The following members were present at the meeting:
District Judge Adrian G. Duplantier, Chairman
District Judge Eduardo C. Robreno
District Judge Bernice B. Donald
District Judge Robert W. Gettleman
Bankruptcy Judge Robert J. Kressel
Bankruptcy Judge Donald E. Cordova
Bankruptcy Judge A. Jay Cristol
Bankruptcy Judge A. Thomas Small
Gerald K. Smith, Esquire
Henry J. Sommer, Esquire
Professor Charles J. Tabb
Professor Kenneth N. Klee
R. Neal Batson, Esquire
Leonard M. Rosen, Esquire
J. Christopher Kohn, Esquire, United States
Department of Justice
Professor Alan N. Resnick, Reporter
District Judge Alicemarie H. Stotler, Chair of the Committee on Rules of Practice and Procedure
("Standing Committee"), and Alan W. Perry, Esquire, liaison to this Committee from the
Standing Committee, were unable to attend. Peter G. McCabe, Secretary to the Standing
Committee and Assistant Director of the Administrative Office of the United States Courts
("Administrative Office"), attended the meeting. Bankruptcy Judge George R. Hodges, a
member of the Committee on the Administration of the Bankruptcy System ("Bankruptcy
Committee"), attended part of the meeting as a representative of that committee. Brady C.
Williamson, Esquire, the chairman of the National Bankruptcy Review Commission ("NBRC"),
and James I. Shepard, a member of the NBRC, also attended part of the meeting.
The following additional persons attended the meeting: Joseph G. Patchan, Director,
Executive Office for United States Trustees (EOUST); Richard G. Heltzel, Clerk, United States
Bankruptcy Court for the Eastern District of California; Cecelia B. Morris, Clerk, United States
Bankruptcy Court for the Southern District of New York; Patricia S. Channon, Bankruptcy
Judges Division, Administrative Office; Mark D. Shapiro, Rules Committee Support Office,
Administrative Office; and Elizabeth C. Wiggins and Robert Niemic, Research Division, Federal
Judicial Center ("FJC").
In addition, David B. Foltz, Jr., Esquire, from Houston, Texas, and Alan S.Tenenbaum,
Esquire, of the Environment and Natural Resources Division, United States Department of
Justice, attended part of the meeting.
The following summary of matters discussed at the meeting should be read in conjunction
with the various memoranda and other written materials referred to, all of which are on file in the
office of the Secretary of the Standing Committee. Votes and other action taken by the Advisory
Committee and assignments by the Chairman appear in bold.
The Chairman introduced the guests and welcomed them to the meeting.
The Committee approved the draft minutes of the March 1997 meeting subject to minor
editorial changes on pages 4, 15, and 19.
Judge Duplantier and Professor Resnick reported on the June 1997 meeting of the
Standing Committee. Judge Duplantier said the Standing Committee had approved the
amendments to the Official Forms, as proposed by the Committee, including the changes made
to proposed Official Form 10, the Proof of Claim, after the March 1997 meeting and circulated
by mail and facsimile transmission to the members. At the Standing Committee meeting, Alan
W. Perry, Esquire, had inquired about inconsistencies in the dates and abbreviated designations
of the forms in the top left corner of each form. In response to these questions, these dates and
designations were edited uniformly to the month and year of anticipated Judicial Conference
action and variations in the abbreviated designations were reduced, the Chairman said. The
Standing Committee also had approved the Advisory Committee's recommendation that a
transition or phase-in period for the new forms be authorized, with March 1, 1998, as the date on
which the new forms would become mandatory.
The Chairman said the Standing Committee also had approved the publication for comment of the package of rules forwarded by the Advisory Committee. He noted that the preliminary draft pamphlets had just been printed and had been distributed to the members at the meeting as well as by mail.
Professor Resnick said the Standing Committee has been examining over the past several
years a few areas of practice in federal courts in which issues of attorney conduct have arisen,
with a view toward ascertaining whether any uniform federal rules might be either appropriate or
helpful in a field that traditionally has been regulated by the states and local federal district
courts. The various state rules and the American Bar Association's model code are often
inconsistent, especially with respect to defining and addressing conflicts of interest, a situation
that can leave practitioners subject to contradictory rules. Professor Resnick said he had spoken
with Professor Daniel R. Coquillette, Reporter to the Standing Committee, who stated that he
planned to draft an amendment to Federal Rule of Civil Procedure 83 that would prohibit courts
from making local rules that would conflict with "Appendix A." Professor Coquillette told
Professor Resnick that he also planned to draft an "Appendix A" to the civil rules that would
contain five to eight "core" federal rules of attorney conduct.
Professor Resnick noted that the Standing Committee has held two seminars on the
subject, which were attended by Gerald K. Smith of the Advisory Committee, and that there
appears to be recognition that bankruptcy practice may have to be carved out of at least some
aspects of the kinds of rules the Standing Committee appears to be contemplating. Professor
Resnick also noted, however, that most bankruptcy court local rules on the subject refer to
district court or state rules and, therefor, if the Federal Rules of Civil Procedure are amended,
those amendments may be binding on the bankruptcy courts. Accordingly, he said, the Advisory
Committee needs to monitor this attorney conduct rules project very attentively. Ultimately, the
Advisory Committee may have to draft its own "core" rules or, at minimum, consider and
comment on any proposed civil rules amendments. Professor Resnick also said that the FJC last
year had completed a study of attorney conduct issues in district courts and that Professor
Coquillette has suggested that a similar study be done in the bankruptcy courts. This proposed
study, he said, will require input from the Advisory Committee. The Chairman said that he,
Mr. Smith, and the Reporter would consult with Ms. Wiggins concerning any proposed
The Reporter noted that on April 1, 1998, adjustments to certain dollar amounts in the
Bankruptcy Code are scheduled to take effect. Some of the affected dollar amounts also appear
on some of the official forms. He reminded the Committee that in 1996 the Standing Committee
and the Judicial Conference had acted to permit these adjustments to be made automatically
without further Committee or Conference involvement. Amendments to the Bankruptcy Code
enacted in 1994 specify the procedure and formula to be used to adjust the dollar amounts and
require that the adjustments be published in the Federal Register no later than March 1. The
Administrative Office will take care of making the computations needed and arranging and
paying for the publication. Conforming amendments to the affected forms -- the Proof of Claim
and Schedule E -- will be distributed in the normal way.
