Proposed Bankruptcy Rule Changes Ready for Public Comment

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By Diane Davis

The Judicial Conference Committee on Rules of Practice and Procedure have published proposed amendments for public comment on Federal Rules of Bankruptcy Procedure.

Bankruptcy Rules 2002, 4001, 6007, 9036, and 9037, and Form 410, Proof of Claim, would be amended. These rules affect notice and electronic transmission issues, obtaining credit, motions to abandon property, and privacy protections for filings.

Federal Rule of Appellate Procedure 26.1 covering corporate disclosure statements in bankruptcy proceedings would also be amended.

Members of the public are invited to comment on the proposed changes in writing by Feb. 15, 2018.

Those who want to present testimony may appear at a public hearing on the bankruptcy rules in Washington, D.C., on Jan. 17, 2018, and in Pasadena, Calif., on Jan. 30, 2018, and on the appellate rules in Washington, D.C., on Nov. 9, and in Phoenix, Ariz., on Jan. 5, 2018.

Notice Issues

Bankruptcy Rule 2002(g), which addresses notice to creditors, equity security holders, administrators in foreign proceedings, and others in cross-border cases, would be amended to allow a creditor to elect to receive notices by email.

A creditor’s election on the proof of claim, or an equity security holder’s election on the proof of interest, to receive notices in a particular case by electronic means supersedes a previous request to receive notices at a specific address in that particular case.

Rule 9036, Notice by Electronic Transmission, would be amended to allow both notice and service by electronic means. The amendment recognizes the increased use of electronic delivery and safeguards for parties not filing an appearance in the case through the court’s electronic filing system.

The amended rule also permits electronic notice or service on a registered user who has appeared in the case by filing with the court’s electronic filing system.

Under the proposed rule, a court may choose to allow registration only with the court’s permission.

Official Form 410, Proof of Claim, would be modified to include a box to check if you want to receive all notices and papers by email instead of by regular mail.

The proof of claim form, which is filed both electronically and manually, is one of the forms frequently used by non-registered users in bankruptcy cases. It is the form used to make a claim for payment in a bankruptcy case.

Obtaining Credit

Rule 4001(c), which pertains to obtaining credit would be amended to exclude Chapter 13 cases.

This amendment, however, wouldn’t speak to the underlying substantive issue of whether the Bankruptcy Code requires or permits a Chapter 13 debtor not engaged in business to request approval of post-petition credit.

Motion to Abandon Property

Rule 6007(b), which addresses abandonment or disposition of property, is amended to specify the parties to be served with the motion and any notice of the motion. The rule also establishes an objection deadline.

The proposed rule also clarifies that no further action is necessary to notice or effect the abandonment of property ordered by the court in connection with a motion filed under this provision, unless the court directs otherwise.

Privacy Protections

Rule 9037, Privacy Protections for Filings Made with the Court, would be amended to add a new (h) to the rule to provide a procedure for redacting personal identifiers in documents that were previously filed without complying with the rule’s redaction requirements.

Under the new rule, the court may alter the prescribed procedure. This might be appropriate when a party wants to redact a large number of documents.

Because the filing of a motion to redact may call attention to the existence of the unredacted document, courts should take immediate steps to protect the motion and document from public access.

Appellate Disclosures

Appellate Rule 26.1 addressing corporate disclosure statements, would create a new 26.1(c) requiring disclosure of the name of all of the debtors in bankruptcy proceedings.

The names of the debtors aren’t always included in the caption in appeals of adversary proceedings.

To contact the reporter on this story: Diane Davis in Washington at DDavis@bna.com

To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com

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