Contributed by Lacey Laken
Certain amendments to the Federal Rules of Bankruptcy Procedure go into effect today. Generally speaking, the changes relating to corporate debtors principally reflect the application of certain existing Bankruptcy Rules in chapter 15 cases and the adoption of new rules to address specific procedures in chapter 15 cases. In addition, the amendments make some changes to time periods.
The following changes apply to both corporate and individual debtors:
- Rule 1007(a)(2) – Lists, Schedules, Statements, and Other Documents; Time Limits
A debtor in an involuntary case now has only has seven days (reduced from 14 days) after the entry of an order for relief to file a list of creditors.
- Rule 1014(b) – Dismissal and Change of Venue
Rule 1014(b) determines which court will have jurisdiction over a bankruptcy case when petitions involving the same debtor are filed in different districts. The Rule has been amended to expressly include those cases seeking chapter 15 recognition within its scope. In respect of chapter 15 debtors, Rule 1014(b) specifically states that the court may determine “in the interests of justice or for the convenience of the parties” the district or districts in which the case should proceed.
- Rule 1015(a) – Consolidation or Joint Administration of Cases Pending in Same Court
Rule 1015(a) now provides that the court may order consolidation of two or more bankruptcy petitions “by, regarding, or against the same debtor” that are pending in the same court. The effect of this amendment is to include chapter 15 cases within its scope.
- Rule 1018 – Contested Involuntary Petitions; Contested Petitions Commencing Chapter 15 Cases; Proceedings to Vacate Order for Relief; Applicability of Rules in Part VII Governing Adversary Proceedings
Rule 1018 provides that Rules 7005, 7008–7010, 7015, 7016, 7024–7026, 7028–7037, 7052, 7054, 7056, 7062, and any other rules governing adversary proceedings as the court may direct now also apply to petitions for recognition under chapter 15. Previously, chapter 15 petitions were not specifically included within the scope of Rule 1018.
- Rule 4001(d) – Relief from Automatic Stay; Prohibiting or Conditioning the Use, Sale, or Lease of Property; Use of Cash Collateral; Obtaining Creditors; Agreements
Rule 4001(d)(2) provides that objections to a motion for approval of any agreement to (i) provide adequate protection, (ii) prohibit or condition the use, sale, or lease of property, (iii) modify or terminate the automatic stay, (iv) use cash collateral, or (v) prime a lien, may be filed within 14 days (decreased from 15 days) of the mailing of a notice of motion, unless otherwise fixed by the court.
Rule 4001(d)(3) now provides that seven days’ (increased from five days’) notice of a hearing is now required for a hearing on a motion to approve any agreement to (i) provide adequate protection, (ii) prohibit or condition the use, sale or lease of property, (iii) modify or terminate the automatic stay, (iv) use cash collateral, or (v) prime a lien.
- Rule 5009(b) – Closing Chapter 7 Liquidation, Chapter 12 Family Farmer’s Debt Adjustment, and Chapter 13 Individual Debt Adjustment Cases
Rule 5009(b) is a new rule that provides that a foreign representative in a chapter 15 case must file and give notice of a final report when the purpose of the representative’s appearance in court is complete. Rule 5009(b) further requires a foreign representative to file a certificate with the court that notice has been given, and, if no objection has been filed by the United States Trustee or any party in interest within 30 days after the certificate is filed, there shall be a presumption that the case has been fully administered.
- Rule 5012 – Agreements Concerning Coordination of Proceedings in Chapter 15 Cases
Rule 5012 is a new rule establishing procedures in chapter 15 cases for obtaining approval of an agreement regarding communications and coordination of proceedings with cases involving the debtor that are pending in other countries. Specifically, Rule 5012 requires that a party seeking approval of an agreement under section 1524(4) of the Bankruptcy Code file a motion, with a copy of the proposed agreement or protocol attached thereto. In addition, unless otherwise directed by the court, the movant must give at least 30 days’ notice of a hearing on the motion to the United States Trustee, and serve it on the debtor, all persons or bodies authorized to administer foreign proceedings of the debtor, all entities against whom provisional relief is being sought under section 1519 of the Bankruptcy Code, all parties to litigation pending in the United States in which the debtor was a party at the time of the filing of the petition, and such other entities as the court may direct.
- Rule 9001 – General Definitions
Rule 9001 has been amended to expressly state that the definitions set forth in Rule 9001 are applicable to section 1502 of the Bankruptcy Code, which sets forth definitions applicable to chapter 15 cases.