Judge Duplantier said that the Advisory Committee on Civil Rules had sponsored a two-day conference on discovery the week before at Boston College Law School. Professor Resnick
said he had attended the conference and that it appeared to him that the only consensus reached
during the two days is that local opt-outs from an otherwise national rule should not be
permitted. There was a divided vote on what the national rule should provide with respect to
mandatory disclosures, with the majority opposed. The minority, however, was sizable, he said.
Judge Robreno said he had attended a meeting of the Civil Rules Committee and would be
attending another in October. He said he had been studying the Rand Corporation report issued
in connection with the experiments conducted under the Civil Justice Reform Act. The Rand
researchers had studied 12,000 cases and their findings are quite controversial, he said. The
report indicates that the various pilot programs undertaken under the Civil Justice Reform Act
had little effect on costs of litigation or parties' satisfaction with the process, and that alternative
dispute resolution (ADR) programs also made little difference. The only factor that made a
difference, according to the report, was the setting of an early trial date. The report also
indicated that differentiating cases for appropriate management according to size and complexity
is a useful exercise, he said. Judge Robreno also said the Advisory Committee should be aware
of the June 1997 decision of the Supreme Court in the "Georgine" case, Amchem Products, Inc.
v. Windsor, ____ U.S. ____, 117 S.Ct. 2231 (1997), which held that settlement classes are not
permissible unless they meet all the requirements for a regular class under Federal Rule of Civil
Judge Duplantier also said he had attended the June 1997 meeting of the Bankruptcy
Committee. Judge Hodges, who attended the Advisory Committee meeting as a representative
of the Bankruptcy Committee, observed that the two committees overlap very little in their
responsibilities but have many common interests. One area of interest to both groups is fees and
he noted that the Bankruptcy Committee had made recommendations concerning bankruptcy fees
at the June meeting. Other issues the Bankruptcy Committee is working on actively, he said, are
additional judgeships, consolidation of bankruptcy and district court clerks' offices, the in forma
pauperis study which is due to Congress on March 31,1998, and methods to improve the
operations of United States trustees and bankruptcy administrators.
Mr. McCabe added that the Bankruptcy Committee also had taken up Recommendation
73 of the Long Range Plan for the Judiciary, which states that the judiciary does not have enough
information about its bankruptcy cases to support program decisions, and assigned to its Long
Range Planning Subcommittee the task of recommending ways to make more and better
bankruptcy information available to those who need it. The subcommittee had met September 9
and divided into two subgroups, one of which will focus on court data and the other of which
will work on financial and demographic information. Mr. McCabe said he believes the best way
to standardize information coming in to the courts may be through the official forms. Mr.
Sommer, after noting that amendments to the official forms would be considered by the Judicial
Conference the following week, said the Committee should be mindful about timing future
amendments to the forms, because lawyers must purchase new or upgraded software each time
the forms are amended.
Ms. Wiggins said the FJC presently transfers district and appellate court data to the
Interuniversity Consortium for Political Research, which makes the data available to other
researchers, and is working with the Statistics Division of the Administrative Office to make
bankruptcy data available also. Professor Resnick reported that he had attended a conference
held in April 1997 under the sponsorship of the Rand Corporation and the EOUST which had
included social scientists, academics, and a National Bankruptcy Review Commissioner, John A.
Gose. Professor Resnick said he was concerned about privacy issues that arise with widespread
distribution of information disclosed by debtors in bankruptcy cases. For example, he said, there
is a 10-year limit on including bankruptcy information in a credit report, but information placed
on the Internet cannot be erased. Ms. Wiggins said the FJC is sensitive to the privacy issues and
is working to purge certain items from the bankruptcy data. She said the FJC intends to work
with the General Counsel of the Administrative Office and with the Bankruptcy Committee on
the matter. Judge Duplantier asked if the Committee ever had been asked to add social science
questions to the official forms. The Reporter said requests had been made in the past, such as a
request to add the question whether the debtor is male or female.
Notice to the Government
Judge Small introduced the discussion by noting that proposals by the Reporter, Mr.
Kohn, and Mr. David B. Foltz, Jr., had been considered at the Committee's last meeting and
been referred to a new subcommittee chaired by him. He recalled that one proposal would have
required the clerk to establish and maintain a register for addresses of governmental units. The
March 1997 discussion had highlighted problems with the proposal: 1) on the part of clerks
concerning the frequency of updates and the number of addresses permitted per government
agency, and 2) on the part of debtors over the effect, under § 523(a)(3), of a debtor's failure to
provide a correct address. Over the summer, Judge Small said, the subcommittee had met by
telephone and, after further discussion, had directed the Reporter to draft amendments
incorporating many of the proposals presented at the March 1997 meeting. The Reporter added
that the effort to amend the rules to provide for better notice to governmental units actually had
begun at the March 1995 meeting, when the Committee had considered the issues and requested
new proposals that would reflect the concerns raised at that time.
Professor Resnick summarized the elements of the various proposals that the Committee
had considered at the March 1997 meeting; 1) amending Rule 1007 to require that wherever a
debt to a governmental unit is listed a debtor state the name of the agency through which the debt
was incurred; 2) amending Rule 5003 to require the clerk to keep a register of mailing addresses
for government agencies; 3)requiring the debtor to use the register address if the entity listed is a
unit of the federal government or of the government of a state; 4) providing a "safe harbor" for
the debtor who uses the address in the register but providing also that use of a different address
does not bar the discharge if the governmental unit involved receives actual notice of the
bankruptcy case;(1) 5) amending Rule 2002 to provide that when notice to the United States
attorney also is required, that the name of the agency through which the debt was incurred be
included in the notice to the United States attorney; 6) requiring disclosure in the Statement of
Financial Affairs of additional information about the debtor's personal and business relationships
that would enable taxing authorities to investigate the status of the debtor's tax obligations and
about environmental claims, both actual and potential; and 7) requiring a debtor to mail a copy of
the environmental part of its Statement of Financial Affairs to the relevant government agencies.
