BANKRUPTCY CASE LAW UPDATE

Sponsored by:

Oklahoma Bar Association

Bankruptcy and Reorganization Section

December 3 & 4, 2015

Oklahoma Bar Center

Ol~lahoma City, Oklahoma

SAM G. BRATTON IIDoerner, Saunders, Daniel &Anderson, L.L.P.

Two W. Second St., Suite 700Tulsa, OK 74103-3117

105 N. Hudson Avenue, Suite 500Oklahoma City, OK 73102-4805

(918)582-1211sbratton a,dsda.com

SIDNEY K. SWINSONGableGoh~vals

1100 ONEOK Plaza100 W. Fifth StreetTulsa, OK 74103

One Leadership Square, 15th Floor211 N. Robinson

Oklahoma City, OK 73102

(918)595-4800sswinson(a~~ablelaw.com

LEGAL UPDATES 2015BANKRUPTCY LAW UPDATE

TABLE OF CONTENTS

U.S. SUPREME COURT .......................................................................................................................... I

1. Bullard v Blue Hills Bank, fka Hyde Park Savings Bank, 135 S.Ct. 1686(May 4, 2015) ..................................................................................................................1

2 Harris v. Viegelahn, 138 S.Ct. 1829 (May 8, 2015) ...................................................... 1

3. Wellness International Netu~o~~kLimited v. Sharif, 135 S.Ct. 1932(May 26, 2015) ................................................................................................................2

4. Baker Botts L.L.P., et al. v.AsaNco LLC, 135 S.Ct. 2158(June 15, 2015) ............................................................................................................... 3

5. Bank ofAme~zca v. Caullzett, 135 S.Ct. 1995 (June 1, 2015) ......................................... 4

CERTIORARIGRANTED ........................................................................................................................ S

Huslzy Inter°natzonal Electronics, Inc. v. Ritz, No. 15-145,2015 WL 9600346 (November 6, 2015) ........................................................................ 5

TENTH CIRCUIT .................................................................................................................................... S

6. Mallo, et al. v. Inter°nal Revenue SeNvice, 774 F.3d 1313~10ci~ Cir., December 29, 2014 ........................................................................................ 5

7. Bank of Commerce and Trust Company v. Schupbach, et al.,607 Fed.Appx. 831 (l Oct Cir., May 19, 2015) ................................................................ 6

8. Loveridge v. Tony Hall, et al., 792 F.3d 1274 (l Ott' Cir., July 10, 2015) ....................... 6

9. JZcbbe~ v. SMC Electrical Products, Inc., et al., (In Re C. W. MzningCompany), 798 F.3d 983 (lOt~' Cir., August 10, 2015) ................................................... 7

10. .Tester, et al. v. Wells Fargo Banlz, 2015 WL 6389290(10th Cir. BAP, October 22, 2015) ................................................................................. 8

BANKRUPTCYCOURTS ......................................................................................................................... S

11. Philadelphia Indemnity Insurance Company v. Rotert, et al. (In ReRotert), 530 B.R. 791 (Bankr. N.D. Okla., Apri129, 2015) ........................................... 8

12. In Re Macco Properties, Inc., et al., Case No. 10-16682-R andNo. 10-16503-R (jointly administered), 2015 WL 7069037,September 10, 2015 ........................:............................................................................... 9

13. AJney~ican Express Bank, F.S.B. v. Mo~~dy, (In Re Mowdy),526 B.R. 63 (Bankr. W.D. Okla., January 16, 2015) ..................................................... 9

14. In Re Bushyhead, 525 B.R. 136 (Bankr. N.D. Okla., January 21, 2015) ..................... 10

15. Herman v. White (In Re White), Case No. 13-12131-M,Adversary No. 13-01703-M, 519 B.R. (Banlc~. N.D. Olcla.,October 6, 2014) ...................................................o...................................................... 11

RULESAMENDMENTS .......................................................................................... I Z

1. Rule 3002.1. Notice Relating to Claims Secured by Security Interestin the Debtor's Principal Residence .............................................................................. 13

