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Bankruptcy Chat: Amendments to Bankruptcy Rules Published for Comment

The Judicial Conference Advisory Committee on Bankruptcy Rules on June 28, 2016, published for public comment proposed amendments to Bankruptcy Rule 3015 and the adoption of new Rule 3015.1. The deadline for submitting comments is October 3, 2016. The proposed amendments and instructions for submitting comments are posted on the Judiciary’s website at: http://uscourts.gov/rules-policies/proposed-amendments-published-public-comment

National Plan Form

Rule 3015 governs the filing and confirmation of Chapter 13 plans and objections to confirmation. The rule as amended would require the use of an official plan form (Official Form 113) in all cases, unless a local plan has been adopted according to the requirements of new Rule 3015.1. Nonstandard provisions in the plan, that is, provisions that are not included in the official or a properly adopted local plan form, must be clearly identified.

Objections to Confirmation

Objections to plan confirmation must be served on the debtor, the trustee, and anyone else designated by the court. Objections to confirmation are contested matters and are subject to the notice requirements of Rule 9014. Although Rule 9014 requires that notice of the objection be reasonable, neither Rule 9014 nor current Rule 3015 provides a specific notice period for objections. Rule 3015 as amended would require service of an objection to confirmation at least seven days before the confirmation hearing.

Claim Valuation

Another departure from current practice is the valuation of claims. The proposed model plan provides for the valuation of secured claims under Code Sec. 506(a). A new subsection added to Rule 3015 further provides that the value of a secured claim determined through the plan controls over a contrary proof of claim-without the need for a claim objections-or the claim amount scheduled by the debtor.

Opt-Out Proposed

There was significant opposition to the adoption of a mandatory plan form. As a compromise to the opposition, the Advisory Committee has proposed the adoption of new Rule 3015.1, which would allow districts to adopt their own local plan forms, provided specified formatting and disclosure requirements are satisfied.

These requirements include:

  • Only a single local form may adopted in a district after public notice and comment period.
  • Each plan paragraph must be numbered and labeled.
  • The plan must indicate whether it contains nonstandard provisions or if it proposes to strip or cram down the value of a lien to the value of its collateral.
  • The plan must contain separate paragraphs for the treatment of home loans, the payment of domestic support obligations, the treatment of claims that are subject to the “hanging paragraph” of Sec. 1325(a), and surrendering collateral.

If approved, the amendments to Rules 3015 and new Rule 3015.1 will become effective on December 1, 2017.

Written by George Basharis J.D.