Summary of Proposed Amendments to Massachusetts Local Bankruptcy Rules

The following summary was prepared by D. Ethan Jeffery of Hanify & King P.C. and Kenneth S. Leonetti of Foley Hoag LLP, co-chairs of Practice and Procedure Committee. The summary reflects the professional views of the authors and does not reflect the position of the Boston Bar Association or the Boston Bar Association Bankruptcy Law Section. The summary is provided for informational purposes only and should not be construed as legal advice on any subject matter.
— The Editors

The United States Bankruptcy Court for the District of Massachusetts is considering proposed amendments to the local rules.
If adopted, the proposed amendments would take effect on December 1, 2009. Comments are due no later than October 2, 2009. Practitioners are encouraged to review the changes before they take effect. A redline version can be found at http://www.mab.uscourts.gov/pdfdocuments/2009LRA_BL.pdf. Some of the more notable proposed amendments are summarized below.
General Comment: The proposed amendments would change the time periods for most of the notices required to be given, hearings to be scheduled, responses to be filed, etc., under many of the existing rules.
  1. Where such time period previously was 20 days, the proposed amendments generally provide for 21 days;
  2. Where previously 15 days, the proposed amendments provide for 14 days;
  3. Where previously 10 days, the proposed amendments provide for 14 days (most notably with respect to the period for objecting/responding to motions under Rule 9013-1(d)); and
  4. Where previously 5 days, the proposed amendments provide for 7 days.

Rule 1007-1: Failure to file an original matrix of creditors within 3 court days of the order for relief shall be cause for dismissal under 11 U.S.C § 109(g).

Rule 1017-1(h): Time periods that had been set forth under previous rule for scheduling hearings on motions to dismiss/convert Chapter 11 cases are eliminated.

Rule 3007-1(b): The rule governing objections to claims is modified slightly to require the objecting party to file a proposed form of notice with blank spaces to set the deadline for filing responses.

Rule 3017-2: The rule governing the filing of a plan and disclosure statement in small business cases now references a new Local Form 15, which is a sample Combined Small Business Plan of Reorganization and Disclosure Statement for Small Business Debtor.

Rule 4001-1: The time limits for setting a hearing date on a motion to continue the automatic stay or to impose the automatic stay are eliminated. Similarly, service time limits for the motion and for the opposition to any such motion are eliminated.

Rule 4001-2: Cash Collateral and DIP Motions no longer need to be accompanied by the loan agreement governing the credit to be extended or a summary of the same. The Motion itself must set forth certain required information in Rule 4001-2.

Rule 4001-3: There is a new rule governing permitted billing and settlement communications. When the automatic stay applies, it shall be deemed lifted in order to enable a secured creditor or its agent, representative or nominee (excluding its attorney) to:

  1. send WRITTEN correspondence to the debtor, with a copy to debtor’s counsel, consisting of statements, payment coupons, notices, analyses or accountings of any payment defaults, the status of insurance coverage, tax payments, and/or municipal charges on property used as collateral and other such correspondence that the creditor typically sends to its non‐debtor customers; EXCEPT that such correspondence shall not make demand for payment or threaten foreclosure or dismissal of the case; and
  2. discuss and/or negotiate with a debtor a proposed modification of the terms of any secured indebtedness, including, without limitation, a home mortgage; EXCEPT that all such negotiations and/or discussions shall be conducted through counsel for the debtor, if the debtor is represented by counsel and such counsel has not, in writing, granted permission for such direct communication by creditor representatives with the debtor. The secured creditor shall terminate the foregoing communications immediately upon receipt of written notice from the debtor or debtor’s counsel requesting that such contacts cease. Further, nothing herein shall authorize a debtor or creditor to enter into any loan modification without court authority, so long as the property which is collateral for the loan is property of the estate under § 541(a).

Rule 4002-1: Requires the Debtor to bring the personal identification and financial information required by FED. R. BANKR P. 4002(b) to the §341 meeting of creditors.

Rule 4008-1: Requires a reaffirmation agreement to be accompanied by the cover sheet prescribed by Official Form 27 to be enforceable.

Rule 6004-1: Sets forth new procedures by which a request for authorization to sell estate property must be made including the requirement that a motion be filed; a defined list of persons upon whom the motion must be served; different procedures for private sales, public auctions and internet auctions.

Rule 9010-1: Allows an attorney representing, without compensation, an otherwise pro se debtor to file a limited notice of appearance and to decline representation in other matters. However, the attorney may not withdraw without leave of court.