Mr. Klee said the Committee needs a policy basis for approving the proposals, which he
viewed as having conflicting objectives. On the one hand, he said, a false oath can jeopardize the
discharge and on the other, the proposed tax and environmental disclosures could result in self-incrimination. With respect to the notice proposals, he said, due process requires notice, but with
these proposals, if notice is not given correctly, the discharge may be jeopardized. What is
different about a bankruptcy, he asked, that these disclosures should be required? He said the
clerk, rather than the debtor, should give notice, and that the only practical approach is for the
clerk to give notice to the entire register, which should be national and not limited to the state
where the court is located. Professor Resnick responded that the use of the register would occur
only when a governmental unit is a creditor and that its purpose is to help government agencies
overcome the problems that arise from the massiveness of their programs. He said the
environmental disclosures proposed for the Statement of Financial Affairs are a different matter
and are much more controversial.
Notice to the Government -- Rules 2002 and 5003
The Committee began its consideration of the draft amendments with the proposed
amendments to Rule 5003(e) (establishment of a register) and proposed new Rule 2002(g)(2)
(filing by governmental unit of preferred address information). Mr. Shepard said the NBRC had
heard much about the importance of notice, especially when the time to act is short. The
opportunity clearly exists to delay notice, he said, and a remedy is needed. The NBRC view is
that the Bankruptcy Code should provide sanctions for deficient noticing, and the rules should
specify the mechanics of proper noticing. Mr. Shepard said he thinks the register should go
beyond the immediate state in the which the court is located. Mr. Klee added that Indian
reservations, foreign states, municipalities, and other, smaller, government units also should be
included. Mr. Heltzel pointed out that the number of government entities in the State of
California alone is over 7,000, and including further jurisdictions is simply impractical.
Professor Resnick suggested that it probably would be better to start with a manageable amount
of material and see how it goes. He said the Committee also had been asked why the register
should be limited to governmental units, with a suggestion to include private creditors such as
Citibank as well. A relatively small register will help, he said, and probably be sufficient for
Judge Cristol expressed concern about the debtor using a register list that is more than
five months old. He said he thinks there should be a distinction in treatment depending on
whether a creditor is a voluntary one (private lending institution) or an involuntary one (such as a
taxing authority). For a voluntary creditor, he said, a debtor should have records and the debt
should not be discharged if notice is not provided. Mr. Kohn said the "outside" states may need
to be listed in a register more than the immediate one. He also said a register would benefit
debtors, because using the address listed there is per se effective notice and creditors also benefit
because timelier notice helps them to avoid violating the automatic stay. Mr. Sommer said he
favors good notice, but that if a registry is too large it is not really useful. Judge Kressel
suggested turning the thrust of the amendment around to say "do the best you can in providing an
address, but you can do even better if you use the register." He said he also would want the rule
to make clear that notice will still go to the address listed by the debtor on the mailing matrix and
not require the clerk to override the matrix with any different address from the register.
Mr. Klee said he still would like the word "state" in line 7 of Rule 5003(e) changed to
"state or territory" and to have conforming changes made throughout the drafts. Mr. Rosen
asked whether the government could search for information using a debtor's social security
number. Mr. Kohn said this is impractical, because the federal government has no central
database and each state would have to go through all one million annual filings to find the cases
in which that state is a creditor.
Judge Duplantier asked whether anyone on the Committee opposed the general idea of "a
register." Mr. Heltzel said he opposed the amount of work it would require of the clerk. Mr.
Batson said he doubted the idea would work in practice. When the matter was put to a vote,
the result was 9 - 4 in favor. On the question of expanding the scope of the register beyond
the proposal, as amended, Mr. Heltzel said clerk opposition would be massive, and only one
member voted in favor.
Continuing with the various provisions of the draft of Rule 5003, the Chairman asked if
the Committee thought the dates on which the register is updated should be uniform. The
consensus was that they should.
Mr. Kohn said he does not like limiting an agency to one address and would prefer to
give the clerk discretion in the matter. Judge Duplantier asked how the debtor would know
which one to choose if several addresses were listed. Kohn suggested that the addresses could be
distributed by counties, but Mr. Heltzel said the government agencies are not all organized the
same way, that their boundaries seldom match those of the court districts. His district, for
example, comprises parts of three IRS districts, he said. Professor Tabb asked if there should be
a safe harbor provided for a debtor who has only a one-in-three chance of choosing the right
address. Mr. Heltzel questioned what will happen when people move. He also said he had been
sampling matrices filed in his district to determine how well debtors are complying with the
addresses posted in the local roster of government agency addresses that he has maintained for
many years; he found compliance is only about 50 percent.
Judge Kressel suggested changing the word "district" on line 7 of Rule 5003(e) to
"court" and making conforming changes throughout the drafts. Judge Gettleman made a
motion to change the frequency of register updates to once per year (from twice per year),
which carried with one opposed.
Mr. Sommer said that in the draft of Rule 2002(g)(2), at lines 13 through 15, he found the
language confusing and asked the Reporter why he did not simply say "the agency"? Professor
Resnick responded that it is not the agency that has the claim, but the United States or the state.
If agency were to be added, he said, it might appear that municipalities could be included. In the
same way, he said, the reference to Rule 5003 is intended to show that the United States or a
state can file an address for one or another of its agencies, but the creditor is still the United
States or the state. Judge Kressel concurred and observed that the cases on notice say that notice
to the Small Business Administration, for example, is not notice to the Internal Revenue Service.
There was general agreement that drafting on these points presents difficult issues and that the
definition of "governmental unit" in §101 of the Code increases the difficulties. The Reporter
invited help from the Committee in resolving this drafting point.
Mr. Rosen said the heading of Rule 2002(g)(2) should be changed to use the phrase
"the United States, states, and territories" to reflect the discussion at the meeting. Judge
Cordova said the word "separate" on line 21 of the rule should be deleted.
Mr. Sommer asked how Rule 2002(g)(2) would work with Rule 2002(g)(1), which
provides for using the address on a filed proof of claim if that address differs from the one
provided by the debtor. Professor Resnick suggested that he could either insert in (g)(1) a carve-out such as "except as provided in (g)(2)" or he could add a proof of claim option to subdivision
A motion by Mr. Rosen that in the draft of Rule 2002(g)(1), lines 10 - 11, a provision
be inserted that a creditor that wants a different address used in subsequent notices must
file a request and serve copies on the debtor and trustee carried by a vote of 9 - 3. The
Committee then reconsidered the matter, based on the amount of paper that would be generated.
