The Advisory Committee on Bankruptcy Rules met in the
Lafayette Hilton Hotel in Lafayette, Louisiana, March 30-31,
1995. The following members were present:
Bankruptcy Judge Paul Mannes, Chairman
Circuit Judge Alice M. Batchelder
District Judge Adrian G. Duplantier
District Judge Eduardo C. Robreno
Honorable Jane A. Restani, United States Court
of International Trade
Bankruptcy Judge Donald E. Cordova
Bankruptcy Judge Robert J. Kressel
Bankruptcy Judge James W. Meyers
Kenneth N. Klee, Esquire
J. Christopher Kohn, Esquire, United States
Department of Justice
Leonard M. Rosen, Esquire
Gerald K. Smith, Esquire
Henry J. Sommer, Esquire
Professor Charles J. Tabb
Professor Alan N. Resnick, Reporter
Joseph Patchan, Director, Executive Office for United States
Trustees, and R. Neal Batson, Esquire, were unable to attend.
The following representatives of the Committee on Rules of
Practice and Procedure also attended:
District Judge Alicemarie H. Stotler, Chair
District Judge Thomas S. Ellis, III, liaison to the Advisory
The following additional persons attended the meeting:
Judge Edward Leavy, United States Court of Appeals for the Ninth
Circuit and former chairman of the Advisory Committee; Richard G.
Heltzel, Clerk, United States Bankruptcy Court for the Eastern
District of California; Patricia S. Channon and James H.
Wannamaker, Bankruptcy Judges Division, Administrative Office of
the United States Courts; Mark D. Shapiro, Rules Committee
Support Office, Administrative Office of the United States
Courts; and Elizabeth C. Wiggins, Federal Judicial Center.
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 to the Committee on Rules of Practice
and Procedure. Unless otherwise indicated, all memoranda
referred to were included in the agenda book for the meeting.
Votes and other action taken by the Advisory Committee and
assignments by the Chairman appear in bold.
The Chairman introduced Judge Leavy, the former chairman of
the Advisory Committee. The Chairman also welcomed Judge Stotler
and Judge Ellis to the meeting. The Committee approved a
resolution of thanks to the host committee chaired by Bankruptcy
Judge Gerald H. Schiff.
Minutes of Previous Meetings. Mr. Klee moved to approve the
minutes of the September 1994 and December 1994 meetings with the
substitution of the word "March" for "February" in the second
line of page 9 of the September minutes. The Committee approved
the minutes, as amended, without dissent.
Standing Committee Meeting. The Reporter stated that the
Standing Committee had ratified the three suggested interim rules
approved by the Advisory Committee at its December meeting. The
suggested interim rules were distributed to the courts with a
letter dated January 17, 1995, from Judges Stotler and Mannes.
The amendments to the Official Forms to conform to the Bankruptcy
Reform Act of 1994 were approved by the Standing Committee in
January and by the Judicial Conference on March 14.
The Reporter said the Standing Committee thought the
Advisory Committee's request for authority to approve future
increases in dollar amounts on the Official Bankruptcy Forms was
premature because the next three-year adjustment required by 11
U.S.C. § 104(b), as amended, is not due until 1998. Since the
statute requires that the Judicial Conference adjust the dollar
amounts in several sections of the Bankruptcy Code after public
notice, revision of the Official Forms can be included in the
same resolution presented to the Conference. Judge Stotler asked
that the Advisory Committee monitor the matter of the dollar
The Reporter said the Standing Committee agreed to the
Advisory Committee's request to communicate directly with the
Bankruptcy Review Commission. In addition, members of the
Advisory Committee were invited to communicate directly with
Professor Thomas E. Baker concerning their response to the Self-Study of Federal Judicial Rulemaking undertaken by the Long Range
Planning Subcommittee of the Standing Committee. Copies of the
self-study were distributed at the meeting.
Comments on Proposed Amendments. The Reporter reviewed the
comments on the proposed amendments to Rules 1006, 1007, 1019,
2002, 2015, 3002, 3016, 4004, 5005, 7004, 8008, and 9006, which
were published in 1994. The first six letters commenting on the
proposed amendments are discussed in the Reporter's memorandum of
February 28, 1995. The three comments received later are covered
by the Reporter's memorandum of March 15, 1995, which was
distributed at the meeting. In addition, Bryan A. Garner,
consultant to the Style Subcommittee of the Standing Committee,
submitted a number of suggestions for stylistic changes in the
The Reporter recommended no action on the general comments
of Raymond A. Noble, Director of Legal Affairs for the New Jersey
State Bar Association; Robert L. Jones, III, President, Arkansas
Bar Association; and Lee Ann Huntington, Chair, Committee on
Federal Courts, State Bar of California.
Susan J. Lewis, Legal Editor, Matthew Bender & Company,
Inc., pointed out a typographical error in the reference to Rule
3003(c)(2) in the Committee Note to the proposed amendment to
Rule 2002(h). The reference should be to Rule 3002(c)(2). The
Advisory Committee agreed to make the correction.
