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December 2019 Bankruptcy Rule Amendments

The U.S. Supreme Court approved amendments to the following bankruptcy rules effective December 1, 2019: Rule 4001 (obtaining credit during bankruptcy), Rule 6007 (notices to abandon property), Rule 9036 (noticing in bankruptcy cases), and Rule 9037 (procedures for redacting personal identifiers in previously filed documents).

Postpetition Financing. Bankruptcy Rule 4001(c) provides the basic rule for obtaining credit after a bankruptcy case is filed. The rule generally addresses issues particular to Chapter 11 cases, therefore most courts limit the application of Rule 4001(c) to Chapter 13 cases in which the debtor is engaged in business.

Procedurally, to obtain approval for postpetition financing in any case, the debtor must file a motion under Rule 9014 (governing contested matters) that contains specific disclosures and information. According to the committee notes, the disclosure and other requirements of Rule 4001(c) may be unduly burdensome for most Chapter 13 cases. Amended Rule 4001 excludes Chapter 13 cases from these requirements. If bankruptcy court approval is required by local rule or otherwise in a Chapter 13 case, the noticing and service requirements of Rule 9013 will govern rather than those of Rule 4001(c).

Disposition of Estate Property. Bankruptcy Rule 6007 governs the abandonment of estate property by the trustee or debtor in possession. Rule 6007(b) implements Bankruptcy Code Sec. 554(b), which provides that a party in interest may apply to the court for an order directing the trustee to abandon estate property. The rule as amended establishes notice and service requirements for abandonment motions.

Bankruptcy Notices. A party may elect under Rule 9036 to receive court notices electronically rather than by mail. Registered users of the bankruptcy courts’ electronic filing system consent to receiving court notices by electronic means via the courts’ registered user agreements. However, Rule 9036 only authorizes the court to send notices electronically and it does not extend to service. As amended, the rule permits service in addition to notices by electronic means. It also allows parties other than the court to serve and notice electronically registered users who appear by filing with the court’s CM/ECF system.

Privacy Protections. Bankruptcy Rule 9037(a) prohibits filings containing private information about an individual debtor. For example, in filings that will be available electronically, only the last four digits of an individual’s Social Security number and any financial account numbers may be used. New Rule 9037(h) establishes a procedure for the redaction of documents that were filed without complying with the privacy requirements of subsection (a).