The following changes only apply to individual debtors:
- Rule 1007(c) – Lists, Schedules, Statements, and Other Documents; Time Limits
Under Rule 1007(c), an individual chapter 7 debtor now has 60 days (increased from 45 days) to file a statement of completion of a course in personal financial management.
- Rule 1019(2)(B) – Conversion of a Chapter 11 Reorganization Case, Chapter 12 Family Farmer’s Debt Adjustment Case, or Chapter 13 Individual’s Debt Adjustment Case to a Chapter 7 Liquidation Case
Rule 1019(2)(B) is a new rule that provides a new 30-day filing period to begin after a conversion of a case to a chapter 7 case for filing objections to a claim of exemptions unless (i) the case was converted to chapter 7 more than one year after entry of the first order confirming a plan under chapter 11, 12, or 13, or (ii) the case was previously pending in chapter 7 and the time to object to a claimed exemption had expired in the original chapter 7 case.
- Rule 4004 – Grant or Denial of Discharge
Rule 4004(a) now provides that in a chapter 7 case, complaints and motions under section 727(a)(8) or 727(a)(9) of the Bankruptcy Code objecting to a debtor’s discharge are subject to the same time limit and must be filed 60 days after the date set for the first meeting of creditors pursuant to section 341(a) of the Bankruptcy Code. Rule 4004(a) also now provides that in a chapter 13 case, a motion objecting to the debtor’s discharge under section 1328(f) of the Bankruptcy Code must be filed no later than 60 days after the date set for the first meeting of creditors pursuant to section 341(a) of the Bankruptcy Code.
Generally, Rule 4004(c)(1) provides for the circumstances under which the court may grant a discharge to a chapter 7 debtor. Rule 4001(c)(1)(b) has been amended to provide that when the time fixed for objecting to discharge and for filing a motion to dismiss a case pursuant Rule 1017(e) has expired, the court will grant the discharge unless, among other things, a complaint or a motion to dismiss under section 727(a)(8) or 727(a)(9) of the Bankruptcy Code objecting to the discharge has been filed and not decided in the Debtors’ favor.
Rule 4004(c)(4) is a new rule that provides that in a chapter 11 case where the debtor is an individual or in a chapter 13 case the court shall not grant a discharge if the debtor has not filed a statement of completion of a course concerning personal financial management, as required by Rule 1007(b)(7).
Rule 4004(d) has been amended to provide that an objection to discharge is governed by Part VII of the Bankruptcy Rules (“Adversary Proceedings”), except that an objection to discharge under section 727(a)(8), 727(a)(9), or 1328(f) of the Bankruptcy Code is commenced by motion and governed by Rule 9014.
- Rule 5009 – Closing Chapter 7 Liquidation, Chapter 12 Family Farmer’s Debt Adjustment, and Chapter 13 Individual Debt Adjustment Cases
Rule 5009(b) is a new rule that requires the clerk to provide notice to individual debtors in chapter 7 and 13 cases that their cases may be closed if they fail to file a statement of completion of a financial management course within 45 days of the first meeting of creditors pursuant to section 341(a) of the Bankruptcy Code, unless the statement is filed within the applicable time limit under Rule 1007(c) (i.e., (i) 60 days after the first meeting of creditors under section 341(a) of the Bankruptcy Code with respect to chapter 7 debtors and (ii) no later than the date when the last payment was made by the debtor as required by the plan or the filing of a motion for a discharge under sections 1141(d)(5)(B) or 1328(b) of the Bankruptcy Code with respect to chapter 13 debtors).
- Rule 7001 – Scope of Rules of Part VII
Rule 7001(4) has been amended to modify the type of proceedings that are categorized as “adversary proceedings” under the Bankruptcy Rules. Specifically, Rule 7001(4) now states that an adversary proceeding includes “a proceeding to object to or revoke a discharge, other than an objection to discharge under [sections] 727(a)(8), (a)(9), and 1328(f) [of the Bankruptcy Code],” which now are to be commenced by motion rather than by complaint. This amendment corresponds to the amendment to Rule 4004.
The following Official Forms have been amended:
- Official Forms 9A, 9C, and 9I have been amended to conform to the amendments to Rules 4004 and 7001.
- Official Forms 20A and 20B have been amended for technical and conforming changes. Official Forms 22A, 22B, and 22C have been amended to instruct that only one joint filer should report payments by another for household expenses.
- Official Forms 22A and 22C are amended to delete references to “household” and “household size” and are replaced by “number of persons” or “family size.”
- Official Form 22A directs debtors in joint cases to file separate forms only if one of the debtors is entitled to a Part I exemption.