Glenn Gregorcy, Chief Deputy Clerk, United States Bankruptcy
Court for the District of Utah, commented that the proposed
deletion of the words "and account" from Rule 2002(f)(8) "does
nothing whatsoever" because, he wrote, only one notice is sent
under the current rule in most courts. In other words, he
stated, in most districts, the trustee's final report and the
final account are the same document. James T. Watkins, who
stated that his law firm represents 10 of the top 25 national
issuers of credit cards in their bankruptcy cases nationwide,
urged the Advisory Committee to abandon the proposed amendment.
He stated that his firm regularly reviews the trustee's final
report and account in order to verify that the stated
distributions have been received.
The Reporter said that, while Mr. Gregorcy assumes that the
trustee's final report and account are one document in most
courts, Mr. Watkins' comments indicate that there are two
separate documents -- both of which may be helpful to creditors.
After a brief discussion, the committee took no action on the two
Richard M. Kremen offered a redraft of the proposed
amendment to Rule 2002(h) on behalf of the Maryland Bar
Association Committee on Creditors' Rights, Bankruptcy, and
Insolvency. Judge Batchelder stated that Mr. Kremen's redraft
appeared preferable for clarity. The Reporter suggested revising
Mr. Kremen's redraft by substituting "under" for "pursuant to" in
line 11; moving the phrase "the court may," from line 12 to line
14 before the word "direct"; and substituting the phrase "mailed
only to the entities listed in the preceding sentence" for the
phrase "limited as set forth above" in the final line. Judge
Meyers moved the acceptance of Mr. Kremen's redraft, as revised.
Mr. Rosen suggested changing the word "listed" in the revision to
"specified." Judge Meyers agreed to the change. The motion was
approved without dissent.
Mr. Kremen also suggested a change in the proposed amendment to Rule 3002 in order to implement the amendment to 11 U.S.C.
§ 502(b)(9) in the Bankruptcy Reform Act of 1994. The Reporter
presented an alternative amendment to Rule 3002. The Reporter
asked whether the revised amendments to Rules 3002 and 7004,
which was amended directly by the Congress, should be published
for comment. He said he believes publication is not required
because the revisions just conform the rules to statutory changes
in the Bankruptcy Reform Act of 1994. The Committee agreed.
Mary S. Elcano, Senior Vice President, General Counsel,
United States Postal Service, suggested that Rule 2002 be amended
to require service of a notice of dismissal on the debtor's
employer and that Rule 7004 be revised to require service on the
particular department, office, or unit of an agency out of which
the debt in question arose. She stated this is needed so the
agency can locate the source of the debt and file a proof of
claim. The Reporter stated that the suggested change to Rule
2002 was unrelated to the proposed amendment published and would
require separate publication. The Reporter stated that Ms.
Elcano's concern about locating the source of a debt appeared to
relate to notice of the bankruptcy filing and of the meeting of
creditors pursuant to Rule 2002(a), not service of process under
Rule 7004. He recommended no action on these comments.
Commenting on the proposed amendment to Civil Rule 5(e), and
indirectly on a similar amendment to Rule 5005(a), as well as on
electronic filing in general, Patricia M. Hynes, Chair, Committee
on Federal Courts, Association of the Bar of the City of New
York, expressed concern about access to electronic filing and
electronic records, system compatibility, the authenticity and
accuracy of electronic records. The Reporter stated that the
Advisory Committee's Technology Subcommittee had focused on these
same concerns in drafting the proposed amendment to Rule 5005 and
the accompanying Committee Note. The proposed amendment mandates
public access by reference to 11 U.S.C. § 107. The Reporter
recommended no further action on Ms. Hynes' comments.
The Reporter stated that he had reviewed Mr. Garner's
proposed stylistic changes and had included a number of the
suggestions in a revised draft of the proposed amendments. Judge
Duplantier stated that "under" does not mean the same thing as
"pursuant to." The Reporter said that a number of years ago the
Advisory Committee rejected the universal substitution of "under"
for "pursuant to." Judge Restani moved to approve the Reporter's
substitution of "under" for "pursuant to" in his revised draft.
After further discussion of the proposed stylistic changes, the
Committee rejected the motion with two dissenting votes. Judge
Batchelder suggested that the Advisory Committee's Style
Subcommittee consider the drafting conventions used in the
proposed amendments to the Supreme Court Rules. The Chairman
requested that she review the proposed amendments to the Supreme
The Advisory Committee then considered the Reporter's
revised draft of each of the proposed amendments, including his
Rule 1006. Judge Duplantier suggested deleting "that is to
be" from lines 10-11 on page 1 of the Reporter's revised draft.
After a discussion, he withdrew the motion. A motion to approve
the proposed amendment as published carried unanimously.
Rule 1007. The Advisory Committee approved the proposed
amendment as published. The Committee subsequently agreed to
change "pursuant to" to "under" in lines 25 and 26 on page 5.
Rule 1019. The Advisory Committee approved the proposed
amendment as published. The Advisory Committee deleted the part
of the Committee Note after "3002(c)(6)" in line 3 on page 8 and
approved the remaining portion of the Committee Note.