2. Rule 7008. General Rules of Pleadings ....................................................................... 14

3. Rule 7012. Defenses and Objections -When and How Presented - ByPleading or Motion -Motion for Judgment on the Pleadings ...................................... 17

4. Rule 7016. Pretrial Procedure ..................................................................................... 18

5. Rule 9006. Computing and Extending Time; Time for Motion Papers ....................... 21

6. Rule 9027. Removal .................................................................................................... 24

7. Rule 9033. Proposed Findings of Fact and Conclusions of Law ................................ 27

BANKRUPTCY CASE LAW UPDATEDecember 3 & 4, 2015

U.S. SUPREME COURT

Bullard v. Blue Hills Bank, fka Hyde Park Savings Bank, 135 S.Ct. 1686 (May 4, 2015)

Headnote: Finality of an order denying confirmation of a plan.

Facts: A Chapter 13 debtor's plan confirmation was denied by the Bankruptcy Court.

Debtor appealed to the BAP. The BAP concluded that the Bankruptcy Court's denial of

confirmation was not a final appealable order, but heard the appeal nonetheless under the

provision permitting interlocutory appeals "with leave of the Court." Having accepted the

interlocutory review, the BAP agreed with the Banl~uptcy Court and affirmed the denial of

confirmation. On appeal to the First Circuit, the Circuit dismissed the appeal for lack of

jurisdiction. It concluded that its jurisdiction depended upon the finality of the BAP's order

which in turn depended upon the finality of the Bankruptcy Court's order. Finding that the

Banlc~uptcy Court's order denying confirmation was not final, the Circuit concluded it lacked

jurisdiction to hear the appeal. The Supreme Court granted certiorari.

Issue: Is the denial of confirmation of a Chapter 13 plan a final appealable order?

Holding: A unamimous Supreme Court held that the denial of a Chapter 13 plan is not a

final appealable order. It relied largely on the longstanding policy of avoiding piecemeal appeals

and the promotion of efficient judicial administration and the notion that the denial of

confirmation does not end the process because, in a Chapter 13, the debtor retains his right to

amend the plan. Moreover, its ruling, the Court reasoned, does not unduly burden the debtor.

Debtor retains the exclusive right to propose plans. Moreover, the lrnowledge that debtor has no

guaranteed appeal from a denial of confirmation should encourage debtors to work with creditors

to develop a confirmable plan, promoting expeditious administration of the case. In addition, the

Banlc~uptcy Rules provide for interlocutory appeals of non-final orders with leave of the Court in

cases deemed by the appellate court to be "important enough." Also, as the process under 11

U.S.C. § 158(d)(2) for certification of important questions to the Court of Appeals, which has

discretion to hear the matter, provides protection for debtors and the system. The Supreme Court

deemed those safeguards sufficient to guard against undue hardship to debtors.

2. Harris a Viegelahn, 138 S.Ct. 1829 (May 8, 2015)

Headnote: Turnover of uncollected funds by a Chapter 13 trustee upon conversion to

Chapter 7.

Facts: A Chapter 13 debtor paid a portion of his monthly wages to the Chapter 13 trustee

to fund a confirmed Chapter 13 plan. Eventually, the case was converted to a Chapter 7 at which

time the trustee was still in possession of $5,519.22 from the debtor's wages which had not yet

disbursed. After conversion, the trustee distributed the remaining funds to the debtor's creditors.The debtor filed a motion directing the refund of the accumulated wages which the trustee hadpaid to the creditors. The Bankruptcy Court granted the debtor's motion and the District Courtaffirmed. The Fifth Circuit reversed, concluding that a Chapter 13 trustee must distribute adebtor's accumulated post-petition wages to the creditors. The Supreme Court granted certiorari.

Issue: Is a debtor who converts to Chapter 7 entitled to a return of post-petition wagesnot yet distributed by the Chapter 13 trustee?

