October 13, 2016
Authored by: Justin Morgan
The United States Bankruptcy Court for the Southern District of New York recently announced proposed amendments to its local rules. The proposed amendments will not take effect until December 1, 2016, but we could not wait to take a peek at the future of practice in the Southern District. (And for those of you who are rules junkies, here and here are prior posts on FRBP changes applying to all courts, from earlier this year.)
The future looks largely like the present—do not expect wholesale changes or many new rules. The most significant changes clarify procedures such as motions to redact identifying or confidential information and reorder the rules governing notices of presentment. Comments will be accepted until November 14, 2016, so it is possible additional changes could be made. Here are some of the most significant changes:
L.R. 1002-1(b) will be added, which will require, if practicable, advance notice to the clerk’s office and the U.S. Trustee of impending chapter 11 or chapter 15 filings and first day motions requiring immediate relief.
L.R. 2002-2 will be repealed, but it isn’t going away. See the note accompanying L.R. 9074-1(c) below.
L.R. 3011-1 will be added. It requires all future chapter 11 plans to provide for distribution of unclaimed property and specifies the treatment of confirmed plans that do not specify how distribution is to take place. The new rule is intended to fill a gap in 11 U.S.C. § 347(b) as applied to liquidating plans. Section 347(b) distributes unclaimed property to the debtor or entity acquiring the debtor under the plan, but in liquidating plans there could be no acquirer and the debtor may be wound up or only exist as an empty shell. (If you need an idea for a residual beneficiary in the liquidating plan you are drafting, ABI board member Chris Ward with Polsinelli has a suggestion – check it out here.)
L.R. 8010-1 will be added. It requires preliminary motions filed in appeals under Fed. R. Bankr. P. 8010(c), which governs motions filed before transmission of the record on appeal filed with an appellate court, to be filed on the bankruptcy court docket as well with notice.
L.R. 9018-1 will be added. It sets forth requirements for filing a motion to file documents under seal. The procedure contemplated involves two components: (1) the motion to seal filed publicly, to which is attached a redacted copy of the confidential document along with a proposed order authorizing filing under seal, and (2) the unredacted version of the confidential document hand delivered to the clerk’s office in the bankruptcy court with a conspicuous label.
L.R. 9018-1 Practice Note: The unredacted version of the confidential document to be hand delivered to the clerk’s office may indicate which material is redacted, such as by highlighting it. Also, the comment to proposed L.R. 9018-1 includes a reminder that if the redacted document is a motion, the time to file and serve that motion should comply with applicable rules. Presumably notice of the underlying motion would not include confidential information and could (and thus, should) be publicly filed contemporaneously with the motion to seal.
L.R. 9037-1 will be added. This new rule sets forth procedures for redaction of personal data identifiers, such as social security numbers or names of minors. The rule governs several situations, including documents to be filed, documents already filed, documents filed in closed cases, and documents filed in multiple cases. (And don’t forget to redact such information in proofs of claim, as this blog post here shows, courtesy of the consumer finance specialists at Smith Debnam.)
L.R. 9074-1 will be revised to include current L.R. 2002-1. The provisions are reordered and relabeled to further clarify the scope of each. This change should help clarify the options by which a party can obtain relief in the Southern District of New York when a hearing is unnecessary. The new rule is clearly organized as follows: part (a) governs submission of a proposed order, judgment, or decree on court request; part (b) governs presentment of a specific list of motions on regular notice; part (c) includes current L.R. 2002-1 and governs presentment of orders when notice and a hearing are required, but a motion is not, with either twenty-one days’ notice or seven days’ notice; and part (d) governs notice of presentment of orders for which notice and a hearing are not required with three days’ notice. Part (e) will require the attachment of a proposed order to any notice of presentment, and directs submission of a copy of the proposed order to chambers once the presentment date and time has passed with no objections.
L.R. 9074-1 Practice Note: Some Courtroom Deputies in the Southern District of New York prefer that proposed orders be submitted to them electronically when the notice of presentment is filed, not on or after the presentment date.
Certain other smaller changes are included as well and listed below. Be sure to read the rules yourself whenever filing, both before and after December 1.
- L.R. 1007-1: diskettes no longer accepted by the clerk
- L.R. 2015-1: trustee may convert non-electronic books and records to an electronic format for cost-effective storage
- L.R. 3018-1: plan proponents must disclose uncounted ballots
- L.R. 3021-1: liquidating plan must specify steps to “monitor and ensure the safety of the trusts’ assets”
- L.R. 3022-1: estate representative may file closing report
- L.R. 5075-1: new requirements for claims agents
- L.R. 7052-1: proposed counter-findings and conclusions no longer permissible without court approval and proposed findings and conclusions now part of the record on appeal
- L.R. 9006-1: reply papers due 3 days before the return date
- L.R. 9078-1: clarifying deadline for proof of service