Rule 2002. Judge Meyers moved to retain "as the court may
direct" on lines 4-5 of page 8 rather than substituting "whom the
court directs." The Advisory Committee agreed. Mr. Smith moved
to accept the substitution of "at least 20 days'" for "not less
than 20 days" on lines 8-9. The motion carried with one
dissenting vote. Judge Batchelder moved to accept each of the
changes suggested by the Reporter and incorporated in the revised
proposed amendments unless the Advisory Committee votes to make a
specific modification in the revised proposed amendments. The
Advisory Committee agreed. The Advisory Committee agreed to
substitute "that" for "who" on line 93 of page 13. Mr. Sommer
moved to substitute "under" for "pursuant to" on lines 102 and
103 of page 13 in order to track the language used in the
Bankruptcy Code for the appointment or election of a committee.
The motion carried by a vote of 5-3. The Advisory Committee
agreed to substitute "under" for "pursuant to" on lines 111, 112,
and 119 on page 14. The Advisory Committee agreed to retain
"pursuant to" rather than substituting "under" on lines 10 and 21
of page 9. It was moved to delegate to the Reporter to review
all of the revised proposed amendments and to use either
"pursuant to" or "under" as is consistent with the Bankruptcy
Code and to use "pursuant to" when the Code is not specific. The
motion passed by acclamation.
Rule 2015. There were no changes in the proposed amendment.
Rule 3002(d). In response to the Advisory Committee's
request, the Reporter prepared and distributed a draft of a new
subsection (d). The new subsection would require a creditor that
tardily files a claim in a chapter 12 or chapter 13 case to mail
copies of the tardy claim to the trustee and debtor. The
Reporter stated that he prepared the draft to focus the
discussion but opposed the proposal because of uncertainty about
the sanction for failing to give the notice. He said the new
subsection would require publication for comment.
The Reporter said that the debtor could provide for tardily-filed claims in its plan and the trustee could periodically check
the claims register for tardy claims. Mr. Sommer stated that the
notice requirement might create a new area of litigation. He
said that, if a party learns about the bankruptcy, it should find
out about the deadlines, especially a party with an important
priority or administrative claim.
The Committee discussed whether the clerk or the creditor
should be responsible for noticing a late-filed claim. The
Reporter stated that the creditor may not know that its claim was
received after the deadline and that requiring the clerk to give
the notice would ensure that it is done. Judge Meyers and Mr.
Heltzel said it is easier for the clerk to send every claim than
to sort them and just send the tardy ones. At the Chairman's
suggestion, the Committee agreed to set the matter over to the
Rule 3002. The Reporter stated that he had deleted
subsection (d) of the published amendment to Rule 3002 and
revised subsection (c) and the Committee Note in order to conform
the rule to the statute, as amended by the Bankruptcy Reform Act
of 1994. He said he believed the revisions did not require
publication. Mr. Klee moved to substitute "not later" for "no
later" on line 14 of page 20. The Advisory Committee agreed. It
was moved to substitute "not later than" for "before" in line 21
on page 21 and explain in the Committee Note that the change was
made to clarify a possible ambiguity in the statute. After
discussing whether this extended the deadline, the Advisory
Committee voted, with one dissent, to approve the motion. With
one dissent, the Advisory Committee approved a motion to submit
the revised draft of Rule 3002 to the Standing Committee without
The Reporter offered an additional paragraph to be included in the Committee Note on page 22 to explain that "not later than" is used to avoid any confusion over whether a governmental unit's claim is timely filed if the claim is filed on the 180th day. The Advisory Committee agreed to the inclusion.
Rule 3016. The Advisory Committee agreed to delete the
Reporter's stylistic changes of "pursuant to" to "under" where
not consistent with the usage in the Bankruptcy Code.
Rule 4004. Mr. Klee suggested inserting "other" after "any"
in line 29 on page 26 in order to be consistent with the statute
and to move the word "also" to the beginning of the second
sentence of the Committee Note. The Advisory Committee agreed to
the stylistic changes.
The Committee on the Administration of the Bankruptcy System
had requested Rule 4004 be further amended to provide that the
court may delay issuing a discharge to a chapter 7 debtor who has
not paid in full the proposed $15 trustee surcharge fee which is
due when a case is converted to chapter 7. The Chairman asked
whether the debtor's discharge should be denied over $15. The
Reporter stated that the proposed revision should be published
for comment if there is any controversy. Mr. Sommer moved to
table the matter. The motion carried without dissent.
Rule 5005. There were no changes in the proposed amendment.
Rule 7004. The Reporter stated that the changes in this
rule subsequent to its publication were stylistic except for
specifying that subsection (g) was abrogated, incorporating the
new subsection (h), and including the new introductory phrase in
subsection (b) added by the Bankruptcy Reform Act of 1994.
Rule 8008. The post-publication changes are stylistic.