Holding: A unanimous Supreme Court reversed the Fifth Circuit and affirmed theBanlc~uptcy and District Courts' holding that a Chapter 13 trustee must return any accumulatedand undisbursed funds to the debtor upon conversion of the case to a Chapter 7. The SupremeCourt noted that in a Chapter 7 case, the debtor turns his non-exempt assets over to the trusteewhich assets become property of the estate, but debtor's post-petition wages are not turned overand do not constitute property of the estate, contrasted with a Chapter 13 wherein the debtorretains his property and typically contributes his future earnings to fund the Chapter 13 plan.The Court noted that a Chapter 13 estate, unlike a Chapter 7 estate, includes both the debtor'sproperty at the time his bankruptcy petition and any assets he acquires after filing, includingwages. Section 1306(a). Absent a bad faith conversion, § 3480 defines the converted Chapter7 estate as consisting of property belonging to the debtor as of the date of the original Chapter 13petition. Because post-petition wages do not fit that description, they are not property of theChapter 7 estate. The Court further noted that § 3480(2) provides an exception in the case of abad faith conversion expressly providing that, if the debtor converts a case in bad faith theproperty of the estate in the converted case consists of all of the property of the estate as of theconversion. Since in the absence of bad faith, the property of the estate is defined as property asof the date of the original Chapter 13 petition, the Court concluded that it was clear that in casesof good faith conversion, the post-petition earnings were not property of the estate.

Wellness International Network Limited a Sltaf~if, 135 S.Ct. 1932 (May 26, 2015)

Headnote: Adjudication of Stern cases in the Bankruptcy Count by consent.

Facts: A judgment creditor brought an adversary proceeding against a Chapter 13 debtorseeking a denial of the debtor's discharge and a declaration that a trust of which the debtor wasthe trustee was the debtor's alter ego and that its assets should be included in the bankruptcyestate. The Bankruptcy Count entered a default judgment in the creditor's favor as a discoverysanction against the debtor. The debtor appealed to the District Court, which affirmed. TheSeventh Circuit affirmed as to the denial of discharge but reversed as to the trust alter ego claimholding that under Stern, the Bankruptcy Count lacked constitutional authority to enter a finaljudgment on that claim and determined that the debtor's Stern objection could not be waived.The Supreme Court granted certiorari, presumably to resolve the last remaining majorunresolved issues arising under Stern.

Issue: Does Article III permit bankruptcy judges to adjudicate Stern claims with theparties knowing and voluntary consent and if so, can consent be implied?

Pa

Holding: A divided Supreme Court held that Article III does permit bankruptcy judges toadjudicate Stern claims with the parties' knowing and voluntary consent. A Stern claim, whichdraws from the Supreme Court's landmark bankruptcy jurisdiction case, Stern v. Marshall, 121S.Ct. 2594 (2011), is "a claim designated for final adjudication in the Bankruptcy Court as astatutory matter, but which is prohibited from proceeding in that way as a constitutional matter.In this case, the trust alter ego claim brought by the creditor was clearly a Stern claim. TheCourt, having reviewed the principal cases on Article III jurisdiction, summarized by stating thatthe entitlement to an Article III adjudication is a "personal right" and thus ordinarily subject towaiver. Allowing Article I adjudicators (i.e., banlauptcy judges) to decide Stern claimssubmitted to them by consent would not offend separation of powers as long as Article III countsretain supervisory authority over the process. In the banlc~uptcy system, District Counts alwaysretain the right to withdraw the reference of a case, contested matter or proceeding, and also haveappellate jurisdiction over decisions by a Bankruptcy Court. Banlc~uptcy judges, like magistratejudges, are appointed and subject to removal by Article III judges and they "serve as judicialofficers of the United States District Court." The Supreme Court further noted that adjudicationbased on litigant consent has been a consistent feature of the federal count system since itsinception. "Reaffirming that unremarkable fact, we are confident, poses no great threat toanyone's birth rights, constitutional or otherwise."