Professor Resnick suggested amending proposed subdivision (g)(2) at lines 17 - 19 to carve out
subdivision (g)(1), but Mr. Sommer said it would be a mistake to carve out of subdivision (g)(1)
the requirement to use the address on the matrix or any later-filed schedule unless a request is
filed to use a different address. Mr. Heltzel said the real process of sending notices is highly
computerized, with the actual printing and mailing performed by a contractor at a remote site.
As a practical matter, he said, the clerk can't make corrections, but simply adds any new
addresses received and sends notices to all.
After this discussion, a new suggestion was made: delete subdivision (g)(2), (refrain
from amending Rule 2002 at all), and rely instead on draft Rule 1007(m)(2) (debtor's duty
to use register address). Although there was no vote taken, no member expressed any
objection to this approach. The Reporter said he would redraft Rule 5003(e) to delete the
reference to (g)(2) and to provide simply for setting up the register.
The Committee discussed again Rule 5003 and the issue of whether to limit a government
agency to one address or permit multiple addresses to be used. Mr. Batson spoke passionately
against requiring citizens to help the government by providing information that may be damaging
to their interests. Mr. Smith said he is ready to reconsider the creditor's option to provide a new
address by doing so on the Proof of Claim. Mr. Kohn said that multiple addresses seem to be
working without causing problems in those districts that have established registers by local rules
and that the various addresses conform to geographic divisions within the particular district. A
motion to limit each agency to one register address carried by a vote of 5 - 4.
With respect to the draft of Rule 2002(j), the Reporter said the proposed changes all were stylistic with the exception of lines 61 - 64, which contain the provision requiring that when notice must be mailed also to the United States attorney, the notice shall identify in the address the name of the department, agency, or instrumentality through which the debt was incurred. The Chairman stated that, seeing no objection, the amendment would be adopted, subject to review by the Style Subcommittee.
National Bankruptcy Review Commission
Brady C. Williamson, chairman of the NBRC, reported that the Commission expected to
issue its report on time, on October 20, 1997, and that it would be published electronically as
well as in paper form. He said the report would be available on several websites, including the
Government Printing Office (GPO) and the site maintained by the judiciary. Commissioner
James I. Shepard spoke of the importance of notice to the bankruptcy system. If the public's
right and interest is not protected in bankruptcy proceedings, he said, the system is not working
Notice to the Government -- Rule 1007
The Committee, returning to its consideration of government noticing, discussed the draft
of proposed Rule 1007(m), in particular the "safe harbor" provisions that safeguard the
discharge if the debtor incorrectly names a government agency or uses an address that is different
from the address in the clerk's register, but the creditor agency timely receives actual notice of
the case. Mr. Klee said the language should track that of § 523(a)(3). Mr. Sommer and Judge
Kressel said the provision should be rewritten more explicitly as a "safe harbor." Judge
Duplantier asked how many members thought there should be no "safe harbor." Only Mr. Kohn
raised his hand. Judge Duplantier asked how many members would favor language such as "the
debtor may use" the register address rather than "the debtor shall" use it. The show of hands was
clearly in favor. Mr. Klee observed that some circuits have ruled that if a requirement is in the
rules and not followed, the debtor is not discharged. Mr. Rosen said that whether an agency is
correctly named should not control whether a debtor receives a discharge in an actual notice
situation. The draft of Rule 1007 was recommitted to the subcommittee.
Notice to the Government -- Official Form 7
(Tax and Environmental Questions)
The Reporter introduced the discussion of the proposed addition of several tax questions
to Official Form 7, the debtor's Statement of Financial Affairs, and stated that the four questions
shown in the agenda book represent the Government Noticing Subcommittee's winnowing of the
submissions received from the Department of Justice. It was the subcommittee's judgment, he
said, that if any tax questions are added, the addition should be limited to the questions shown.
Mr. Sommer said that in the proposed new question 16, on line 3, the phrase "had been married"
should be changed to "was married." He also said some of the proposed questions overlap
existing ones, and the Committee should try to avoid duplication of information. He suggested
referring the proposed questions either to the Forms Subcommittee or the Style Subcommittee.
Mr. Smith said that proposed question 17 should clarify whether the word "owned"
means only 100 percent ownership or is intended also to cover partial ownership. He referred the
Committee to the current question 16, which is quite similar, and suggested that it could be
broadened to include proposed question 17. Mr. Smith also asked why the information on
former spouses is needed. Mr. Kohn said that is for community property purposes. Mr. Sommer
suggested substituting "if you listed community debts, name any former spouse." Mr. Klee said
trustees also would find the information useful for contribution purposes. Other suggestions by
members were to generally refine question 22 and add "If the debtor is a corporation . . . ," and in
question 23 to limit applicability to the debtor as an employer and possibly to corporations only.
The consensus was that these questions should not be added specially, but only when there
is a general review of forms.
Judge Small introduced the discussion of the proposed environmental questions by noting
that they pertain to identified claims only and do not include the disclosure of "imminent danger"
on property of the debtor, which Mr. Kohn advocates. Mr. Klee said he would want question
24.a. limited to disclosure of notices actually received by the debtor and would want the clerk,
rather than the debtor, to mail the part of the statement containing the disclosures. The Reporter
said any requirement to mail part of the statement to creditors should be in the rules and that
Rule 1007 could provide for it. Mr. Batson asked whether affording environmental protection
agencies with extra information could open the door to requests for similar service by other
agencies. There was consensus that merely adding an instructional note to the form would
not be sufficient to require a debtor to mail a portion of its statement to certain creditors
and that, if the Committee approves such a requirement, it must be stated in the rules.
Mr. Smith said he thinks the "imminent danger" information should be disclosed. Mr.
Klee said that goes beyond the debtor-creditor relationship and had Fifth Amendment
implications. Judge Robreno suggested that such information would be appropriate to inquire
about at a § 341 meeting. Judge Gettleman asked whether such disclosures would go beyond
what the environmental laws would require. Judge Cristol said environmental issues generally
arise in a chapter 7 case where there is a fight between the bank, the trustee, and the other
creditors over who will bear the expense of cleanup, and the sooner the existence of an
environmental problem is known the better it is for all. Mr. Sommer asked whether it is so
important that the participants in the case need the information sooner than the § 341 meeting.