Rule 9006. The Reporter said changing "may not" to "shall"
in line 4 on page 49 made the meaning clearer. Mr. Klee said the
rule of construction in section 102 of the Bankruptcy Code
dictates the use of "may not." The Reporter agreed to restore
Amendments to be submitted for publication. The Reporter
presented proposed amendments to Rules 1020, 2002(a), 2002(n),
2007.1, 3018, 3021, 8001(a), 8001(e), 8020, 9015, and 9035 for
submission to the Standing Committee with a request for
publication. Judge Meyers asked the purpose of the amendment to
Rule 3021. The Reporter said it is to provide flexibility in
fixing the record date for the purpose of making distributions to
holders of securities of record. Judge Restani commented on the
frequency of amendments to Rule 2002. The Reporter stated that
the Advisory Committee deals with Rule 2002 by subsection to
avoid confusion. He said many of the amendments conform Rule
2002 to changes in other rules.
The Reporter stated that he received a number of suggestions
for stylistic changes in the proposed amendments from Mr. Garner
the night before the meeting. Judge Batchelder said the Advisory
Committee should deal with substantive matters and refer the
suggested stylistic changes to the Style Subcommittee. It was
moved to submit the proposed amendments to Rules 1020, 2002(a),
2002(n), 3018, 3021, 8001(a), 8001(e), 8020, 9015, and 9035 for
publication along with the proposed amendment to Rule 3017
included in Agenda Item 7. The Style Subcommittee is to review
the proposed amendments and circulate its changes to the
committee members, who will have one week to object to the
stylistic changes. As restyled, the proposed amendments then
will be submitted to the Standing Committee for publication. The
Advisory Committee approved the proposed arrangements.
Rule 2007.1. At its December meeting, the Advisory
Committee approved Interim Bankruptcy Rule 1, which provides that
the United States trustee will appoint the person elected as a
chapter 11 trustee, subject to court approval. This comports
with the other references in chapter 11 to the appointment of a
Marvin E. Jacob and Una M. O'Boyle had suggested in a letter
a number of changes in the interim rule. In drafting proposed
Rule 2007.1, the Reporter incorporated their suggestions that
copies of the United States trustee's report of a disputed
election go to the party who requested the election and to the
creditors' committee (line 34) and that the ten-day period for
moving to resolve a disputed election run from the filing of the
report (line 40).
Mr. Sommer expressed concern that other parties may need
notice of the report of disputed election. The Reporter
suggested substituting "has made a request to convene a meeting
under § 1104(b) or to receive a copy of the report," for "made a
request under § 1104(b)". Judge Restani moved to approve the
Reporter's suggested change. Judge Robreno suggested adding "all
persons for whom ballots were cast". The Reporter said the
suggested phrase would include creditors for whom a proxy vote is
cast. He said trustee candidates probably would request a copy.
Judge Restani's motion carried with one dissent.
The Reporter recommended substituting "United States trustee
files the report" for "date of the creditors' meeting called
under § 1104(b) of the Code". Mr. Rosen so moved. After a
colloquy with Mr. Klee, the Reporter agreed to substitute "Unless
a" for "If no" in line 38 on page 4, "not later than" for
"within" on line 39, and "any" for "a" on line 42. Judge Restani
moved for the approval of the revision. The motion carried
Mr. Klee suggested substituting the language in lines 42 - 45, as revised, for the phrase "a person appointed trustee under
§ 1104(d) shall serve as trustee" on lines 12 - 13 on page 3.
Mr. Rosen's motion to make the change was approved without
dissent. The Reporter stated that the rule should specify that
equity security holders can not convene a meeting to elect a
trustee or solicit proxies. Accordingly, the Advisory Committee
agreed without dissent to add the word "only" after "solicited"
on line 21 on page 3 and "of creditors" after "committee" on the
Mr. Rosen asked if someone other than the United States
trustee could file a report of a disputed election. The Reporter
said they could object to the United States trustee's report. In
order to allow a party to object without waiting for the report,
Mr. Klee suggested substituting "not later than" for "within" on
line 39 of page 4. The Advisory Committee agreed. Professor
Tabb suggested substituting "Unless a" for "If no" on line 38 of
page 4. Judge Restani moved to make the change and the Advisory
Committee approved her motion without dissent. Mr. Smith
suggested deleting "approval of" from line 24 on page 3. The
Advisory Committee agreed.
The General Counsel for the Executive Office for United
States Trustees has expressed concern about the authority of the
United States trustee to preside at the election of a chapter 11
trustee. In response, the Advisory Committee voted unanimously
to insert the sentence "The United states trustee shall preside
at the meeting." after "2002" on line 20 on page 3.
After the December meeting and lengthy discussions with Mr.
Patchan concerning the application of proposed Rule 2007.1, the
Reporter revised the Committee Note to explain the need for court
approval of the appointment of the elected trustee. The revised
Committee Note, which was distributed at the meeting, includes an
example of a situation in which the United States trustee might
dispute the election, i.e., the United States trustee believes
the person elected is not "disinterested." Mr. Klee suggested
changing "not eligible" to "ineligible" in the sixth line of the
fourth paragraph and "should" to "may" in the penultimate line of
that paragraph. The Advisory Committee agreed.