The petitioner argued in the alternative that, to the extent that litigants may validlyconsent to adjudication by a Bankruptcy Court, such consent must be express. The SupremeCourt disagreed citing to a line of cases articulating the standard for consent holding that it mustbe knowing and voluntary but not necessarily express. The Court made it clear that the keyinquiry is whether the litigant or counsel was made aware of the need for consent and the right torefuse it, and still voluntary appeared to try the case. The Supreme Court did not undertake todecide whether the petitioner's actions here evidenced the requisite knowledge and voluntaryconsent, but remanded to the lower courts to make that "deeply fact bound analysis of theprocedural history unique to this protracted litigation." Nonetheless, the principle of consent toadjudication in the Bankruptcy Court, express and implied, was established.

In a strongly worded dissent by the Chief Justice, joined by Justices Scalia and Thomas,Justice Roberts warned against encroachment on Article III and the serious constitutionalquestion raised by private parties consent to an Article III adjudication where no constitutionalbasis under Article III exists. The dissenters characterized Article III as "an inseparable elementof the constitutional system of checks and balances — a structural safeguard must be zealouslyguarded."

4. Baker Botts L.L.P., et al. a Asarco LLC, 135 S.Ct. 2158 (June 15, 2015)

Headnote: Allowance of professional fees for defending an objection to fees.

Facts: The debtor, in a large and complicated Chapter 11 banluuptcy case, Asarco, LLC,hired Balser Botts to be general counsel for the debtor pursuant to § 327(a). Asarco obtained asuccessful Chapter 11 plan confirmation and emerged from bankruptcy. Balser Botts filed a feeapplication to which the post-confirmation debtor objected. The Bankruptcy Court rejected thedebtor's objections and awarded the law firm's fees, including fees for the time spent defending

the fee application. The debtor appealed to the District Court, which affirmed. The Fifth Circuitreversed, holding that § 330(a)(1) does not authorize fee awards for defending fee applications.

Issue: Does § 330(a)(1) permit Bankruptcy Courts to award fees to § 327(a)professionals for defending fee applications.

Holding: A divided Supreme Court affirmed the Fifth Circuit, relying principally on theAmerican Rule as providing the "basic point of reference" for award of attorneys fees, that Rulebeing that each litigant pay his own attorneys fees, win or lose, unless a statute or contractprovides otherwise. The Count found that Congress did not depart from the American Rule in §330(a)(1) for fee-defense litigation. The Count held that 330(a)(1) authorizes compensation forprofessionals for actual and necessary services rendered for the debtor or the estate. The Courtheld that time defending the applicant's own fee application could not fairly be described as"labor performed for —let alone ̀ disinterested service to' the debtor-in-possession or the estate."The Court acknowledged that time spent preparing a fee application is compensable, § 330(a)(6),but that time spent defending it does not necessarily follow because it is not expresslyauthorized.

Bank ofAmerica v. Caulkett,135 S.Ct. 1995 (June 1, 2015)

Headnote: Strip off of a wholly unsecured junior lien.

Facts: In a Chapter 7 case, a mortgage holder's second mortgage was wholly unsecured,i.e., it was wholly unsupported by any equity in the property securing its debt above the amountof the senior mortgage debt. As the Court said the junior mortgage lien was "wholly underwater" The debtor sought to avoid the junior mortgage lien under § 506(d) which provides, "tothe extent that a lien secures a claim against the debtor that is not an allowed secured claim, suchlien is void." The lien avoidance was granted by the Bankruptcy Court and affirmed by theDistrict Court and the Eleventh Circuit.

Issue: Can the debtor avoid, i.e., "strip off' a junior mortgage lien when the debt owedon a senior mortgage lien exceeds the current value of the collateral.