Rule 9013-1(g): Emergency and expedited motions are treated similarly as opposed to distinct forms of relief. Several changes are made to the procedure for seeking determination on an emergency or expedited basis:

  1. The motion for relief and the request for expedited or emergency determination of the motion are to be filed together in a single document.
  2. A movant seeking determination of the motion within 3 days after it is filed shall include in the title of the motion “Request for Emergency Determination” (it was previously two days). A movant seeking determination of the motion within 7 days after it is filed shall include in the title of the motion “Request for Expedited Determination.”
  3. The motion shall set forth in separate numbered paragraphs the justification for expedited or emergency determination of the underlying request for relief.
  4. The movant shall make a reasonable, good faith effort to advise all affected parties of the substance of the motion for relief, the request for an emergency or expedited determination, and the date and time of the hearing. Such reasonable, good faith efforts may include providing notice by telephone, facsimile transmission or email in appropriate circumstances. Federal R. Bankr. P. 2002 and MLBR 2002‐1 govern who is an “affected party.” Notice, at a minimum, shall be provided to the debtor, the debtor’s counsel, any trustee, the trustee’s counsel, the United States trustee, any directly affected creditor, and any party that has entered an appearance or has requested notices. In addition, the caption of the motion shall indicate if there is a request to limit notice.
  5. Written responses to a motion for emergency determination are not required, but are encouraged and may be filed up to the time of the hearing. Written responses to a motion for expedited determination appear to be required. If the Court does not set a response time, responses to a motion for expedited determination are due no later than 3 days before the hearing.

Appendix 1 – Chapter 13 Cases: Several major changes are made to the Local Rules governing Chapter 13 cases, including objections to claims, filing proofs of claims, and seeking relief from the stay in such cases.

Appendix 8 – Electronic Filing Rules: These are mostly technical changes. The one substantive amendment is that attorneys who appear in no more than three cases per year need not file electronically and may file documents in paper form at the Clerk’s Office.

Official Local Forms: There are changes to most of the Official Local Forms.

2009 Proposed Amendments to the Massachusetts Local Bankruptcy Rules

Comments are invited, and should be submitted to Chief Judge Henry J. Boroff, United States Bankruptcy Court, 300 State Street, Springfield, MA 01105 and to the Hon. Joan N. Feeney, 1101 Thomas P. O’Neill, Jr. Federal Building, 10 Causeway Street, Boston, MA 02222, no later than October 2, 2009. Those who wish to email comments should do so at [email protected] and [email protected].

· 2009 Massachusetts Bankruptcy Local Rule Amendments
· 2009 Massachusetts Bankruptcy Local Rule Amendments (Red-Lined Version)

In submitting your comments to the court, please make it clear that your comments reflect your own professional views, and should not be construed to reflect the position of the Boston Bar Association or the Boston Bar Association Bankruptcy Law Section.

From the Editors: The BBA Bankruptcy Blog is Syndicated

As you may have surmised from our initial post, the Editors are very excited about the functionality and inherent possibilities that the blog format provides for the dissemination of information and bankruptcy related topics to the members of the Bankruptcy Section. One new feature that we are now adding to the BBA Bankruptcy Blog is the ability to subscribe to an RSS feed. By subscribing to an RSS feed, you will be able to choose how and when you wish to be notified of content changes and/or additions to the BBA Bankruptcy Blog.

RSS stands for “Really Simple Syndication.” In general, it is a way to distribute a brief notice or headline to a number of people thereby avoiding the need to repeatedly check a blog for new content. To subscribe to the BBA Bankruptcy Blog’s RSS feed, simply select the orange “subscribe to posts” button in the right hand column. You will be given the option to choose one of several “RSS aggregators.” An RSS aggregator automatically checks for RSS content on all internet sites that you subscribe to and are available in numerous formats that may be integrated into email programs, accessed through a browser or are a stand alone application on your computer. It only takes a moment or two to set up an RSS aggregator if you do not already have one.

The BBA Bankruptcy Blog is a work in process, and the Editors strive to provide you with timely news and information pertaining to the Bankruptcy Section and bankruptcy topics. Although the comment function for the blog is inactive, we welcome and request your comments. Together, we can make the BBA Bankruptcy Blog an informative tool for practitioners.

Brown Bag Lunch Event: Solvency Analysis in Today’s Economy

Tuesday, June 16, 2009 – 12:00 pm
Boston Bar Association – 16 Beacon Street

Follow this link to sign up for this program.

RSVP

In this session, Paul Marcus, Jaime Dalmeida, William Hrycay, all of Duff & Phelps Corp., will review the issues and challenges with establishing solvency in today’s unprecedented economic environment. Topics to be addressed include:

  • determining asset values in today’s environment,
  • assessing adequate capital in a market where sources of capital are drying up,
  • projecting cash flows in an economic recession, and
  • interpreting and using information on public companies in today’s economy.