After the Advisory Committee discussed various changes in
the paragraph which begins "The rule", Professor Tabb moved to
approve the Committee Note with the insertion of "appointment of
the" after "the" in the first sentence of the paragraph; Mr.
Klee's two stylistic changes in the next paragraph; and the
deletion of "(2)" in "§1104(b)(2)". At Mr. Klee's request,
Professor Tabb agreed to the insertion of "primarily" after
"necessary" in the penultimate line of the paragraph. At Mr.
Rosen's suggestion, Professor Tabb agreed to the deletion of "of
the appointment of the elected person after the disclosures
required under Rule 2007.1(c)". The amended motion carried
Rules 3017, 3017.1, 3018. At its September meeting, the
Advisory Committee approved amendments to Rules 3017 and 3018 to
provide flexibility in fixing the record date for the purpose of
determining the parties entitled to receive solicitation
materials and to vote on a chapter 11 plan. At its December
meeting, the Advisory Committee approved the substance of a new
Rule 3017.1 for court consideration of a disclosure statement in
a small business case. Judge Kressel moved to approve the
Reporter's draft of Rule 3017.1 The motion carried unanimously.
Mr. Rosen suggested adding "Other Than Small Business Cases"
to the caption of Rule 3017. The Advisory Committee agreed.
Judge Kressel stated that Rule 3017 does apply in small business
cases if the debtor does not make a timely election to be treated
as a small business. The Advisory Committee reconsidered and
withdrew the amendment to the caption. Judge Robreno moved to
delete "new. It is" from line 1 of the Committee Note on page
7. The Advisory Committee agreed.
Mr. Klee stated, that as the result of the deletion of
subsection 1124(a)(3) in the Bankruptcy Reform Act of 1994,
classes will be impaired even if they receive cash equal to the
full, allowed amount of their claims. He said the rules should
give the court discretion to dispense with sending out the
disclosure statement if the plan proponent plans to go straight
to cramdown on such a class. The Reporter asked if he would
limit the amendment to former subsection 1124(a)(3) or make it
applicable to any impaired class. Mr. Klee said the procedure
should be available for any class not solicited.
Mr. Smith said that, as a matter of due process, members of
an unsolicited class should get a one-page summary of what is
being done to them and why their votes are not being sought. The
Reporter agreed to prepare a memorandum on the matter for the
Rule 3014. The Reporter prepared an amendment to Rule 3014
to provide a deadline for a section 1111(b) election in small
business cases. He said he was unsure whether the deadline
should be determined by reference to the date fixed pursuant to
subsection (a)(2), (a)(3), or (a)(4) of Rule 3017.1. After
discussing the importance of fixing a date, the Advisory
Committee agreed that the election "may be made no later than the
date fixed under Rule 3017.1(a)(2) or another date the court may
fix." The Advisory Committee approved the proposed amendment, as
Rule 9011. At its September 1994 meeting, the Advisory
Committee discussed and approved a recommendation to amend Rule
9011 so that it conforms substantially to the 1993 amendments to
Civil Rule 11. The Reporter was directed to draft appropriate
language for the rule and Committee Note to provide that the 21-day "safe harbor" provision would not apply to motions for
sanctions for the improper filing of a petition.
The Advisory Committee discussed revising lines 69 - 70 on
page 4 to provide "A motion for sanctions for the filing of a
petition in violation of subdivision (b) may be filed at any
time. Any other". Several committee members expressed concern
about the statement that Rule 9011 motions "may be filed at any
time." It was proposed to delete lines 69 - 70, insert "The" at
the beginning of line 71, and insert ", except that this
limitation shall not apply if the conduct alleged is the filing
of a petition in violation of subsection (b)" after "corrected"
on line 76. The proposal was approved with one dissenting vote.
The Reporter agreed to correct typographical errors by inserting
the word "to" at the beginning of line 37 and substituting
"withdrawn" for "withdraw" on line 16 of the Committee Note on
Rule 1019. In February 1994, the Advisory Committee voted
to delete the phrase "superseded case" in Rules 1007(c) and Rule
1019(3) and (4) because the use of the phrase gives the erroneous
impression that conversion of a case results in a new case. The
changes in Rule 1007(c) were part of the package of proposed rule
amendments published for comment in September 1994. In addition
to deleting "superseded" from Rule 1019, the Advisory Committee
asked the Reporter to restyle the rule and divide it according to
applicable Code chapter.
Mr. Klee said "within" on line 31 of page 4 should be "not
later than". The Reporter agreed that "not later than" should be
substituted for "within" throughout the proposed amendment. The
Advisory Committee accepted the change. Mr. Klee said lines 19
and 31 should refer to a "holder of a claim" rather than a
"creditor." The Advisory Committee agreed.
Judge Kressel said "a debtor" should be inserted after "not"
in line 14 on page 3. The Advisory Committee agreed. Mr. Sommer
expressed concern that lines 39 - 41 of the draft appear to take
a substantive position on the interpretation of 11 U.S.C. § 348
as amended by the Bankruptcy Reform Act of 1994. The Advisory
Committee agreed that subsection (C)(i) on page 4 should be
revised to implement the 1994 amendment to section 348. The
Advisory Committee approved the proposed amendment, as revised.
