Supreme Court Approves Amendments to Bankruptcy Rules!

AUTHOR – George Basharis, JD, DATE – 27 September 2018

The U.S. Supreme Court earlier this year approved amendments to the Federal Rules of Bankruptcy Procedure that are expected to become effective on December 1, 2018. Firstly, Many of the amendments are technical. They are to conform the Bankruptcy Rules to recently amended rules of appellate and civil procedure. Bankruptcy Rules affected by the amendments. It includes Rules 3002.1, 5005, 7004, 7062, 8002, 8006, 8007, 8010, 8011, 8013, 8015, 8016, 8017, 8021, 8022, 9025, and new Rule 8018.1 as well as Part VIII Appendix.

Rule 3002.1

Bankruptcy Rule 3002.1 requires creditors with claims secured by a debtor’s personal residence. It is to provide notice of all post-petition payment changes, fees, expenses, and charges incurred. The proposed amendments to the rule would create flexibility regarding notice of payment changes. That includes home equity loans, a procedure for objecting to payment changes as well as expand the category of parties who can seek a determination of fees, expenses, and charges that owe at the end of a bankruptcy case.

Rules 5005 and 8011.

Rules 5005(a)(2) and 8011 authorize individual courts to mandate electronic filing or to make it optional. Most courts require attorneys to file electronically, subject to reasonable exceptions. The proposed amendments would make electronic filing mandatory in all districts for all parties represented by an attorney. The paper filing would allow for a good cause. And individual courts by local rule could permit paper filings for other reasons.

Likewise, the proposal would permit pro se debtors to file electronically only if authorized by individual court orders or local rules. Individual courts that mandate electronic filing for all pro se debtors must provide reasonable exceptions.

Rule 7004.

The technical amendment to Rule 7004 would update a cross-reference to Federal Rule of Civil Procedure 4.

Rules 7062, 8007, 8010, 8021, and 9025.

These rules address the entry, enforcement, and appeal of judgments entered in adversary proceedings. Rule 7062 also incorporates the whole of Federal Rule of Civil Procedure 62. Which provides an automatic stay for the enforcement of judgments entered by a district court. The current stay is 14 days, but a proposed amendment to Civil Rule 62 would increase the stay to 30 days to coincide with the 28-day deadline for filing post-judgment motions in district court. The proposed amendment to Bankruptcy Rule 7062 would still incorporate Civil Rule 62 but would retain the 14-day duration for the automatic stay of judgments since the deadline for post-judgment motions in bankruptcy cases is only 14 days.

The proposed amendments to Rules 8007, 8010, 8021, and 9025 would allow a party therefore the enforcement of a judgment can stay in an adversary proceeding by posting a “bond or other security.” This is not a substantive amendment, it is only to “broaden and modernize” the terms “supersedeas bond” and “surety” that use currently in the rules.

Rule 8002

Official Form 417A and New Director’s Form 4170. Rule 8002 addresses the timeliness of appeals. Likewise, Rule 8002(a) provides that a notice of appeal must be filed within 14 days after the entry of a judgment. Additionally, the proposed amendment to Rule 8002(a) would add a new subparagraph (5) that defines the term “entry of judgment” for purposes of calculating the time for filing the notice of appeal.

Similarly, Rule 8002(b) lists the types of post-judgment motions that toll the deadline for filing appeals. The proposed amendment to Rule 8002(b) would require the filing of post-judgment motions within the times specified by the rules under the authorized motions. It also concerns the timeliness of tolling motions. That was made to Federal Rule of Appellate Procedure 4(a)(4) in 2016.

Likewise, Rule 8002(c) establishes filing and service requirements for inmate appeals. Under the proposed amendments to Rule 8002(c), an inmate’s notice of appeal is timely. Only if we deposit it in the institution’s mail system on or before the last day for filing. The notice must include a declaration or notarized statement by the inmate stating the mailing date of the notice and attesting to the prepayment of first-class postage. A new Director’s Form, Form 4170 (Declaration of Inmate Filing), sets out a suggested form for the declaration. Also, an amendment to Official Form 417A would direct inmate filers to the Director’s Form.

Rule 8006

Rule 8006(c) establishes the manner by which litigants can file a joint certification for direct appellate review. The amendment would add a new subsection that would allow the bankruptcy court to file a supplemental statement about the merits of the parties’ joint certification. The new subsection is to be the counterpart to existing subsection (e)(2), which authorizes the parties to file a similar statement when the court certifies direct review on its own motion.

Rules 8013, 8015, 8016, 8022, and New Part VIII Appendix;

Official Form 417C. Rules 8013 (motions), 8015 (briefs), 8016 (cross-appeals), and 8022 (rehearing) establish length limits for motions, briefs, as well as other pleadings filed in bankruptcy appeals. The proposed amendments convert current page limits to word-count limits for documents prepared using a computer. Similar length limits were made to Federal Rules of Appellate Procedure in 2016. Likewise, a new appendix to Part VIII of the Bankruptcy Rules lists all of the length limits in one chart. A conforming amendment was on the certificate of compliance in Official Form 417C.

Rule 8017

Rule 8017 addresses the filing of amicus curiae briefs. The proposed amendments would permit a district court or bankruptcy appellate panel to prohibit or strike an amicus brief if the filing would result in the disqualification of a judge. The amendments address the scenario in which an amicus brief is filed before a judge or appellate panel is assigned to a case and amicus curiae could not predict whether the filing of its brief would result in a recusal. A similar amendment has been proposed for the Federal Rule of Appellate Procedure 29.

Rule 8018.1

New Rule 8018.1 is the latest installment of rule amendments intended to address the impact of the Supreme Court’s decision in Stern v. Marshall, 564 U.S. 462 (2011) on bankruptcy court jurisdiction to enter final judgments. The proposed rule would authorize a district court to treat a bankruptcy court’s judgment as proposed findings of fact and conclusions of law if the lower court did not have the constitutional authority to enter a final judgment.

Official Forms 411A and 411B.

The use of Official Forms is mandatory. The Bankruptcy Rules do not require the use of Director’s Forms, their use is optional unless local court rule or general order mandates their use. At its September meeting, the Judicial Conference approved reissuing the bankruptcy general and special power of attorney forms. Currently Director’s Forms 4011A and 4011B, as Official Forms 411A and 411B to conform to Bankruptcy Rule 9010(c). That requires the execution of a power of attorney on an Official Form. Bankruptcy cases commenced after December 1, 2018, must use the new forms. Similarly, cases pending on December 1 must use the new forms “insofar as just and practicable.”

Effective date.

The Judicial Conference approved the rule amendments last fall at its annual meeting. Likewise, the Supreme Court adopted the proposed amendments and transmitted them to Congress in April 2018. If Congress takes no action, the amendments will become effective on December 1, 2018.

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