A Desk Reference on the Eleven Amendments to the Federal Rules of Bankruptcy Procedure (Effective December 1, 2010)

By Griffin S. Dunham

On April 28, 2010, Chief Justice John Roberts submitted to Congress 11 amendments to the Federal Rules of Bankruptcy Procedure previously adopted by the Court. The amendments, which went into effect on December 1, 2010, affect the following Bankruptcy Rules: 1007, 1014, 1015, 1018, 1019, 4001, 4004, 5009, 7001, 9001 and new Rule 5012. The amended rules apply to all cases filed on and after December 1, 2010, as well as all proceedings pending as of December 1, 2010 "insofar as just and practicable."

The purpose of this article is to provide a quick-reference guide to the amendments, with a brief discussion of any substantive effects likely to result during a bankruptcy case. Accordingly, the amendments will be addressed chronologically:

Bankruptcy Rule 1007. Rule 1007 describes the requirements for filing statements and schedules. This Rule was amended in two ways:

a. Subsection (a)(2) shortens the time for a debtor to file schedules after filing the petition in an involuntary case from 14 days to 7 days; and

b. Section (c) extends the time for an individual chapter 7 debtor to file statements of completion of course in personal financial management (Official Form 23), from 45 to 60 days after the first date set for the meeting of creditors.

Bankruptcy Rule 1014. Rule 1014 provides for the transfer of cases filed (regardless of whether the case was filed in the proper district or the improper district), as well as the procedure for filing petitions involving the same debtor or related debtors in different courts. The previous version of the Rule did not contemplate a chapter 15 debtor that files in a foreign country and seeks recognition by United States courts of the foreign insolvency proceeding. The amended Rule 1014(a) expressly provides for the procedure for a foreign debtor seeking recognition in multiple districts.

Bankruptcy Rule 1015. Rule 1015 provides for the consolidation or joint administration of cases pending in the same district. Similarly to Rule 1014, the previous version did not provide for a chapter 15 debtor, stating only, "[i]f two or more petitions are pending in the same court by or against the same debtor, the court may order consolidation of the cases." The amendment, contained in Rule 1015(a), changes this to "[i]f two or more petitions by, regarding, or against the same debtor are pending in the same court, the court may order the consolidation of the cases."

Bankruptcy Rule 1018. Rule 1018 addresses contested involuntary petitions, contested petitions commencing ancillary cases, proceedings to vacate the filing of a petition, and the applicability of the 7000-series rules in these types of adversary proceedings. The substance of the rule continues to provide the scope of the rules to apply in cases ancillary to a foreign proceeding, but the explicit chapter 15 reference is now added (pursuant to the BAPCPA codification).

Bankruptcy Rule 1019. Rule 1019 contains the procedure to follow for cases that are converted to chapter 7 from chapter 11, 12, or 13. Prior to the amendment, the Rule did not expressly address the new time period for filing an objection to a claim of exemptions. The Rules now contain new subsection (2)(B) to provide for a new time period to object to a claim of exemption under Rule 4003(b) after conversion to chapter 7, unless:

a. the case was converted to chapter 7 more than one year after the first order confirming a chapter 11, 12, or 13 plan was entered, or

b. 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.

Bankruptcy Rule 4001. Rule 4001 governs the manner and process of obtaining stay relief, prohibiting the use of property of the estate, using cash collateral, and obtaining credit. Subsection (d)(2) previously allowed for a 15-day objection period (unless the court affixed a different time) from the mailing of the notice. Subsection (d)(3) previously ordered a hearing on no less than five days' notice to the parties in interest. The amendment, consistent with the Federal Rules of Civil Procedure time computation, shortened the period for filing an objection to 14 days of the mailing of the notice in subsection (d)(2), and ordered a hearing on no less than seven days' notice to the parties in interest in subsection (d)(3).

Bankruptcy Rule 4004. Rule 4004 pertains to the grant or denial of discharge. The amendments to this Rule were originally proposed to be amendments to Rule 7001(b), but public comments persuaded the changes to affect Rule 4004. Sections (a), (c), and (d) were amended as follows:

a. Section (a) now makes the 60-day deadline to file a complaint after the meeting of creditors to be applicable to § 727(a)(8) and (a)(9) motions.

b. Subsection (c)(1) and (c)(1)(B) were amended to provide for the occurrence of an objection by motion as an alternative to objection by complaint. Subsection (c)(4) is new, and states that in chapter 13 cases or individual chapter 11 cases, the court cannot grant a discharge if the debtor has not filed a statement of completion of course in personal financial management (Official Form 23).

c. Section (d) has been re-titled from "Applicability of Rules in Part VII" to "Applicability of Rules in Part VII and Rule 9014." Pursuant to this additional reference, the amendment instructs that Part VII governs adversary proceedings, except that objections to discharge under §§ 727(a)(8), (a)(9), or 1328(f) are governed by Rule 9014. This is noteworthy because motions under these sections will now be governed by the rules governing contested matters, not adversary proceedings.

Bankruptcy Rule 5009. Rule 5009 addresses closing cases under chapters 7, 12, 13, and 15. The amendment adds two sections:

a. Section (b) states that if the individual debtor in either a chapter 7 or 13 case has not filed a statement of completion of course in personal financial management (Official Form 23) within 45 days after the first date set for the meeting of creditors, the clerk is to notify the debtor that a discharge will not be granted and the case will be closed if the form is not filed in accordance with Rule 1007(c) (which, as stated above, extends the time to file from 45 days to 60 days). The reasoning behind the amendment is to reduce the number of requests for retroactive extensions of time, and also to reduce the amount of fees incurred in connection with reopening the matter.

b. Section (c) relates only to chapter 15 cases, and requires the foreign debtor to file a final report when the purpose of the foreign representative's appearance in court is completed. The proper procedure for filing the report, and objection period, is set forth in detail in the amendment.

Bankruptcy Rule 5012. Rule 5012 is a new rule entitled "Agreements Concerning Coordination of Proceedings in Chapter 15 Cases." Its purpose is to create procedures in chapter 15 cases. The full text is as follows:

Approval of an agreement under § 1527(4) of the Code shall be sought by motion. The movant shall attach to the motion a copy of the proposed agreement or protocol and, unless the court directs otherwise, give at least 30 days' notice of any hearing on the motion by transmitting the motion to the United States trustee, and serving 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 § 1519, 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.

Bankruptcy Rule 7001. Rule 7001 addresses the scope of adversary proceedings. Consistent with amended Rule 4004(d), Rule 7001(4) was amended only to exclude objections to discharge under §§ 727(a)(8), (a)(9), and 1328(f).

Bankruptcy Rule 9001. Rule 9001 contains general definitions not otherwise covered in §§ 101, 902, 1101, or the rules of construction in § 102. The amendment now also includes reference to § 1502 of the Code, to exclude Rule 9001 from governing any definitions contained in § 1502.

The 11 amendments addressed in this article were met with little opposition. Their uncontroversial nature is evidenced by the fact that only six comments were filed, which resulted in the cancelation of public hearings associated with the amendments. Although objecting to discharge by motion in certain cases instead of by complaint will be an adjustment, the amendments as a whole should not be difficult to implement immediately.