Mr. Patchan said it should be known to the U.S. trustee, who appoints the case trustee, before the
appointment is made and suggested that there should be a requirement in the rules for separate
notice. Mr. Foltz stated that question 24, as drafted, would not have disclosed the problems he
has encountered, which included representing a debtor that had hazardous biomedical material on
its premises. Mr. Foltz said he would like the substance creating an "imminent danger" to be
identified and thinks it should be disclosed immediately. Mr. Klee said there should be a
distinction between different types of debtors and what is required of them. He said he supports
requiring disclosure by a business and thinks the standard should be that the substance does,
rather than may, pose a hazard. Mr. Batson suggested that the standard should be "imminent
threat to public health and safety," including environmental safety.
Concerning the general principle of requiring disclosure, the vote was in favor, with
one opposed. Turning to the mechanism for establishing the requirement, Professor Resnick
suggested that the disclosures in question may go beyond what already is required under § 521
and need a statutory change, especially if separate notice is to be given. Mr. Patchan again
supported special notice to the U. S. trustee as the person most likely to respond immediately.
Professor Resnick suggested there could be a checkbox on the petition, and checking the box
would signal the clerk to notify the U. S. attorney immediately. Judge Cordova said the U.S.
trustee should receive the notice, not the U. S. attorney. Judge Robreno said he favors using the
statement of affairs rather than adding to the filing requirements set out by Congress. He said he
also was concerned about how the word "imminent" would be interpreted. Mr. Rosen said that
in a bankruptcy, the property is transferred to a new person, the trustee, who should know the
risk being undertaken.
The Reporter suggested that a two-step disclosure might be possible, with items that
create an imminent danger and need urgent attention to be disclosed on Day 1, and other items
that are not urgent disclosed in the statement of affairs. A show of hands indicated that the
Committee generally favored a two-stage approach, with one opposing vote and two abstentions.
A second vote showed nine members favoring broad disclosure at the outset, including both
urgent and non-urgent items. Professor Resnick said he thought disclosure might be more
effective if limited to matters that require urgent attention. He said this could be done with a box
labeled "Check here and give a brief description." Mr. Sommer said he favored a combination of
a rule and form to go out for comment with the rule amendment. Judge Donald said the
requirement should be only for disclosure of hazards known to the debtor, with a duty to amend
based on later information.
The Committee determined to recommit to the Forms Subcommittee the issue of
environmental disclosures, both those that present an "imminent danger" and those for
which disclosure is less urgent.
Litigation Subcommittee -- Rules 9013 and 9014
The Reporter introduced the discussion by reviewing the Committee's action at the
March 1997 meeting approving in principle the subcommittee's proposed amendments, subject
to further refinement, review by the Style Subcommittee, and deferral of certain issues. He said
he had submitted the drafts to the Style Subcommittee of the Standing Committee for its
recommendations, and that the Advisory Committee's own Style Subcommittee had gone over
those recommendations in a telephone conference in which the Litigation Subcommittee
chairman, Mr. Klee, also had participated. Professor Resnick said that during the summer he
also had reviewed the rules generally to identify those that would require conforming
amendments. He said that as a result of this review he also wanted to bring back to the
Committee the matter of amending Rule 9034, which governs notice to the United States trustee.
A proposal to amend that rule had been defeated at the March 1997 meeting, but deleting notice
to the U.S. trustee as part of the conforming of rules to the proposed Rules 9013 and 9014 might
cause the Committee to take a different view of amending Rule 9034, he said. Professor Resnick
described the various agenda materials: Exhibit A contains the style revision, with portions
related to deferred issues shown in brackets; Exhibit B is identical to Exhibit A, but marked to
show some additional proposals from the Reporter that resulted from his review of other rules;
Exhibit C lists proposed amendments to 20 rules to conform to the proposed amendments to
Rules 9013 and 9014; Exhibit D contains proposed amendments to Rule 1006, deferred at the
March 1997 meeting; and Exhibit E shows proposed amendments to Rule 1007 that were
approved in principle at the March 1997, subject to further refinement.
Judge Duplantier said that, although the Committee had approved in principle the
proposed amendments to Rules 9013 and 9014, the proposals were open to reconsideration and
he noted that Judge Robreno had written a letter describing a different approach. Judge
Robreno's letter, which was distributed to the Committee separately from the agenda book,
would be discussed at the appropriate moment, he said. Speaking for himself, Judge Duplantier
said his objective in managing litigation is to identify the big case early on, so it can be singled
out for special attention and management. The routine matters, however, should not be unduly
burdened with requirements that are needed only in a big case. He suggested as targets for
deletion from proposed Rule 9014 two items that he thinks will burden routine matters and can
be specially provided for when needed: the list of witnesses, and the 25-day response time. He
said that motion practice is similar to discovery; the problems are in the big cases.
Mr. Smith said the attorney for the movant usually knows when a matter is complex and
should trigger the extraordinary procedures, but Judge Duplantier said it may sometimes be the
responder who creates the complexity. Judge Robreno spoke generally against the proposed
Rule 9014(m), which gives the court discretion to depart from the prescribed procedures. He
said it seemed to him to be like the opt-out provided in Federal Rule of Civil Procedure 26(a) and
is really like adopting no rule. He also said the draft seems to be legislating for the
extraordinary, while he prefers an approach that states basic principles for all, leaving the court to
give directions in major matters. Judge Duplantier said he did not think proposed subdivision
(m) would create a general opt-out.
Mr. Klee reviewed the status of the litigation project. Like Gaul, he said, it is divided
into three parts. Adversary proceedings comprise one part, and are not affected by the proposals.
Proposed Rule 9013 is another part, addressing matters that usually proceed unopposed, and the
proposals concerning these appear to enjoy broad support within the Committee. Proposed Rule
9014 is the third part, and there are three approaches within the Committee: Judge Robreno's,
Judge Duplantier's, and the subcommittee's draft. The Committee then turned to the materials
and considered the proposals in order.
The Reporter noted that the first bracketed material in the draft of Rule 9013 is
subdivision (a)(5), concerning an application for approval of employment of a professional.
