, said Ed Boltz, a board member and former president of the group. After White’s long tenure as program director, “fresh blood” was needed, Boltz said.

“We felt that the US Trustee Program had stagnated to some extent,” Boltz said, though he didn’t suggest the group’s advocacy led to White’s retirement.

Boltz said that while he doesn’t see the US Trustee director as apolitical, it has generally been nonpartisan. When Twomey applied to be US Trustee, the NACBA was excited, said Boltz, who noted that he’s been friends with Twomey for at least 15 years.

“She’s spent the last several years there taking what is a very nonpartisan—you know, largely an oversight position—and done really good work,” Boltz said.

Robert Lawless, a University of Illinois law professor who teaches bankruptcy, called Twomey’s firing “a short-sighted and likely illegal decision,” in a blog post.

Twomey’s Tenure

Twomey’s firing is “frustrating” because she helped spearhead priorities that seem, in theory, in line with Trump’s: government efficiency and fighting the opioid crisis, Boltz said.

Boltz pointed to the US Trustee’s implementation and expansion of virtual creditor meetings nationwide as a cost-saver for creditors.

He also noted the US Trustee’s win at the US Supreme Court last year in the Purdue Pharma LP Chapter 11 case—which was spurred by litigation accusing the company and its owners of fueling the national opioid crisis.

While Boltz said he was disappointed over the firing, he wasn’t surprised because of the larger wholesale house cleaning that’s occurred under Trump.

But Twomey isn’t without critics.

Lawrence A. Friedman, who led the US Trustee Program from March 2002 through April 2005, criticized what he described as the political nature of Twomey’s appointment.

He admitted that he was a political appointee himself but argued Twomey undermined depoliticization efforts he made during his tenure.

That included terminating “a lot of political folks” within the program, Friedman said.

Between Twomey’s firing and a larger shakeup at the Consumer Financial Protection Bureau, “it’s pretty clear Liz Warren’s chickens are coming home to roost,” said Friedman, a managing member of consulting firm Friedman Partners LLC.

“Tara Twomey had no business being appointed to that job,” Friedman said. “It was a political appointment at the behest of Liz Warren and others in the bankruptcy system.”