Holding: The Supreme Court, in an opinion joined by all Justices as to the result (withdissents as to a particular footnote) overruled the Eleventh circuit and denied the lien strip-off.The debtor asserted that, since the bank's claim is "allowed," i.e., the bank holds a valid claimunder § 502, and that "an allowed claim ... is a secured claim to the extent of the value of suchcreditor's interest in ...such property" and an unsecured claim otherwise, § 506(a)(1), the bankwould not hold an allowed secured claim against the property because it had no equity in its lien.The Supreme Court held, however, that its prior case in DeN~snup v. Tinzm, 502 U.S. 410 (1992)resolved the issue to the contrary. In Dewsnup, the Supreme Court held that a partially securedjunior lien could not be stripped down, i.e., reduced to the amount of the junior creditor's equityin the property, holding that a "secured claim" is a claim supported by a security interest inproperty, regardless of whether the value of that property would be sufficient to cover the claim.In Dewsnup, the junior creditor was partially unsecured, but in Caulkett, the junior creditor waswholly under water, i.e., the value of its interest in the property was zero. The Supreme Courtheld that if a claim is secured by an interest in property, the value of that claim cannot be reduced

4

to reflect the value of the creditor's interest in the property. In essence, the Supreme Countaffirmed and extended its holding in DeN~snzcp that if a claim has been allowed pursuant to § 502and it is secured by a lien with recourse to the underlying collateral, it does not come within thescope of § 506(d). Under this definition, § 506(d)'s function is reduced to "voiding a lienwhenever a claim secured by the lien itself has not been allowed"

Subsequently, the Supreme Court granted certiorari and vacated at least 21 otherEleventh Circuit cases holding that stripping off wholly under water junior mortgage liens waspermissible.

CERTIORARI GRANTED

On November 6, the U.S. Supreme Count agreed to hear an appeal of a Fifth Circuitdecision where the Circuit Court held that barring the discharge of a debt for "actual fraud"requires a false representation by the debtor. This ruling was at odds with a Seventh Circuit caseand created a Circuit split. Shortly after the Fifth Circuit's case, the First Circuit adopted theSeventh Circuit's approach. Hzrsky InteNnational Electronics, Inc. v. Ritz, No. 15-145, 2015 WL9600346 (November 6, 2015)

TENTH CIRCUIT

6. Mallo, et al. a Internal Revenue Service, 774 F.3d 1313 (10th Cir., December 29, 2014)

Headnote: Dischargeability of tax obligations reported in late-filed tax returns.

Facts: In each of two consolidated appeals, the debtors obtained general orders ofdischarge in the ordinary course of a Chapter 7 bankruptcy case. Subsequently the debtors filedadversary proceedings against the IRS seeking a determination that their income tax liabilitieshave been discharged. In each case, the debtors had filed their respective forms 1040, but filedthem late. On summary judgment, the Bankruptcy Court found that the taxes were notdischarged based on the Count's conclusion that the debtors had not filed a return in accordancewith applicable law, that being the law regarding deadline to file. (In the other case consolidatedon appeal, on the same facts, another bankruptcy judge decided that the the tardy form 1040 wasa tax return and therefore the tax debt was not excepted from the order of discharge.)

Holding: On appeal, the Tenth Circuit agreed with the Count which found the late-filedreturn not to be a "return eligible to be discharged." Section 523(a)(1), governing the exceptionsto a general discharge excludes from discharge any debt for a tax liability with respect to which a"return" was not filed. § 523(a)(1). Of significance is the last unnumbered paragraph of thatsection which defines a "return" as a "return that satisfies the requirements of applicable non-bankruptcy law (including applicable filing requirements)." The Circuit found that the plainlanguage of the unnumbered paragraph (often referred to as the "hanging paragraph") requiresthe court to consult non-bankruptcy law in determining whether tardy tax returns are "returns."The Tenth Circuit examined the scant Circuit authority on the issue but essentially founded itsdecision upon a straightforward reading of the hanging paragraph and adopted the decision of theonly other Circuit to have ruled on the issue, the Fifth Circuit. The Court held that because thedebtors filed the tax form after the deadline for filing a return, the late-filed return did notconstitute a "return" as defined by the hanging paragraph. The Tenth Circuit declined that

invitation to determine the hanging paragraph as ambiguous and found the language to be plain.The Circuit also declined to deal with the issue of assessment versus the filing of a return.