Rules 8002(c), 7062. In September 1993, the Advisory
Committee voted to amend Rule 8002(c) to clarify that a motion
for an extension of the time to file a notice of appeal must be
"filed" -- rather than "made" -- within the ten-day period. In
view of the Ninth Circuit's decision in In re Mouradick, 13 F.3d
326 (9th Cir. 1994), the Advisory Committee approved additional
amendments at its September 1994 meeting designed to give a party
that files a timely extension motion the benefit of an order
granting the motion, regardless of when the extension motion is
After the approval of the September 1994 amendments, the
Committee asked the Reporter to compile an appropriate list of
orders with respect to which the time to appeal may not be
extended at all. In compiling the list the Reporter considered
the orders listed in Rule 7062 as exceptions to Civil Rule 62's
ten-day automatic stay of enforcement or execution with respect
to a judgment. As a result, he proposed amending both Rule
8002(c) and Rule 7062.
Judge Kressel suggested transposing the numbers "1325" and
"1225" in lines 19 and 20 on page 8 and in lines 15 and 16 on
page 10. The Advisory Committee agreed to make the correction.
The Advisory Committee agreed to substitute "change the effect
of" or similar language for "overrule" in the second sentence of
the Committee Note to Rule 8002(c) on page 9. Judge Restani
suggested inserting "the automatic stay under" after "to" in line
2 on page 10. The Advisory Committee agreed. Mr. Sommer
suggested substituting "may" for "must" in line 36 on page 8.
The Advisory Committee agreed.
Mr. Smith asked if the court has the ability to make an
order effective immediately even if the order otherwise would be
stayed for ten days. The Reporter said he believes the phrase
"unless the court otherwise directs" in Rule 9014 authorizes the
court to waive the application of Rule 7062 in a contested
matter. Mr. Smith said Rule 7062 should give the court explicit
discretion to except other orders from the ten-day stay, as Civil
Rule 62 does. Mr. Klee said the parties should have an
opportunity to get a stay pending appeal, even if an order is
effective immediately, in order to preserve the constitutional
right to consideration by an Article III judge.
Judge Kressel said Civil Rule 62 does not make sense in the
bankruptcy context, which causes many of the problems with the
bankruptcy rule. Professor Tabb said there should be a separate
stay rule for contested matters. Mr. Klee said Rule 7062 should
be published for comment as drafted while the Long Range Planning
Subcommittee considers rationalizing Rules 9014 and 7062.
Mr. Klee moved to approve the proposed amendment to Rule
8002(c) with the changes made during the discussion. The motion
was approved unanimously. Mr. Klee moved to approve the proposed
amendment to Rule 7062 with the addition of a subsection (f)
which states "any other order as the court may direct." The
Advisory Committee approved the motion by a 7-4 vote.
Rule 2002. Attorney General Janet Reno proposed an
amendment to Rule 2002(j)(4) in order to provide more effective
notice to the United States. (Copies of her letter were
distributed separately.) The proposed amendment, which is
fashioned after local rules in several districts, was modified
after a series of conversations between Mr. Kohn and the
Reporter. The revised proposal would require that the notice to
the United States attorney identify the agency through which the
debtor became indebted and that the notice to the federal agency
be addressed as the United States attorney directs in a filed
request. Mr. Kohn said bankruptcy notices sent to the United
States attorney often are ignored because there is no practical
way to identify the agency and that notices sent to a federal
agency often go to the address where the debtor makes payments.
Mr. Klee said he is sympathetic to the government's problem
but that the proposed amendment goes to the heart of the
bankruptcy process and puts the burden on the debtor to apprise
the creditor of the nature of its claim. He said the debtor
ought to be required to make a good faith effort to identify the
agency, if it knows the name, but that the debtor should not risk
losing its discharge. Mr. Smith said the emphasis should be on
effective notice, not perceived due process questions. He stated
that the government is a major creditor and millions of dollars
are at stake. Mr. Smith said the proposed amendment is good for
the debtor because compliance with the proposal is fairly easy
and compliance should avoid challenges to the discharge.
Mr. Klee said the Congress wrestled with the issue of
effective notice to creditors in considering the Bankruptcy
Reform Act of 1994. The lawmakers compromised by requiring the
debtor's Social Security number or taxpayer ID (instead of the
debtor's account number) but excluding challenges to the
discharge. The Reporter stated that the 1994 amendments gave the
government 180 days to file a claim, which should be enough time
to get the notice to the right place. Mr. Kohn said it is better
to get the notice on the first day.
Mr. Klee suggested inserting "to the mailing address" after
"addressed" on line 5 on page 5 to avoid any implication that the
United States attorney could require the use of an account
number. The Advisory Committee agreed. A motion to approve the
proposed amendment failed. The Chairman asked Mr. Kohn to
revisit the matter and consider preparing another draft for the
The Chairman suggested that the Department of Justice
consider preparing a national register of addresses to be used
for bankruptcy notices to government agencies. Mr. Kohn said
that would be very difficult because federal agencies' procedures
for handling bankruptcy notices vary from district to district
and agency to agency. Several committee members expressed
sentiment for the development of local federal agency address
registers similar to the ones which have been published as
addendums to some local rules. Mr. Klee suggested requiring the
sender to designate the agency only if known to the sender. The
Advisory Committee discussed whether the sender or the debtor
should be responsible for making sure the right address is used.
