New bankruptcy rules will come into effect on December 1, 2021 | Bradley Arant Boult Cummings LLP

A few changes to the federal bankruptcy rules came into effect on December 1, 2021. The most notable change is bankruptcy rule 9036, which deals with electronic notice and service.

  • Bankruptcy Rule 2005 – The Bankruptcy Rule 2005 generally deals with the apprehension and dismissal of a debtor to require him to attend a review regarding the administration of the Georgia bankruptcy exemptions estate. At the request of an interested party supported by an affidavit concerning the necessity of the examination and the risk of the debtor absconding, the court may issue to the marshal or other judicial officer an order to bring the debtor before the court without unnecessary delay. The amendment to Bankruptcy Rule 2005 (c) corrects a technical error related to the conditions of discharge of the debtor. The technical error arose in connection with the repeal and replacement of certain provisions of the Bail Reform Act 1984, and the new reference to 28 USC § 3142 now correctly follows the terms of release and gives the court the discretion to consider only the “relevant” provisions of this article.
    • Next steps – Although this rule is not frequently invoked, clients will benefit from the reminder that a debtor may be forced to appear for examination as a potential step in cases where the bankruptcy estate is not properly administered.
  • Bankruptcy Rule 3007 – Bankruptcy Rule 3007 covers the procedure for objecting to claims, and Bankruptcy Rule 3007 (a) deals with when and how to serve such objections. The amendment to Bankruptcy Rule 3007 (a) (2) (A) (ii) clarifies that the specialized service requirements of Bankruptcy Rule 7004 (h) only apply to insured deposit-taking institutions as defined in Article 3 of the Federal Deposit Insurance Act. In other words, institutions insured by the Federal Deposit Insurance Corporation are covered by Bankruptcy Rule 7004 (h), which generally requires service by certified mail addressed to an officer of the institution, with limited exceptions. Institutions not insured by the FDIC, such as credit unions, can be served by first class mail sent to the person designated for receipt of proof of claim notice.
    • Next steps – Customers who are not FDIC insured should modify their policies and procedures as necessary to actively monitor the meaning of objections to claims so that they are received in time to take necessary action to protect their claims.
  • Bankruptcy Rule 7007.1 – Bankruptcy Rule 7007.1 applies in adversarial proceedings and generally deals with the requirement that a party file a disclosure listing the party’s parent company, if any, and public companies holding 10% or more of the actions of the party. The rule is used to assist the court in determining whether the designated judge should be disqualified under Canon 3C (1) (c) of the United States Code of Conduct for Judges. The amendment clarifies that bankruptcy rule 7007.1 applies to non-government corporations and also provides for an additional notice when the information required by the rule changes.
    • Next steps – Business clients should ensure to file a disclosure under Rule 7007.1 at the start of an adversarial proceeding, if applicable. Customers should also be sure to check local bankruptcy court rules, as some courts extend rule 7007.1 to require unincorporated entities, such as limited liability companies, to file disclosures under rule 7007.1.
  • Bankruptcy Rule 9036 – Bankruptcy Rule 9036 deals with electronic notice and service. Where bankruptcy rules require or allow notice to be sent or service of a document, Bankruptcy Rule 9036 provides that certain documents must be served electronically. The changes to Bankruptcy Rule 9036 are designed to address high volume paper notice recipients. The clerk is now authorized to send notice or serve to registered users using CM / ECF (the court’s electronic filing system) and can also serve on any recipient electronically if the recipient had consented to that electronic notice in writing. , subject to certain exceptions. . The amended rule further clarifies that the electronic notice or service is complete at the time of sending and that it is the recipient’s responsibility to keep their email address up to date with the clerk.
    • Next steps – Customers who are important recipients, such as those who regularly appear as creditors in consumer bankruptcy cases, should modify their policies and procedures as necessary to actively monitor their email addresses to ensure they receive notices in time to take the necessary action. Customers should also ensure that the email addresses registered with each bankruptcy court are active and correct.

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