By Nima Ghazvini, Staff Attorney for Martha G. Bronitsky, Standing Chapter 13 Trustee, Northern District of California, Oakland Division
The United States Supreme Court has adopted changes to Bankruptcy Rules 1007, 2015, 3001, 7054, and 7056. The amendments were transmitted to Congress on April 24, 2012, and barring any Congressional intervention or rejection, will take effect on December 1, 2012. So rather than waiting for the Holidays, take a look at the changes now and analyze whether or not they will affect your practice.
The amendments range in significance from simple house-keeping, stylistic changes to significant issues which may actually have an impact on your practice.
Bankruptcy Rule 1007
The major proposed change to this Rule is “technical and conforming.” The previous amendment to Rule 1007(a) created an inconsistency which is eliminated by the new amendment to Rule 1007(c). Specifically, the inconsistency stemmed from Rule 1007(a)(2) containing a 7 day deadline for the filing of the list of creditors in involuntary cases and Rule 1007(c) containing a 14 day deadline for the filing of the same. The amendment which will likely take effect this December now strikes the reference to Rule 1007(a)(2) from 1007(c) altogether. As a result, the deadline to file a list of creditors in an involuntary case will be governed by Rule 1007(a)(2) and halved from 14 days, to within 7 days after entry of the order for relief.
Bottom Line: The list of creditors in an involuntary case will have to be filed within seven (7) days after entry of the order for relief.
Bankruptcy Rule 2015
Once again the proposed amendment to this amendment is technical and conforming. The 2005 amendments to the Code broke up 11 U.S.C. § 704 into subsections. For example, the pre-2005 amendment § 704(8) is now § 704(a)(8). However, Rule 2015 continues to make reference to § 704 in its pre-2005 amendment form.
Bottom Line: This amendment will likely have no effect on bankruptcy practice beyond possibly correcting any Rule 2015 or § 704 references in pleadings.
Bankruptcy Rule 7054
Subdivision (b) of Rule 7054 is amended to allow more time for a party to respond to the prevailing party’s bill of costs in adversary proceedings. The Rule currently allows one day’s notice for the clerk to tax costs. One days’ notice was found to be unrealistically short. The amendment also extends from five (5) to seven (7) days the time to serve a motion for court review of the clerk’s action. This will conform to other changes throughout the rules changing five (5) day deadlines to seven (7) days.
Bottom Line: This is obviously a sigh of relief to any losing party who now has 14 days to respond to the bill of costs. One days’ notice is just unrealistic.
The United States Supreme Court has adopted changes to Bankruptcy Rules 1007, 2015, 3001, 7054, and 7056. The amendments were transmitted to Congress on April 24, 2012, and barring any Congressional intervention or rejection, will take effect on December 1, 2012.
Bankruptcy Rule 3001
For claims based on an open-end or revolving credit agreement, new paragraph (c)(3) now requires that a statement be filed with the proof of claim to provide additional information. The statement should contain the name of the entity from whom the account was purchased, name of entity to whom the debt was owed at the time of last transaction, the date of the account holder’s last transaction, the date of last payment on the account, and the charge off date.
As the Committee on Rules of Practice and Procedure’s Report found, claims of this type (i.e. credit card debts) are frequently sold. As a result, the claim filer is often an entity entirely unknown to a debtor. This amendment’s purpose is to provide debtors with enough information to associate a claim with an account. They can also obtain a copy of the writing on which the claim is based by requesting it in writing; claim holders have 30 days to respond. A claimant’s failure to respond could subject the claimant to sanctions.
Bottom Line: The amendment is meant to provide more information than provided under current practice. Debtor’s attorneys and bankruptcy judges have argued that revolving credit agreement claimants, many of whom purchase their claims in bulk, have little information about the claims they file. This amendment may bring some relief by requiring additional information, but whether it is adequate to deal with a widespread problem remains to be seen. Note, also, that this rule change is not applicable to home equity lines of credit.
Bankruptcy Rule 7056
Bankruptcy Rule 7056 makes Fed. R. Civ. P. 56 applicable to filing motions for summary judgment in adversary proceedings. The Rule imposes a 30 day deadline before the initial date set for an evidentiary hearing on any issues for which summary judgment is sought. Rule 7056 does not apply if a local rule or the court sets a different deadline.
Bottom Line: Check your calendars! Time is of the essence.
Nima Ghazvini is a Staff Attorney for Martha G. Bronitsky, Standing Chapter 13 Trustee, Northern District of California, Oakland Division. He graduated with a B.A. in Political Science from University of California at Berkeley and received his J.D. at Southwestern University School of Law. Nima is admitted to practice in the State of California and the United States District Court, Northern and Central Districts of California.