Professor Resnick said that deleting the brackets would create a conflict with what is proposed
for Rule 2014 and that perhaps the best course would be to delete (a)(5) from Rule 9013
altogether and leave Rule 2014 as a stand-alone rule. There was no opposition to deleting
The next bracketed subdivision is (a)(11), which addresses a request for examination
under Rule 2004, and the Reporter noted that the Rule 2004 Subcommittee had decided to table
the proposals to require notice of a Rule 2004 examination. Deleting subdivision (a)(11), he
said, would leave the question of notice to local rule. Mr. Klee made a motion to retain
subdivision (a)(11) (and delete the brackets), which carried by a vote of 7 to 6.
Turning to Exhibit B, which includes additions made to the draft after the Reporter's
review of other rules, there was consensus to retain subdivision (a)(14), concerning
conditional approval of a disclosure statement under Rule 3017.1. With respect to subdivision
(a)(15), concerning protection of secret, confidential, scandalous, or defamatory materials, Judge
Robreno raised the issue of public interest. A motion to include subdivision (a)(15) drew a tie
vote of 6 to 6, which the Chairman resolved by voting to include (a)(15).
Judge Kressel expressed concern about the provision in subdivision (e) that the applicant
is to serve the order, once it has been signed by the judge. Judge Kressel said the rule needs to
ensure that the order is served, because the clerk will docket it and the appeal time will begin to
run. He said he thinks the rule should require that, if the court issues an order, the clerk must
serve a copy on the applicant, any entity listed in Rule 9013(c), and any other entity the court
directs. A motion to amend the draft to require the clerk to serve any order carried by a
vote of 9 to 2.
A motion to approve proposed Rule 9013 as amended at the meeting carried on a
Turning to the subcommittee's draft of Rule 9014, the Chairman said the draft is nearing
completion. He said he would like to shorten the response time, put the burden on the
respondent to say the matter is complex and needs more time.
Judge Robreno made a motion to substitute his draft. He said the essence of his proposed
rule is its subdivision (c). Under his draft rule, he said, the rule would state the principles, and
the details would be left to local rule. Judge Robreno said the proposed substitution would
provide a mandate to bankruptcy courts to refrain from awarding relief unless a court found that
the party against whom relief was sought had been afforded, in the circumstances, 1) adequate
notice of the hearing, 2) an opportunity to respond to the administrative motion, 3) an
opportunity to offer evidence on any contested issues, 4) an opportunity to cross examine adverse
witnesses, and 5) an opportunity for discovery in the circumstances.
Mr. Sommer said he supports the principle of uniformity and would publish the
subcommittee's draft. Judge Kressel agreed and said the sole finding of the FJC study was a
desire for uniformity. He said the Committee should publish the draft and see what the
comments are. Professor Tabb said the draft seems to him to be micromanagement. Professor
Resnick said he did not agree and noted that the draft had been streamlined since two meetings
prior. He also observed that the policy of the Standing Committee is uniformity in rules and
against local rules. Judge Cordova said the draft appears to be unduly complicating motion
practice, and the only items needed are notice to the opposing party, and opportunity to respond
(which should be ten days), and reasonable time to be heard. Judge Donald said the procedures
look more complicated on paper than they would be in practice, and Judge Duplantier and Mr.
Sommer agreed. The Reporter said the trend in the civil rules with respect to discovery is toward
limiting the number of depositions and interrogatories. This is a technique for identifying the big
case, he said, because studies show that in most cases discovery takes less than three hours, and a
need for more than the rule permits forces the parties to go to the judge. If the draft of Rule 9014
is amended to make the response time ten days, he said, that would have a similar result of
sending the parties in a complex matter to the judge with a request for more time. The motion
to substitute Judge Robreno's draft for the subcommittee's draft of Rule 9014 failed by a
vote of 3 to 9.
The Committee then turned to the subcommittee's draft of Rule 9014. The Chairman
said the rule should be drafted so that in a non-routine matter, the respondent can request more
time. Mr. Smith said the extension should be automatic if there is a response. The Reporter said
this extension already is built-in, because, if there is a response, the first hearing is a status
conference (unless there is no genuine triable issue of fact). Judge Small said he thinks the
shortest response time possible would be 15 days. Others suggested ten days, with 24 hours for
further response from the movant, or with three days for further response. Mr. Sommer said
shortening the time is workable so long as the rule retains the "at least" language, so the time can
be extended. A suggestion to establish 15 days as the time for response, with five days for
further response, drew 9 votes in favor. A subsequent motion to change the 15 days to 20
days carried by a vote of 8 to 2.
A motion to strike the requirement that the movant (lines 31-35) and the respondent
(lines 95-101) provide witness lists with their initial pleadings carried, 7 to 3.
The Committee then began a subdivision-by-subdivision review of the subcommittee's
draft. In response to a question about the inclusion in subdivision (a)(2) of the approval of a
disclosure statement and the confirmation of a plan as matters to which Rule 9014 would not
apply, the Reporter said no motion or status conference is required for these matters now, that the
Code requires the court to hold a confirmation hearing, and that Rule 9014 would allow the court
to skip the confirmation hearing if no objection were filed. A motion to apply Rule 9014
procedures to Rules 3017, 3019, and 3020(b) carried by a vote of 6 to 5. Judge Kressel said it
is the objection to a disclosure statement or to confirmation of a plan that triggers Rule 9014
now, and that should continue. The Reporter said any motion involving valuation needs an
attached appraisal under the subcommittee's draft, which may not be appropriate for a disclosure
statement or a plan. A motion that Rule 9014 apply to these matters but that the objection
be the initiating "motion" failed by a vote of 3 to 6. Mr. Klee reiterated that the survey
showed people think there are too many different procedures in the rules. The Reporter noted
that there also is a conflict with existing Rule 2002(b), which requires a 25-day notice of a
hearing on approval of a disclosure statement or confirmation of a plan. A motion to reconsider
and carve out Rules 3017 and 3020(b) from Rule 9014 carried by a vote of 10 to 1. A
motion to retain the reference to Rule 3015(g), modification of a chapter 13 plan, in
subdivision (a)(2) carried 8 to 2. [Subsequently, the Committee determined that Rule
3015(g) is to be governed by Rule 9014.] The Committee then agreed to amend Rule 3019
to provide that a request for a determination that a class be deemed unaffected by a plan is
governed by Rule 9014. The Committee decided to delete as redundant, however, the
reference to Rule 3017.1, because it is included in Rule 9013(a) which is carved out
In subdivision (a)(5), the Committee also determined to delete the word "other" in
line 18 and to insert the word "the" after the word "or" in line 19. The Committee voted 7
to 2 to retain subdivision (b)(3)(C), requiring the movant to provide a copy of any valuation
report when valuation is "an" (rather than "at") issue.