7. Bank of Commerce ~cnd Trust Company v. Schupbach, et al., 607 Fed.Appx. 831 (10tH

Cir., May 19, 2015)

Headnote: Mootness by virtue of plan confirmation.

Facts: In a Chapter 11 case, the bank filed a complaint objecting to the dischargeabilityof its debt. While the adversary proceeding was pending, the debtor obtained confirmation of aChapter 11 plan providing for surrender of the collateral securing the bank's claim in fullsatisfaction of the claim. Subsequent to confirmation, the Bankruptcy Court dismissed thebank's dischargeability action holding that the non-dischargeability complaint was moot byvirtue of full satisfaction of the bank's claim pursuant to the plan. The Bankruptcy AppellatePanel affirmed.

Issue: Whether confirmation of a Chapter 11 plan providing for fu11 satisfaction of acreditor's claim renders the creditor's pending claim for non-dischargeability of the debt moot.

Holding: The debtor's confirmed Chapterl 1 plan provided that surrender of the propertysecuring the bank's claim "shall be in full satisfaction of the (bank's) claim" and furtherprovided that the bank could file an additional unsecured claim if it believed that the value of thesurrendered collateral to be less than its claim. The plan also provided that the plan treatmentwould be binding upon all creditors. The bank received notice of the plan and it did not file anobjection or file an amended proof of claim. The Circuit found the bank's appeal of thedismissal of its non-dischargeability complaint to implicate constitutional mootness, which isgrounded in the Article III requirement that federal courts only decide actual ongoing cases orcontroversies. In this case, since the confirmed plan functions as a judgment with regard to thosebound by the plan (including the bank), the provision that the property be surrendered to the

bank in full satisfaction of the bank's claim was binding on the bank. Since the bank, afteraccepting surrender of the property, had no further claim, its claim for non-dischargeability of itsclaim was moot and left nothing "in controversy" as required by At-ticle III, depriving the partiesfederal jurisdiction.

8. Lovef~idge v. Tony Hall, et al., 792 F.3d 1274 (10th Cir., July 10, 2015)

Headnote: Transfer of a Step°n claim by a District Court to a Bankruptcy Court foradjudication.

Facts: Defendants in an adversary proceeding brought by the Chapter 7 trustee fordefendant's alleged violation of the automatic stay and tortious interference with the Court-approved sale of the debtor's property, brought state law claims against the trustee and his lawfirm for, among other things, legal malpractice and breaches of fiduciary duty. The defendants

also filed motions in the district court for permissive withdrawal of the reference. The districtjudge denied the motion concluding that the defendant's malpractice and breach of fiduciary

duty claims should be resolved by the Bankruptcy Court.

Issue: Resolution of Stern claims by a Bankruptcy Court.

D

Holding: Consistent with recent U.S. Supreme Court rulings, when a Bankruptcy Court

is faced with a Stern claim, that is a claim the Bankruptcy Court is statutorily but not

constitutionally authorized to decide and for which it has not received the parties' consent to

proceed, it still may hear the matter and submit proposed findings of fact and conclusions of law

to the District Count for a de novo review and entry of judgment. Executive Benefits Ins. Agency

v. A~^kison, 134 S.Ct. 2165 (2014). The Circuit in this case give a concise review of the

constitutional development of the landmark cases from Northern Pipeline through the recent line

of U.S. Supreme Court cases beginning with and deriving from SteNn. The Tenth Circuit

concisely held that in deciding that a Bankruptcy Court may not decide a case without the

parties' consent under Stern does not necessarily mean it cannot hear the case and offer a report

and recommendation. Along the way, the Tenth Circuit found that, in this case, the

counterclaims by the defendants clearly either arose under Title 11 or were related to a case

under Title 11 implicating federal jurisdiction. The Circuit also noted that the District Court had

jurisdiction, if not under the Bankruptcy Code, under 28 U.S.C. § 1332(a) given that the

complainants had alleged diversity jurisdiction.