Mr. Heltzel said the deputy clerk putting the creditor addresses
into the court's computer system should not be required to
recognize that a government agency's address needs to be changed.
Rule 6007(a). The Attorney General also requested in her
letter that Rule 6007(a) be amended to require notice to the
Environmental Protection Agency (EPA) of any proposed abandonment
or disposition of estate property with respect to which there may
be claims or obligations under statutes or regulations
administered by the EPA. After a series of discussions between
Mr. Kohn and the Reporter, the proposal was limited to the
abandonment of nonresidential real property and the abandonment
of hazardous substances and hazardous waste and broadened to
include notice to state environmental agencies.
The Reporter stated that it may be difficult for trustees to
comply with the proposed notice requirement because the
referenced statutory definition of hazardous substances contains
cross-references to a number of other environmental statutes.
Several committee members questioned the meaning of the phrase
"to which there is or may be a claim or cleanup obligation under
any law administered by the United States Environmental
Protection Agency or a state environmental unit" on lines 14 - 16
on pages 9 - 10.
The Reporter said it might be better to require notice to
the EPA of any abandonment of nonresidential real property.
Judge Restani stated that requiring notice of every abandonment
effectively would be no notice at all. Mr. Klee stated that he
favors the current requirement, which is limited to known claims
or cleanup obligations. The Chairman asked Mr. Kohn to revise
the proposed amendment so that the notice requirement in
subsection (a)(2) is limited to known claims.
Rule 9006(b)(1). In In re Village Green Associates, No.
AZ-94-1232-ZRH, slip op. (Bankr. 9th Cir. August 8, 1994), the
Bankruptcy Appellate Panel of the Ninth Circuit found several
ambiguities in Rule 9006(b)(1). The Reporter stated that the
issues raised by the decision can be analyzed by considering two
questions: 1) Should a court have the discretion to act, in the
absence of a request, to extend a chapter 11 claims bar date or
another deadline before the time period expires? and 2) Should a
court have the discretion to act sua sponte -- for cause but
without finding excusable neglect -- to extend a chapter 11
claims bar date or another deadline for all parties after the
time period has expired? The Reporter stated that the rule could
be revised to specify that the court has no discretion to extend
the deadline after the time has expired absent a motion and a
showing of excusable neglect, or to specify that the court can
extend the deadline for everyone for cause.
Professor Tabb moved to adopt the second, more liberal
alternative. The motion was amended to require an initial vote
on whether to amend the rule at all. Judge Meyers stated that
Village Green Associates was an unpublished decision. With one
dissent, the Advisory Committee voted against making any changes
in the rule.
Rule 2014. Harvey R. Miller, of the law firm of Weil,
Gotshal & Manges in New York, requested that the Advisory
Committee study Rule 2014(a) and consider appropriate amendments
to clarify the duty to disclose. The Reporter stated that, in
response to a resolution adopted by the House of Delegates of the
American Bar Association (ABA), the Advisory Committee considered
Rule 2014 at its meeting in March 1992 and decided not to amend
the rule. The Chairman said he put the matter on the agenda for
the purpose of deciding whether to revisit it. The Reporter said
he believes there are two issues: 1) Whether the rule can be
clarified by being more specific and detailed in setting forth
the facts that must be disclosed and 2) The application of the
rule to large cases in which strict compliance is difficult or
Mr. Smith stated that he was responsible for the ABA
resolution and that it was not intended to reduce disclosure. He
said the rule should give bankruptcy attorneys who practice
around the country guidance as to what types of connections they
should disclose. Mr. Rosen stated that the rule does not address
supplementation, which causes problems in large cases in which
the parties change as the result of claims trading.
Judge Meyers agreed with the comments but expressed concern
that it would appear that the Advisory Committee is intervening
to give an attorney solace. Mr. Rosen said that the decision in
In re Leslie Fay, No. 93-B-41724(TLB), slip op. (Bankr. SDNY
December 15, 1994), which prompted Mr. Miller's letter, has been
settled and there are no pending appeals. Judge Batchelder
expressed concern that claims trading could be used as a means of
disqualifying competent counsel and said the letter heightened
existing concerns about the rule. The Advisory Committee
unanimously approved a motion to revisit the matter. The
Chairman appointed Mr. Smith to head a Rule 2014 subcommittee.
Mr. Smith may select the other members of the subcommittee.