Concerning subdivision (c), Mr. Sommer said there is an ambiguity surrounding the phrase "at least" when applied to the time limit that could permit a party to file a motion and wait to serve it. The Reporter asked whether the court can change time periods other than under Rule 9014, which permits such changes in a particular case only. The Committee voted 7 to 4 in favor of allowing the court to circumvent the "at least" and allow a local rule to provide for a longer initial time period. Judge Duplantier said this action would destroy uniformity, and in a second vote, the Committee reversed and voted 8 to 3 against a local rule opt-out.
In subdivision (c)(1)(F), the Committee determined to insert the word "on" after
"lien" in line 60 and to delete the word "adversely" in line 62. In subdivision (c)(1)(G), the
Committee inserted the words "to service" after "entitled" in line 64.
Concerning subdivision (h)(1)(C), a member questioned whether the shortened time
period provided in the subcommittee's draft would be workable with the shortened answer time
voted earlier. The Committee voted 4 to 3 against shortening these periods and then voted
to delete the subdivision entirely. Upon a motion to reconsider, subdivision (h)(1)(C) was
restored with the phrase "30 days" in line 141 deleted and the brackets surrounding "10
days" deleted in line 143. The Committee voted to delete subdivision (h)(2), which Judge
Gettleman had pointed out as redundant of Federal Rule of Civil Procedure 37.
In subdivision (i)(1)(B), line 171, the Committee discussed how much notice the court
should be required to give when it decides that the first hearing in a matter will be an evidentiary
hearing. Five members favored three days, but Mr. Batson wanted a longer time. Mr. Klee said
a longer time would not work when the response does not come in until five days before the
originally scheduled hearing date. Both Rule 9006 and subdivision (n) of the (Exhibit B) draft
allow for alteration of time periods, he said, and the Reporter suggested that line 171 could
simply require "reasonable" notice. The Committee voted 7 to 3 in favor of requiring
reasonable notice. In subdivision (i)(2), line 181, the Committee changed "unrepresented"
to "not represented."
In subdivision (l), line 211, the Committee agreed to delete the brackets around
"7009" in the list of adversary proceeding rules that will apply. In lines 216-17, and in
subdivision (n), line 229, the Committee determined to delete the phrase "within the time
necessary." In subdivision (n), line 225, the Committee also determined to delete the
phrase "with or without prior notice."
The Chairman requested that, for the publication of the draft for comment, the
Reporter and Mr. Klee write an introduction to the litigation package that would tell
members of the bench and bar what to focus on, such as the issues just debated by the
Committee. Ms. Wiggins suggested as a model the "Call for Comment" that accompanied the
preliminary draft of Rule 11 of the Federal Rules of Civil Procedure. Judge Robreno asked if
any report or other document accompanying the package would contain a disclaimer that it is not
approved by the Committee. The Reporter said he envisioned a report to the Standing
Committee that the Committee would ask to have published with the preliminary draft. At the
Chairman's request, the Reporter and Mr. Klee agreed to have the report ready in time to
include in the agenda book for the March 1998 meeting.
A motion to adopt the subcommittee's draft of Rule 9014 as amended at the meeting
carried by a vote of 8 to 3.
Litigation "Package" -- Conforming Amendments to Other Rules
The Committee then turned to Exhibit C, which contains proposed conforming
amendments to other rules that would be required if proposed Rules 9013 and 9014 become
national rules. The Reporter noted that he had included style changes also, and that, if approved
by the Committee, these amendments still would have to be reviewed by the style subcommittees
of the Standing Committee and the Advisory Committee.
Rule 1014. The Committee approved the Reporter's draft with one change,
inserting in line 17, before the word "transfer," the phrase beginning on line 18 "if the
court determines . . . ."
Rule 1017. The Reporter noted that Rule 1017(c), which is shown as deleted because it
would conflict with proposed Rule 9014, had been published for comment. He said the
subdivision would simply remain in effect if Rule 9014 does not become effective. The
Committee changed the word "motion" to "application" in subdivision (f)(2), line 40, and
approved the Reporter's draft.
Rule 2001. The Committee approved the Reporter's draft.
Rule 2004(a). (Not in materials.) The Committee determined to change the word
"motion" to "application."
Rule 2007. The Reporter noted that the changes shown are all stylistic except for the
addition of a provision that the matter is governed by Rule 9014. The Committee approved the
Rule 2016. The Reporter said he had restyled the rule, making substantive changes only
to change "application" to "motion" and provide that Rule 9014 governs. The Committee
changed the word "request" on line 28 to "motion," changed "applies" to "apply" in line
56, and changed "application" to "motion" in line 57. The Committee approved the
Reporter's draft with the changes noted.
Rule 3001. It was noted that the response time in the current rule would be shortened as a
consequence of bring the matter under Rule 9014. The Committee approved the Reporter's
Rule 3006. The Committee discussed whether the rule should say "claim" or " proof of
claim," and Judge Cordova noted that usage is inconsistent throughout the rules. The
Committee approved the Reporter's draft.
Rule 3007. The Reporter noted that conforming the procedure for objecting to a claim
would shorten the response time from 30 days to 15 and change the procedures generally, by
requiring that the matter be set for hearing and a status conference be held. Judge Kressel said he
thinks the existing rule contemplates that some basis for the objection will be stated in the papers
filed. Several members thought the response time should be longer, wanted to retain the 30 days,
and change the response time in Rule 9014 to 30 days also (subdivision (c)(1), line 43). Mr.
Patchan said the Rule 9014 procedures would burden the pro se party and generate unnecessary
paper to get the matter before the court. The Committee approved the Reporter's draft with
the following changes. In line 2, insert "except that the motion shall be served and filed at
least 30 days before the hearing" after "Rule 9014"; in line 6, change "If" to "But", and
delete the word "is" before the word "joined"; and, line 7, delete the comma and substitute
"is" for "it becomes."
