Changes to the Federal Bankruptcy Rules come into effect on December 1, 2021 – Insolvency / Bankruptcy / Restructuring

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United States: Changes to Federal Bankruptcy Rules Come into Force December 1, 2021

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Each year, changes are made to the federal bankruptcy rules, which govern the handling of bankruptcy cases. The changes address issues identified by an advisory committee made up of federal judges, bankruptcy lawyers and others. Rule amendments are ultimately passed by the United States Supreme Court and technically subject to Congress disapproval.

Just a handful of rule amendments this year. This year, only four changes to Louisiana bankruptcy rules are expected to come into effect on December 1, 2021. These are all relatively minor technical or administrative revisions. This means you don’t have to worry about major changes to bankruptcy rules this year – good to know.

Here are the amendments:

  • The 2005 rule, relating to the conditions of release of a debtor from detention, has been amended to refer to the correct section of Title 18.
  • Rule 3007, governing the service of objections to claims, has been amended to clarify that an insured deposit institution, now identified only as a “defined in Section 3 of the Federal Deposit Insurance Act”, must also be served in accordance with Rule 7004 (h) and its more stringent service requirements (including certified mail in certain situations). Although this is a minor change, it is a good reminder of the special service rules that apply to FDIC insured depository institutions. The committee’s note clarifies that this provision does not apply to credit unions, as they are covered by National Credit Union Administration insurance instead of FDIC insurance.
  • Rule 7007.1, regarding corporate ownership disclosures, has been amended to align with similar disclosure rules in the Federal Rules of Appeal Procedure and Federal Rules of Civil Procedure. It has been revised to apply only to non-government corporations, including where such corporations are involved in bankruptcy cases and adversarial proceedings.
  • Rule 9036, governing notice and service, has been amended to address high volume paper notice recipients and to clarify procedures for those recipients related to the Bankruptcy Notification Center (BNC).
  • While not a bankruptcy rule, Federal Rule of Appeal Procedure 6, which governs Louisiana bankruptcy appeals, has also been revised slightly, but only to change the reference to a form considering changes to Rule 3 of the Federal Rule of Appeal Procedure (which, in turn, split the old Form 1 into Form 1A and Form 1B).

I need a red line. No doubt the best way to see the changes (and how minor they are this year) is to review a red line. Follow the link in this sentence for the full set of rule changes, including red lines indicating revisions made, along with advisory committee explanations for each amendment. In addition to the changes described above to the Federal Bankruptcy Rules of Procedure (red line changes begin on page 61), the linked document includes changes to the Federal Rules of Appeal Procedure.

December is almost here. These rule changes are expected to go into effect on December 1, 2021, which will be here before you know it (just like 2022).

Courtesy Image from Flickr by Robert lyle bolton

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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