Amendments to the Federal Rules of Bankruptcy Procedure

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December 1, 2007

On April 30, 2007, the U.S. Supreme Court adopted amendments to the Federal Rules of Bankruptcy Procedure , which became effective on December 1, 2007.  Some of the important substantive amendments include:

Rule 1014 now allows the court, on its own motion, to dismiss or transfer a case filed in an improper district.

Rule 3007 now prohibits a party from including in a claim objection a request for relief of a type requiring the commencement of an adversary proceeding.  The rule limits to 100 the number of claims a party may join in a single omnibus objection and specifies the content and nature of objections that may be so joined.

Rule 4001 now provides that when a party requests authorization for use of cash collateral, to obtain credit, to obtain approval of agreements providing adequate protection or to modify or otherwise terminate the automatic stay, or to grant a lien on property, the movant must provide a proposed order granting the relief requested, with notice to interested parties.  The rule also requires the movant to include a statement in the motion, not to exceed five pages, which concisely describes the substance of the relief requested.

Rule 6003 is new and provides limitations with respect to so-called “first-day” requests for relief.  It provides that the court shall not grant relief within 20 days of filing, except upon a showing of immediate and irreparable harm, with respect to applications for employment of professionals; motions to use, sell lease or otherwise incur obligation regarding property of the estate, including a motion to pay a claim that arose pre-petition; or a motion to assume or assign an executory contract.  The new rule does provide an exception for a motion brought under Rule 4001.

Rule 6006 now authorizes a movant to file an omnibus motion for rejection, or under certain circumstances, assumption and assignment of a maximum of 100 executory contracts.

Rule 7007.1 clarifies that a corporate party to an adversary proceeding must file a corporate statement of ownership with the first document filed with the court by that party.

New Rule 9005.1 provides that Rule 5.1 of the Federal Rules of Civil Procedure, dealing with notice requirements involving constitutional challenges to a statute, applies in cases under the Bankruptcy Code.

New Rule 9037 contains privacy protection requirements for filings made with the court.  It specifies that where an electronic or paper filing is made with the court which contains an individual’s social security number, taxpayer identification number, financial account number, birth date, or identifies a minor, such filing must be redacted with respect to such information to include only the last four digits of the social security, taxpayer or financial account identification number, the year of the individual’s birth, or the minor’s initials.  There are limited exceptions to the redaction requirement contained in the rule, as well as options for obtaining protective orders from the court; filings made under seal; and the option of filing a reference list with respect to the redacted information.  Moreover, if such information is elicited during testimony or during a hearing, it may become available to the public upon the filing of a deposition or hearing transcript unless and until it is redacted or sealed.  Finally, the new rule makes clear that any entity, by making an unredacted filing or filing not under seal, waives the protection with respect to the identifiers contained in such filing.

In addition to the amendments to the Federal Rules of Bankruptcy Procedure, revisions were made to many of the Official Forms, which also became effective December 1, 2007.  A summary of the revisions to the Official Forms is available at the District of Minnesota bankruptcy court’s website.

It is expected that bankruptcy courts across the country will amend their Local Rules as a result of the recent amendments to the Federal Rules.

This publication is circulated to bring useful and timely information to our clients and colleagues.  The publication is for general information purposes only and is not legal advice. You should not rely on any information or views contained in the publication in evaluating any specific legal issues you may have.  Please consult your Briggs and Morgan attorney for specific legal advice.