Local Rules. Ms. Channon distributed her memorandum on the
12 letters commenting on the proposed uniform numbering system
for local rules. She said the Advisory Committee also received
one oral comment from a former committee member. Ms. Channon
said the comments were generally either favorable or favorable
with qualifications or suggestions for modification. Two persons
were opposed to both the proposed system and the entire idea of
Ms. Channon said the Local Rules Subcommittee had decided that the subdivisions of the national rules should not be carried over into the uniform numbers, that the use of the prescribed titles should be mandated for the uniform numbers, and that the
uniform numbers should not have the exact same titles as the
Professor Tabb suggesting putting all miscellaneous matters
in the 9000 series numbers unless there is an exact match with a
national rule. Mr. Sommer said it is more logical to assign
these rules to related national rules. Mr. Klee said there
appears to be little impetus for completely restructuring the
national rules and, therefore, the Advisory Committee should go
forward with uniform numbers based on the current national rules.
Judge Leavy suggested that a list be published of the
uniform numbers for all local rules, rather than requiring the
districts to reorganize their rules according to the national
numbers. Mr. Rosen said the problem in implementing the uniform
numbers is that one local rule may relate to several national
rules. Mr. Heltzel said that it would require a tremendous
amount of work for each district to revise its local rules. He
suggested compiling a database of local rules and making it
available in a scannable format.
Judge Batchelder said the issue is no longer whether to
require uniform local rule numbers but what is the best uniform
number system. She said the question is what is the most
expeditious, most efficient, and least objectionable system.
Judge Meyers suggested that the districts be authorized either to
use the uniform numbers or to add references to the uniform
numbers to their existing rules. Professor Tabb moved to adopt
the proposed uniform numbers set out in the attachment to
Director Mecham's memorandum of November 22, 1994, except that
references to subdivisions of the national rules are to be
deleted and cross-references are to be included. The motion
carried with one dissenting vote.
Long Range Planning. Judge Stotler led a discussion of the
report prepared by the Long Range Planning Subcommittee of the
Standing Committee. The committee members agreed that a five-year term for the chair of an Advisory Committee is desirable in
order to oversee the lengthy rule-making process and preserve an
institutional memory. There was no agreement on whether
committee members should be eligible for appointment to a third
term or whether the terms should be for two, three or four years.
At the request of the Advisory Committee, the Federal
Judicial Center conducted a survey concerning the scope, format,
and organization of the bankruptcy rules. A memorandum setting
out the survey questions and a tabulation of the initial
responses was distributed at the meeting.
Mr. Klee said the survey has not been completed but that
some trends are apparent. He said that, although there is no
ground swell of sentiment for a complete overhaul of the rules,
there is support for improving the rules related to motion
practice and the interaction between the 7000 series rules and
the 9000 series. Ms. Wiggins stated that the survey indicated
there is room for improving a number of rules. Mr. Klee said
interest was expressed for developing ethical standards for
practicing before the bankruptcy courts. The Reporter stated
that the Standing Committee's reporter is tackling the issue as
it relates to all federal courts.
Technology. The Chairman assigned Mr. Heltzel, Mr. Klee,
and Mr. Sommer to the Technology Subcommittee and designated Mr.
Heltzel as chairman. The Chairman stated that he will ask Judge
James Barta, a former member of the Advisory Committee and the
former chairman of the subcommittee, to serve as a consultant.
Professor Tabb stated that the American Bankruptcy Law Journal
will publish a symposium issue on the bankruptcy rules, including
a section on automation.
Civil Rules Liaison. Judge Restani stated that the Advisory
Committee on Civil Rules met in Philadelphia with a number of
experts to consider the need for revising Fed. R. Civ. P. 23,
Class Actions. She stated that, although the rule does not work
well in mass tort cases, there was little sentiment among the
experts for a major overhaul of the rule. She said the Civil
Committee will continue its exploration of the rule at a seminar
at New York University in April.
Alternative Dispute Resolution. With the help of Ralph
Mabey, a former member of the Advisory Committee, the
subcommittee has conducted a national survey on local Alternative
Dispute Resolution (ADR) programs in the bankruptcy courts.
Professor Tabb promised to distribute copies of an article on the
survey to committee members.
He stated that the ADR Subcommittee will meet at 3 p.m. on
May 24, 1995, to consider drafting an ADR proposal for the
September meeting. The meeting will be held at a hotel in the
vicinity of O'Hare International Airport. Professor Tabb asked
that any committee member interested in ADR contact him or
another subcommittee member before the May meeting. Several
committee members expressed their opposition to mandatory
arbitration or mandatory mediation.
Forms. Mr. Sommer said the Forms Subcommittee has almost
completed its revision of a number of forms and hopes to present
the new, revamped forms at the September meeting. He said the
Forms Subcommittee will meet at 10 a.m. on May 25, 1995, at a
hotel in the vicinity of O'Hare International Airport.
The Chairman announced that the next meeting will be in
Portland, Oregon, on September 7 - 8, 1995. He suggested that
the winter - spring meeting for 1996 be held in the eastern part
of the country. The Reporter suggested March 21 - 22 or March 28
- 29, 1996, as possible meeting dates. The committee members
agreed to inform Ms. Channon of their schedule conflicts for
those dates within one week.
James H. Wannamaker, III
JHW:jhw273-1910 October 27, 1995 27 THRU: FFS_____
REF: Bankruptcy Rules Comm - Minutes PSC_____