Rule 3012. The Committee deleted the phrase "of a party in interest" and approved
the Reporter's draft.
Rule 3013. The Committee approved the Reporter's draft.
Rule 3015. Subdivision (f), objection to confirmation, the Reporter said, would be a
stand alone procedure, and the changes from the current rule would be to provide for service as
in Rule 9014 and to make discovery available. A member raised the issue of whether there
should be a deadline for filing an objection, and the Committee decided to delete the word
"timely" from line 14. The Committee also struck the text of subdivision (g), subject to
review by the Reporter. Subdivision (g) is to remain, but simply say that modification of a
plan after confirmation is governed by Rule 9014. The Committee approved the
Reporter's draft with the changes specified.
Rule 3020(b)(1). After discussion, the Committee decided to change the first sentence
back to the passive voice, and approved the Reporter's draft, with that change.
Rule 4001. Professor Resnick explained that most of the changes he was recommending
are to eliminate redundancies, state that Rule 9014 applies, or make style improvements. The
Committee approved the Reporter's draft.
Rule 6004. The consensus was that the redrafting effort had become overzealous with
respect to the rearranging of the paragraphs. The Committee directed that the paragraphs be
restored to the order in which they appear in the existing rule and that lines 11 - 13 and 38
- 42 be restored to the passive voice. The Committee also changed the reference to "(d)" in
line 11 to "(e)" and decided to move the clause on lines 35 - 38 beginning "to all creditors"
to form an insert at line 33, after the word "give." When redrafted, Judge Duplantier said, the
rule should make it clear that a sale may be accomplished by notice, but, if an objection is
filed, Rule 9014 applies and the objection is treated as a response. The objector should be
required to obtain a hearing date if none has been set in the notice. In addition, the
Committee decided to delete the bracketed language at lines 49 - 51. The Committee
approved the Reporter's draft, subject to the changes stated.
Rule 6006. The Committee approved the Reporter's draft.
Rule 6007. The Committee restored the phrase "or debtor in possession" on lines 3
and 4, which had been marked for deletion by the Reporter, and inserted in line 15 after the
word "is" the phrase "treated as a motion." The Committee also directed that Rule
6007(b) also be amended to provide that Rule 9014 applies. The Committee approved the
Reporter's draft, subject to the changes stated.
Rule 9006. The Committee approved the abrogation of subdivision (d), and noted a
typographical error in identifying the subdivision in the Committee Note.
Rule 9017. The Committee approved the Reporter's draft.
Rule 9021. The Committee approved the Reporter's draft.
Rule 9034. The Committee deleted lines 27 and 28 and approved the Reporter's
Rule 1006. Turning to Exhibit D, the Reporter explained that Rule 1006 would be a
stand alone rule. The change to the existing rule is to substitute the word "request" for the word
"application," as that is now a specific procedure governed by Rule 9013. The Reporter said he
also had made substantive clarifications about pre- and post-petition payments to bankruptcy
petition preparers. The Committee approved the Reporter's draft.
Rule 1007. (Exhibit E.) The Reporter noted that this also is a stand alone rule which the
Committee had previously approved and is back for review after redrafting. After changing the
word "is" in line 16 to "are," the Committee approved the Reporter's draft.
The Reporter said these 23 rules will be submitted to the two style subcommittees and
then reviewed by the Committee at the March 1998 meeting.
After discussion of the Reporter's draft of amendments to raise from $500 to $1000 the
amount of a fee request that would trigger notice to all creditors, the Committee inserted in line
9 of the draft the phrase "of an entity," deleted line 11, and substituted the word "request"
for the word "hearing" in line 12. The Committee approved the Reporter's draft with the
This rule requires the clerk to use the address provided by a creditor in a filed proof of
claim, if that address differs from the one listed on the schedules filed by the debtor. The rule
allows the clerk to ignore any new address on a proof of claim, however, if a notice of no
dividend has been given. The Reporter noted that Bankruptcy Judge Paul Mannes, the former
chairman of the Committee, had suggested that, in a case in which assets later appear and a
further notice of possible distribution must be sent, any address provided by a creditor on a proof
of claim should be used. A motion to adopt the Reporter's draft, except the portion that
requires the use of an address provided in a proof of claim, failed by a vote of 3 to 9. A
motion to adopt the Reporter's draft carried by a vote of 9 to 0. A member requested that the
Style Subcommittee give particular attention to this amendment, especially to clarifying the
purpose and use of the word "subsequent" in line 10.
Alternative Dispute Resolution Subcommittee
Professor Tabb stated that the subcommittee is in a watching mode. The FJC has
completed a survey aimed at discovering whether problems exist, he said. A second survey to
explore any problems found in the initial one remains a possibility, he said. Mr. Niemic reported
on the preliminary results of the survey. He said a very small number of problems had been
reported, leaving the Committee to consider whether any problems in the areas of mediator
confidentiality and ex parte communication between the mediator and the judge should be
tolerated. Mr. Klee indicated he would be interested in whether the results of the survey differed
depending on whether the mediator was paid or was a volunteer. He said he also is interested in
how frequently the ex parte contact between the judge and the mediator was with the consent of
Field Trip to Courtroom 21
The Committee visited Courtroom 21, which is located at the Marshall-Wythe School of
Law of the College of William and Mary. Professor Frederic I. Lederer of the law school faculty
demonstrated some of the special features of the courtroom, which include video-conference
participation by judges at remote locations, video presentation of evidence, and real time court
reporting. Ms. Morris used the facilities to explain and demonstrate for the Committee the
electronic filing system now being used in the Manhattan office of the bankruptcy court for the
Southern District of New York. The Committee could view actual documents filed in cases, and
Ms. Morris demonstrated the procedures an attorney would use to file a new document in one of
the cases on the system. A private vendor of an electronic filing system also made a
The Committee discussed dates and locations for the autumn 1998 meeting. Members
appeared to favor New York, Boston, New England, Sun Valley, or the north rim of the Grand
Canyon as possible locations. Staff will explore availability of space at these locations for
October 8 - 9, 1998.
All other matters on the Committee's agenda were put over to the March 1998 meeting.
Patricia S. Channon
1. Although the Reporter characterized this as a "safe harbor" provision for the debtor who uses the address in the register, Mr. Kohn emphasized that it makes use of the register address voluntary.