We look forward to seeing you at this event.

So, now we have a blog.

The Bankruptcy Section of the Boston Bar Association is pleased to launch this new way of communicating with members of the section and those with an interest in bankruptcy law. The first BBA section to launch a blog, we are admittedly dipping our toes in these waters slowly. At the outset, we’ll use this blog as the next evolved form of the Section’s newsletter. (Whether this is a form of evolution, or just change, is a question we’ll leave to another day). We are not as interactive as many other blogs, and for now, the ability to comment is not enabled.

The BBA Bankruptcy Blog is designed to work alongside the bi-weekly email blasts section members receive from the BBA with news of the Bankruptcy Section’s programs and activities, BBA Week, and the section’s page on bostonbar.org. Here, you’ll find a mix of news about Bankruptcy Section and BBA events and initiatives, case squibs from selected decisions from the Massachusetts Bankruptcy Court, articles on bankruptcy topics, and occasional random musings and miscellany. The Editors welcome your feedback. Over time, we hope you’ll find the archive of these posts to be some combination of useful, entertaining, thought provoking and helpful.

Chief Judge Boroff’s State of the District 2009

The following is the text of the remarks delivered by Hon. Henry J. Boroff, Chief Judge of the United States Bankruptcy Court for the District of Massachusetts, at the BBA’s Bankruptcy Bench Meets Bar Conference, held May 14, 2009, in Boston.
–The Editors

Before we begin, I just want to take a moment to again welcome Frank Bailey to the court. He certainly has hit the ground running, and his contributions have already been felt and appreciated by his colleagues. As I told Judge Bailey the other day, this is his last acknowledgement of welcome. Hereafter, he is old news.

Thank you all again for allowing the bankruptcy judges of this district to participate with you in this wonderful program. Not only do the judges get the benefit of fine continuing legal education, but the program gives us the opportunity to partner with many of you as well as with the law students who bring so much to this program. We want to thank particularly your colleagues Patricia Antonelli, Christopher Mirick, Richard Pedone and John Rao for their efforts and especially express our appreciation for the contribution of the B.C. law students, Brandi Buehn, Joel Goloskie, Marie Gonzalez, Gabriel Hindin and Sarah McGarrell. After the program, please take the opportunity to spend a moment thanking those students who took time away from studying for their final exams to help us out here.

It has been tradition for the Chief Judge to start with filing statistics, and they are as remarkable as you might have guessed. A comparison of the 12 months ended March 31, 2009 to the 12 months ended March 31, 2008 reveals that:

  • Chapter 7 case filings have increased 31%
  • Chapter 11 case filings (although still relatively few in number) increased 66%

Interestingly, Chapter 13 case filings decreased 15%, reflecting, I think, a resignation by many debtors and a realization that their homes can not be saved. Rather than viewed as good news, I think that a substantial increase in Chapter 7 case filings coupled with a decrease in Chapter 13 case filings reflects the depressed economy and the poor job outlook. Total case filings increased by 18% over the last year and – also surprising to me – total case filings for the 12 months ended March 31, 2009 reflects an increase of 72% over the past two years in total case filings; 100% in Chapter 7 case filings.

Also of great interest to us and with a great deal of satisfaction we see a decrease over the past year of 23% in the number of pro se case filings. Although the raw number is still unacceptably high (almost 1,000 pro se case filings in the past year) the percentage decrease is good evidence that the work of Leslie Storm, our wonderful pro se law clerk, has had real effect. As many of you know, Ms. Storm’s first task is to encourage potential pro se case filers to “lawyer up” whether it be on a full fee, reduced fee or pro bono basis. As a point of information, over the 10 months ended March 30, 2009, Leslie had communicated with over 750 pro se debtors.

Our and her focus over the past year has particularly been to secure attorney services, even on a very limited basis, when pro se debtors are faced with a need for emergency legal services. In that connection, we want to express our appreciation to the Boston Bar Association and its lawyer referral service, the Hampden and Hampshire County Bar Associations, and the attorneys of the Western Massachusetts Foreclosure Hotline, all of which have established panels of attorneys not only willing to take pro se debtors as clients but who have offered to talk to pro se debtors on an emergency basis. At the very great risk of leaving someone out, I do want to acknowledge Bill McLeod; Susan Grossberg, Gene Berman, Justin Dion and Walter Oney, all of whom have been involved in the organizational aspects of these panels and obviously Leslie Storm who puts it all together. The Worcester County Bar Association has also recently established a reaffirmation clinic, largely based on the BBA model.

