Bankruptcy Judges and United States Trustees Act of 1986

Bankruptcy Judges and United States Trustees Act of 1986 - Title I: Amendments to Title 28 of the United States Code - Subtitle A: Bankruptcy Judges - Amends the judicial code to increase the number of bankruptcy judges: (1) from two to three for the Eastern and Western Districts of Arkansas; (2) from seven to eight for the Northern District of California; (3) from four to six for the Eastern District of California; (4) from 12 to 18 for the Central District of California; (5) from three to four for the Southern District of California; (6) from two to four for the Middle District of Florida; (7) from four to five for the Northern District of Georgia; (8) from one to two for the Southern District of Georgia; (9) from one to two for Idaho; (10) from eight to ten for the Northern District of Illinois; (11) from two to three for the Central District of Illinois; (12) from one to two for the Northern District of Iowa; (13) from one to two for the Southern District of Iowa; (14) from one to two for the Eastern District of Kentucky; (15) from two to three for the Western District of Louisiana; (16) from two to three for Maryland; (17) from two to three for the Western District of Michigan; (18) from one to two for Nebraska; (19) from two to three for Nevada; (20) from five to seven for New Jersey; (21) from one to two for the Western District of North Carolina; (22) from one to two for the Northern District of Oklahoma; (23) from two to three for the Western District of Oklahoma; (24) from three to four for the Western District of Pennsylvania; (25) from one to two for South Carolina; (26) from one to two for South Dakota; (27) from two to three for the Eastern District of Tennessee; (28) from two to three for the Western District of Tennessee; (29) from four to five for the Northern District of Texas; (30) from three to six for the Southern District of Texas; (31) from two to three for the Western District of Texas; (32) from two to three for Utah; (33) from one to two for the Eastern District of Washington; and (34) from three to four for the Eastern District of Wisconsin.

Makes members of the bar of the Commonwealth of Puerto Rico eligible for appointment to bankruptcy judgeships.

Subtitle B: United States Trustees and Related Matters - Revises and increases (from ten to 18) the groups of judicial districts to which a U.S. trustee is assigned to perform specified duties in bankruptcy cases. Reduces the U.S. trustee term of office from seven years to five years. Removes the 90-day limitation on the appointment of acting U.S. trustees.

Extends the authorities of U.S. trustees to include: (1) monitoring applications for fees and expenses; (2) monitoring reorganization plans and disclosure statements; (3) taking action to insure that all statutorily required reports are filed by debtors; (4) monitoring creditors' committees; (5) notifying and assisting the U.S. attorney if violations of criminal laws are discovered; and (6) monitoring applications filed to employ professional persons. Allows U.S. trustees to file comments with the court on such matters.

Increases the salaries of U.S. trustees from GS-16 to level IV of the Executive Schedule.

Establishes in the Treasury the United States Trustee System Fund for the operations of the trustees, including salaries and related benefits. Provides for the deposit of specified bankruptcy fees in the Fund. Requires the Attorney General to report to the Congress on the deposits and expenditures of such Fund not later than 120 days after the end of each fiscal year. Authorizes appropriations as necessary to supplement deposited amounts.

Repeals the authority of the Director of the Administrative Office of the United States Courts to name members to the panel of private trustees.

Increases the filing fee for the commencement of bankruptcy actions.

Title II: Amendments to Title 11 of the United States Code - Authorizes the bankruptcy court in involuntary liquidation cases to order the U.S. trustee to appoint an interim trustee. (Currently, the court makes such an appointment.)

Declares that a U.S. trustee for the judicial district in which a case is pending is eligible to serve as trustee in such case.

Authorizes the U.S. trustee (in lieu of the court) to determine appropriate bond amounts for a person chosen to serve as trustee for certain proceedings.

Empowers the court to remove a trustee, other than a U.S. trustee, for cause.

Prohibits compensation for services or reimbursement of expenses of U.S. trustees in individual bankruptcy cases. Requires, in cases where the U.S. trustee is due compensation, that such amount be paid into the Treasury. Grants U.S. trustees the authority to appear in any bankruptcy proceeding.

Transfers, in liquidation cases, the following authorities from the court to U.S. trustees: (1) authority to convene and preside at meetings of creditors and equity security holders; (2) authority to appoint interim trustees; and (3) authority to appoint successor trustees.

Requires trustees in liquidation cases to file a final account of the administration of the estate with the court and the U.S. trustee. (Currently, trustees are required to file such an account with the court.)

Authorizes creditors' committees to consult with the U.S. trustee in connection with estate administration.

Includes U.S. trustees in discharge proceedings.

Transfers, in reorganization cases, the following authorities from the court to U.S. trustees: (1) authority to appoint creditors' and equity security holders' committees; (2) authority to appoint trustees or examiners; and (3) authority to appoint trustees in railroad reorganization cases.

Allows the court to dismiss a case or convert such case to a chapter 7 action (liquidation) if the debtor fails to file a required certification.

Repeals provisions concerning the U.S. trustee pilot program.

Title III: Transition and Conforming Provisions - Terminates the term of office of incumbent U.S. trustees: (1) two years after the expiration date of such term; or (2) four years after the effective date of this Act, whichever occurs first. Clarifies the scope of authority of such trustees and fixes their salaries.

Allows the Attorney General and the Administrative Office of the U.S. Courts to agree to the cooperative use of services, equipment, personnel, and facilities.

Expresses the sense of the Congress that any individual currently serving as a trustee in a bankruptcy case or as an estate administrator should be considered for appointment as a U.S. trustee.