Jobber v. SMC Electrical Products, Inc., et al. (In Re C.W. Mining Company), 798

F.3d 983 (10th Cir., August 10, 2015)

Headnote: Ordinary course of business defense to a preference action in a one-time

transaction.

Facts: A Chapter 7 trustee brought an adversary proceeding to recover as alleged

preferences the debtor's pre-petition payment to a creditor. The underlying transaction and the

payment were the first time the debtor and creditor had transacted business. The creditor-

defendant asserted that the transfer was not avoidable because it was made in the "ordinary

course of business." § 547(c)(2) The Bankruptcy Court granted the defendant's motion for

summary judgment. On appeal, the Tenth Circuit BAP affirmed.

Issue: Can a defendant in a preference action assent an ordinary course of business

defense regarding aone-time transaction with the debtor.

Holding: The Tenth Circuit affirmed the granting of the motion for summary judgment

in favor of the defendant based on the ordinary course of business defense. The ordinary course

of business exception to the preference statute, § 547(c)(2) provides a defense "to the extent that

the transfer was in payment of a debt incurred by the debtor in the ordinary course of business or

financial affairs of the debtor and the transferee and the transfer was made in the ordinary course

of business or financial affairs of the debtor and the transferee or made according to ordinary

business terms." Although the exception is to be construed narrowly, and the burden of proof is

on the transferee to show the exception, the Court found that notwithstanding that the transaction

was aone-time transaction between the debtor and the transferee, the transfer could nevertheless

still be in the ordinary course of business because the exception requires only that the transaction

be in the ordinary course of business "of' and not "between" the parties. The Tenth Circuit also

found that Congress's intention in enacting the ordinary course of business exception was not to

protect well-established financial relations, but rather to leave undisturbed normal financial

relations. For first-time transactions, the Court may refer to the written terms of the transaction

and the ordinary course of business of each party respecting similar transactions, which need not

7

necessarily include a history of transactions between the parties. The Court found such analysisto be consistent with congressional policy to leave undisturbed normal financial relations.

10. Jester, et al. a Wells Fargo Bank, 2015 WL 6389290 (10th Cir. BAP, October 22, 2015)

Headnote: Automatic stay and discharge injunction violation post-closing of a Chapter 7banl~uptcy case.

Facts: Prior to banlc~uptcy, the bank had initiated a foreclosure action in state court onproperty owned by the prospective debtors. The debtors filed a Chapter 7 banluuptcy case andthe bank, although it did not dismiss the foreclosure case, tools no action in the state case oneway or the other. After the bankruptcy case was closed, the debtor executed a loan modificationagreement and the bank dismissed the pending foreclosure case. Subsequently, the debtorsstopped making payments and the bank foreclosed obtaining a summary judgment. The debtorfiled a motion to reopen the banlc~uptcy case assenting violations of the automatic stay by virtueof the prior foreclosure action not being dismissed when the banl~uptcy case was filed, and aviolation of the discharge injunction by virtue of the subsequent foreclosure, among otherallegations regarding mis-application of payments under the modification agreement. TheBankruptcy Court denied the motion to reopen concluding that there was no violation of theautomatic stay or the discharge injunction and there was no relief that it could provide for thedebtors.

Issue: Scope of the automatic stay and discharge injunction respecting pending pre-petition suits. Scope of the discharge injunction regarding post-discharge foreclosure.

Holding: On appeal, the BAP concluded that there is no affirmative duty to dismiss apre-petition foreclosure action upon learning that the defendant filed a bankruptcy petition. Theautomatic stay prevents prosecution of the foreclosure action but does not require dismissal. Inother words, the creditor must refrain from any activity that would move the case forward.Further, the automatic stay terminates upon the granting of a discharge for the debtor whichoccurred. Thus, no action in the foreclosure case after the discharge was granted would haveviolated the automatic stay. Regarding the discharge injunction of § 324(a)(2), the Court notedthat the discharge operates as an injunction against the employment of process, etc., to collect adebt as a personal liability of the debtor regardless of the entry of a discharge. Thus in remactions, which include actions to enforce a lien against encumbered property, but which do notseek in personam relief, are not prohibited by the discharge injunction.

