The Federal Bar Association
Oklahoma City Chapter
AMENDMENTS TO FEDERAL RULES OF BANKRUPTCY PROCEDURE
The amendments to the Federal Rules of Bankruptcy Procedure, effective December 1, 2011, affect only a few rules but the revisions significantly change the information required for proofs of claim.
Rule 1004.2 – This is a new rule applicable only to chapter 15 cases and requires the petition for recognition of a foreign proceeding to identify the countries where a foreign proceeding is pending against the same debtor and the country where the debtor has its "center of main interests." The rule requires that challenges to the designation of the debtor’s center of main interests must be filed no later than 7 days before the hearing on the petition and further sets forth the applicable notice provisions.
Rule 2003(e) – Section 2003(3) has been amended to require the presiding official over an adjourned meeting of creditors or equity security holders to "promptly" file a statement specifying the date and time to which the meeting is adjourned.
Rule 2019 – Rule 2019 has been completely overhauled to expand disclosure requirements for groups of creditors or equity security holders and their putative representatives in chapter 9 and 11 cases.
Subsection (a) contains the definitions of two terms, "disclosable economic interest" and "represent" or "represents."
Subsection (b) specifies that a verified statement, containing the information required in Subsection (c), must be filed by every group or committee that consists of or represents, and every entity that represents, multiple creditors or equity security holders that (1) are acting in concert to advance their interests and (2) not composed entirely of affiliates or insiders of each other. Excluded from the disclosure requirements are entities who would otherwise be required to file a Rule 2019 statement solely because of their status as an indenture trustee, agent for one or more entities under a credit agreement, a class action representative or governmental unit that is not a person.
Subsection (c) sets forth the information required to be in a Section 2019 statement with respect to each group or committee (other than an official committee) as well as entities employed by and representatives of any entity, group or committee.
Subsection (d) requires that a verified supplemental statement be filed by an entity, group or committee if there has been any material change in any fact disclosed in its most recently filed Rule 2019 statement whenever the entity, group or committee takes a position before the Court or solicits votes on plan confirmation.
Subsection (e) addresses the procedure for determining if there has been noncompliance with Rule 2019. On motion of a party in interest or sua sponte, if the Court finds noncompliance, the Court may (i) refuse to permit the entity, group or committee to be heard or intervene in the case, (ii) hold invalid any authority, acceptance, rejection or objection given, procured or received by the entity, group or committee, or (iii) grant such other appropriate relief.
Rule 3001 – Rule 3001(c) has been amended by redesignating Subsection (c) as (c)(1) and adding Subsection (c)(2). Subsection (c)(2) requires the following additional information to be filed with proofs of claim filed in individual debtor cases:
1. An itemized statement of interests, fees, expenses or charges incurred pre-petition if the same are claimed in addition to principal (Rule 3001(c)(2)(A));
2. A statement of the amount necessary to cure any default as of the petition date if a security interest is claimed in the debtor’s property (Rule 3001(c)(2)(B)); and
3. If a security interest is claimed in the debtor’s principal residence, then the appropriate Official Form must be filed with the proof of claim (which will set forth the information required by (c)(2)(A) and (c)(2)(B). (Rule 3001(c)(2)(C)). Additionally, if an escrow account has been established in connection with the claim, then an escrow account statement, prepared as of the petition date and consistent with applicable non-bankruptcy law, must also be attached to the proof of claim.
Under Subsection (c)(2)(D), if the holder of a claim fails to provide the foregoing information, the Court, after notice and hearing, may take either or both of the following actions: (i) preclude the claimant from supplying the omitted information in any contested matter or adversary proceeding unless the Court determines the failure to be substantially justified or harmless; or (ii) grant other appropriate relief including reasonable attorneys’ fees and expenses caused by the failure.
Rule 3002.1 – Rule 3002.1 is new and is designed to implement Section 1322(b)(5) of the Bankruptcy Code, which permits a debtor to cure a default and maintain payments on a home mortgage over the course of the plan. Rule 3002.1(a).
Subsection (b) requires a notice of any change in payment amount, including any change resulting from an interest rate or escrow account adjustment, to be filed and served on the debtor, debtor’s counsel and the trustee no later than 21 days before the new payment amount is due. Notice shall be by appropriate Official Form (Rule 3002.1(d)).
Subsection (c) requires a notice of any fees, expenses or charges incurred in connection with the claim post-petition that the holder asserts are recoverable from the debtor or the principal residence to be filed and served on the debtor, debtor’s counsel and the trustee within 180 days after the date on which the fees, expenses or charges were incurred. Notice shall be by appropriate Official Form (Rule 3002.1(d)).
Under Subsection (e), on motion by the debtor or trustee filed within one year after service of the notice required by Subsection (c), the Court, after notice and hearing, shall determine whether payment of any fee, expense or charge is required under the underlying agreement and applicable non-bankruptcy law to cure a default or maintain payments in accordance with Section 1322(b)(5).
Subsection (f) provides that, within thirty (30) days after the debtor completes all plan payments, the trustee shall file and serve on the holder of the claim, the debtor and debtor’s counsel a notice (i) stating that the debtor has paid in full the amount required to cure any default on the claim, and (ii) advising that a response must be filed within 21 days after service of the notice. If the trustee fails to file the statement, and the debtor believes that the final cure payment and all plan payments have been made, then the debtor may file the statement.
Subsection (g) provides that a holder of a claim must file and serve a response to the notice served under Subsection (f) on the debtor, debtor’s counsel and the trustee stating (i) whether it agrees that the debtor has paid the amount required to cure the default and (ii) whether the debtor is current on all payments consistent with Section 1322(b)(5). The statement must itemize any required cure or post-petition amounts claimed unpaid.
Under Subsection (h), on motion of the debtor or trustee, filed within 21 days of service of the statement under Subsection (g), the Court, after notice and hearing, shall determine if the debtor has cured the default and paid all post-petition amounts.
Subsection (i) provides that, if the holder of a claim fails to provide any information required by Subsections (b), (c) or (g), the Court may, after notice and hearing, take either or both of the following actions: (i) preclude the claimant from supplying the omitted information in any contested matter or adversary proceeding unless the Court determines the failure to be substantially justified or harmless or such other appropriate relief including reasonable attorneys’ fees and expenses caused by the failure.
Rule 4004(b) - Rule 4004(b) has been amended to provide that a party may seek an extension of time, based on newly discovered information, to object to a debtor’s discharge after the time for objecting has expired but before the discharge is granted . A motion requesting such an extension must be filed promptly after the movant discovers the facts on which the objection is based.
Rule 6003 – Rule 6003 is amended to clarify that the 21 day waiting period before a Court can enter certain orders at the beginning of a case does not prevent the Court from specifying in the order that it is effective as of an earlier date, such as the date of the filing of the motion or application.