Special thanks as well to Chief Judge Sandra Lynch; Gary Wente, our Circuit Executive and Susan Goldberg, Deputy Circuit Executive who have been supportive, particularly during this time of budget constraint when it has not always been easy to offer that support. But we continue to need your help. Please respond as generously as you can when your colleagues call looking for your assistance. And for those in the larger firms, please let Ms. Storm know what pro bono programs have been established in your firms that could meet this great need.

For our part, we have tried to help in the best way we could, consistent with our obligations. I’m sure that many of you have seen three Standing Orders that the court has recently issued.

  • The first, 09-01, permits attorneys, notwithstanding our local rules, to offer pro bono representation to a debtor on a limited basis with respect to a discrete matter in a bankruptcy case and to thereafter withdraw without court authority. Therefore, an attorney can render services in one matter without concern that the attorney will be compelled to render unrelated services in the same case.
  • The second, 09-02, requires that when a Chapter 13 debtor and a lender reach an agreement for payment of postpetition arrears over time, any agreement for the granting of relief from stay on account of a subsequent default that extends beyond the cure period be conspicuously highlighted.
  • And the third, 09-03, just issued the other day, permits a lender to send non-threatening statements and accountings to debtors and to engage in mortgage loan modification negotiations without concern that those conversations will be viewed as a violation of the automatic stay.

In some respects, I’ve oversimplified the provisions of those standing orders, and so I would encourage you to look at them. Those orders were issued as Standing Orders because the Bench Bar Local Rules Committee has been hard at work on a package of local rules amendments, but they are unlikely to be offered for your review and comment until the Fall. Great thanks go out to all of the members of that committee, whose names are on the court website. Please contact a member of the committee if you want to suggest a local rule or a local rule amendment that will assist you in your practice. But I would encourage you to look at your earliest convenience at the amendments to the Federal Rules of Bankruptcy Procedure that will likely go into effect on December 1 of this year. They can be found at www.uscourts.gov. Those amendments include a wholesale restructuring in the way that we calculate time deadlines under the Federal Rules of Civil Procedure and the Federal Rules of Bankruptcy Procedure. Almost all deadlines are altered so that they are multiples of the number 7. For example, most 30 day deadlines become 28 days, 10 day deadlines (including appellate deadlines) become 14 days, etc. And I would also urge you to review newly amended local rules of the First Circuit Bankruptcy Appellate Panel. We hope that they will assist you in your work.

The joint BBA/Bankruptcy Court M. Ellen Carpenter Financial Literacy Program for high school students goes full steam ahead under the fine stewardship of Judge Feeney and Janet Bostwick. Much thanks to them and to all of the participating attorneys for their hard work. The program continues to be offered in each of our divisions, and I would encourage you to participate. Everyone involved in the program has reported that participation is both fun and satisfying. And we are also eager to have new schools apply for this fabulous “free” program, which should be quite attractive to school systems struggling with state and local budget shortfalls.

Segueing from the word free, I am delighted to tell you that at a recent meeting of the Massachusetts Real Estate Bar Association, REBA has formally offered pro bono mediation services to bankruptcy debtors having real estate disputes. REBA is staffing up a large contingent of real estate attorneys interested in offering this service and has even arranged to get them mediation training. In this time of complex mortgage issues, this seems to us to be invaluable, and, of course very generous. Judge Bailey has carried the ball for us here together with Michael Goldberg, and I would encourage you to talk to them about those services after our program.

Before I turn to my last agenda item, I have two requests. First, I would ask that each of you take a minute to review our local rule 9018-1, our impoundment procedure. We find that there is a lot of confusion about that procedure, and that confusion often results in mistakes that could make things difficult for attorneys – for example, attorneys occasionally make the mistake of disclosing the substance of what is to be impounded in the motion seeking impoundment. Second, as you know, social security numbers, dates of birth, children’s names and financial account numbers are supposed to now be redacted from all documents filed with the Court. Our clerk’s office is not sufficiently staffed to review these documents to determine whether this prohibited information is disclosed nor are they authorized to make changes to filed documents. Therefore, the responsibility to redact is yours, and attorneys for both debtors and lenders need to be more careful to redact this information from their filed papers, particularly in exhibits and attachments to pleadings.

And, then finally, is the annual construction report. We have been in the new Springfield courthouse since last September. I hope that many of you will take an early opportunity to visit the courthouse. It has already won a major design award. And the work goes on at the McCormack Building in Boston. We continue to marvel at the beauty which is uncovered by its renovation. It is very exciting for us, and we know that you will be very pleased to practice your craft there. We are assured by GSA that the building will be ready for us to move-in in September. That may be too optimistic. But I do have confidence that this is the last year in which I will be ending this talk with a construction update. At least I hope so.