BANKRUPTCY BULLETIN
Contributing Editor:
Alexander J. Beeby, Sapientia Law Group, PLLC
A significant cleanup of the 1000 and 9000 series of Local Rules and Local Forms for the United States Bankruptcy Court for the District of Minnesota goes into effect on July 17, 2023. According to the Public Notice, the amendments are intended to conform the Local Rules and Local Forms with the Federal Rules of Bankruptcy Procedure (“Federal Bankruptcy Rules”) and current practice. These changes are planned to be the first phase of a complete review of all Local Rules in this district.
This article is intended to provide an overview or highlight of key changes. As an up-front disclaimer, I disavow any attempts to rely on this article as authoritative in any way. This article is nowhere near comprehensive, and practitioners are advised to read the changes themselves. Links to the complete changes are provided below.
One of the most notable (and useful) additions are the inclusion of Advisory Committee Notes, which explain the changes and provide helpful guidance. Overall, many of the changes simply remove language from the Local Rules that was duplicative (and sometime contradictory) of the Federal Bankruptcy Rules or otherwise unnecessary. Indeed, several Local Rules were abrogated in their entirety, including Local Rules 1002-1 (Place of Filing (petition)), 1005-1 (regarding petition captioning), 1007-4 (Failure to File Documents), 1008-1 (Documents Accompanying Petition), 1017-2 (Dismissal or Conversion of Cases), and 9022-1 (Notice of Court Orders and Judgments). Similarly, several forms that were simply recaptioned versions of the Official Forms or otherwise unnecessary were also abrogated (Local Forms 1008-1, 1019-1, and the Signature Declaration).
However, there are also some substantive changes within these amendments, perhaps most notably dealing with motion practice in the 9000 series, as discussed below.
1000 Series (Redlined Version, Final Version)
While most of the changes to the 1000 series of the Local Rules, as discussed, merely simplify these rules, if significantly at times, they do also include several particularly notable changes.
Disclosure of Compensation. In addition to simplification of Local Rule 1007-1 (Lists, Schedules, and Statements), paragraph (a) is modified to require that the disclosure of compensation of debtor’s counsel’s fees must conform with Local Form 1007-1, rather than merely “substantially” conform. This change is presumably related to the submission of disclosures of compensation by multiple debtors’ counsel in which the scope of services had been modified from the local form. Accordingly, it may be worth debtors’ attorneys confirming that the form is accurate in their bankruptcy software. However, the Notices of Responsibilities (Local Forms 1007-3-1(7) and 1007-3-1(13)) remain unchanged.
Chapter 13 Statement of Business Income. The threshold for requiring a statement of business income in Chapter 13 cases is increased from gross monthly income of $200 to $1,000. Local Rule 1007-3 (now “Statement of Business Income in Chapter 13 Cases”).
Consolidation of Joint Spouse Cases. Local Rule 1015-1 (now “Joint Case of Debtor Spouses”) is modified to clarify that automatic consolidation of jointly filed cases only applies to debtor spouses and that the process to object to such consolidation is by motion.
Conversion. Local Rule 1019-1 (now “Filing Requirements for Conversions”) is simplified considerably in deference to the applicable Federal Bankruptcy Rules while also including language allows for situations where a motion may be required for conversion.
Case Assignment. Local Rule 1073-1 (Assignment of Cases) is modified to refer to the Bankruptcy Court’s “Order for Assignment of Cases,” which most recently issued on January 3, 2022, to prescribe how cases are distributed among the judges.
9000 Series (Redline Version, Final Version)
While the amendments to the 9000 series of the Local Rules also primarily simplify the rules in deference to existing Federal Bankruptcy Rules, there are several changes of which all practitioners should be aware—particularly regarding motion practice.
Verifications. It appears that the rules regarding verifications previously included with motions (or responses), which were simply a paragraph attesting to the voracity of the facts stated in the motion (or response), have been modified. The verification was removed from the Local Form for “Notice of Hearing and Motion” (renumbered from Local Form 9013-2 to 9013-1) (Local Form amendment redlines). The definition of “verification” (renumbered from Local Rule 9001-1(13) to 9001-1(g)) adds explicitly required information. Practitioners may want to consider whether continued use of merely the verification paragraph with signature is still permitted at all.
Motion Response Deadline. While the default motion timeline of fourteen days and reply deadline of 48 hours prior to the hearing remain unchanged, the default response deadline is amended to seven days prior to the hearing date. Local Rule 9006-1(b) (as renumbered). While restyled, the timelines for expedited motions remain the same.
Withdrawal as Counsel. While the amendments of the Local Rule regarding attorney admission, substitution, and withdrawal appear to primarily consist of restyling and simplification, it is worth noting that the Local Rule was renumbered to 9010-1. In addition, the paragraph pertaining to substitution and withdrawal, as well as the subparagraphs regarding “Withdrawal Only” (as restyled) and “Effect of Failure to Comply,” which many debtors’ attorneys’ quote or reference in their engagement letters have been both renumbered and restyled. See Local Rule 9010-1(e)(3), (4) (as renumbered).
Signatures. The Local Rule pertaining to signatures on filed documents, renumbered as Local Rule 9011-1, also include several substantive changes and should be reviewed in detail. For example, while many practitioners already included their bar number in their signature block, this is now required. Local Rule 9011-1(a). The amendments also formally adopt use of the “s/” for electronic signatures (“/e/” was previously adopted as the local standard, but “s/” has now become the national standard). Local Rule 9011-1(b)(3). In addition, electronic signatures may now be used more widely, provided the appropriate authorization and retention requirements are satisfied. Local Rule 9011-1(b), (c).
Form of Motions. The Local Rule pertaining to what must be included in motion documents, renumbered as Local Rule 9013-1 (now “Motions – Form”) (the prior rule is abrogated by these amendments as redundant), appears to primarily include restyling and simplification amendments. However, the required notice of hearing and motion form, renumbered to Local Form 9013-1, has also been amended. Not only is the verification removed and the response deadline changed to seven days prior to the hearing, but the day of the week is now required for both the hearing date and the response deadline. It should also be noted that some judges require modified language for telephonic hearings, which presumably has not changed. The Local Rule also refers to the clerk’s instructions as to the filing of exhibits, Local Rule 9013-1(c) (as renumbered), which asks attorneys to file each document as a separate attachment to the main document rather than filing all documents as a single PDF.
Service and Notice. The Local Rule prescribing service requirements is almost entirely rewritten and has been expanded to also include separate notice requirements and renumbered to Local Rule 9013-2. Any practitioner serving a motion or response should review the new rule carefully, along with the relevant Federal Bankruptcy Rules. Presumably due to extensive confusion over the prior rule, the amendments to the service and notice rules attempt to simplify and clarify the requirements. The rewritten rule fortunately includes extensive Advisory Committee Notes, which attempt to explain the new requirements.
Because most motions constitute contested matters, under Fed. R. Bankr. P. 9014, any “service” of those contested motions must comply with the requirements of Fed. R. Bankr. P. 7004. The amended Local Rule reduces the number of parties required to be “served” over and above the federal rule requirements by largely requiring that those excess parties instead be “noticed” or simply sent the motion documents. Additionally, a new Local Rule 9036-1 provides that “service” on a chapter 7, 12, 13, or subchapter V trustee is effective through ECF, unless specifically requested otherwise.
As to applications, renumbered Local Rule 9013-3 is amended to eliminate the distinction between different types of applications and to only require that applications be “noticed” and “sent”—not served as previously required. Similarly, Local Rule 9019-1 is amended to remove extra Local-Rule service requirement for trustee compromise or settlement motions and to permit negative notice for these motions.
Corporate Ownership Statements. A new Local Rule 9013-4 requires a corporate ownership statement to be filed in the main bankruptcy case for any nongovernmental corporation filing a request for relief. Federal Rule of Bankruptcy Procedure 7007.1 requires such disclosures in adversary proceedings and is designed to permit the Court to assess potential ethical conflicts. The new Local Rule extends this to main bankruptcy cases. This amendment largely embodies, and likely supersedes, an En Banc Order, dated November 17, 2021, which previously included similar requirements.
Again, this article only provides an overview of some of the more notable amendments going into effect July 17, 2023. However, the amendments are extensive and nuanced and are worth reviewing in detail.
Useful Links:
Editors-in-Chief:
C.J. Harayda, Stinson LLP
David M. Tanabe, Winthrop & Weinstine, P.A.