BANKRUPTCY COURTS

ll. Philadelphia Indemnity Insu~~ance Company a Rotert, et al. (In Re Rotert), 530 B.R.791 (Banlcr. N.D. Olda., Apri129, 2015)

Headnote: Settlement of discharge complaints.

Issue: May a bankruptcy court approve a settlement of a discharge complaint forconsideration to be paid largely to the complaining creditors, after adequate notice to all creditors

and without an objection by any party in interest.

Holding: The Bankruptcy Court held that the Count could not approve a settlement of adischarge complaint based on consideration to be paid entirely or largely to the complainingcreditors even if adequate notice of the settlement motion was given to all creditors and parties ininterest and no objection to the settlement was filed. In this case, the only response to thesettlement motion was by the Office of the United States Trustee, which supported thesettlement. The Court found promotion of the integrity of the judicial system to be of paramountimportance in deciding whether to approve a settlement that resolves discharge litigation. That isbecause settlement of a discharge complaint for a payment to the complaining creditor creates anappearance that a bankruptcy discharge is a commodity that is up for sale and one that fails toaccount for the interests of the estate and the remaining creditors. These principles are ofsufficient importance that the Court must protect them even in the absence of an objection by anycreditor. The Count reiterated the widely held and oft-recited principle that a bankruptcydischarge is reserved for the "honest but unfortunate debtor" and that banl~uptcy discharges arenot for sale. In fact, the Court noted that while the former principle may not hold true in eachand every case, the latter is absolutely essential to the survival of the system, notwithstandingthat settlements are generally favored and in fact facilitate administration of the system. TheCourt made it clear that under no circumstances are discharges to be bought or sold, nor is thethreat of, or fact of, a § 727 discharge objection ever to be used as a bargaining chip innegotiations between debtors and creditors.

12. In Re Macco Properties, Inc., et al., Case No. 10-16682-R and No. 10-16503-R (jointlyadministered), 2015 WL 7069037, September 10, 2015

Headnote: Comprehensive review of standards for allowance of professional feeapplications and expenses.

Facts and Holding: Fee applications of a trustee, accounting firm for the trustee, andcounsel for the trustee were hotly contested. The Count, in a lengthy and detailed opinion, setforth a comprehensive survey of the applicable law under § 330 and the Johnson Factors aspertain to the particulars of the case and respecting each applicant and also discussed preclusionof relief to the objecting parties by virtue of unclean hands. The case is very fact-specific, butthe exposition of the controlling law and factors is comprehensive and informative.

13. American Expf•ess Bank, F.S.B. a Mow~ly (In Re 1Vlowdy), 526 B.R. 63 (Banlcr. W.D.Ol~la., January 16, 2015)

Headnote: Exception to discharge of credit card debt based on false pretenses, falserepresentations or actual fraud.

Facts: Credit card lender brought a complaint for a determination of anondischargeability of its debt incurred base on of the debtor's pre-petition use of the creditcards.

Issue: What ate the standards applicable to proof that the debtor's incurring of debt on acredit card was incurred by false pretenses, a false representation or actual fraud.

Holding: The case involves the husband and wife debtors' use of a credit card for aconsiderable period of time pre-petition and the dischargeability of the unpaid portion of the

debt. The lender brought the action objecting to dischatgeability of the debt based on falsepretenses, a false representation or actual fraud under § 523(a)(2)(A). In this reported case, theCourt sets forth a very thorough analysis of the important benchmarks in such litigation. TheCourt holds that for non-dischargeability purposes, a debtor's intent cannot be inferred solelyfrom the fact that the debtor does not repay the debt and later files for bankruptcy protection.The Count may consider whether the debtor at the time charges were incurred, had the means tomake even the minimu monthly payment. Among the factors the Court may consider are: 1)length of time between the charges and the date of bankruptcy; 2) whether the debtor consulted abankruptcy attorney; 3) number of charges made; 4) amounts of the charges; 5) financialcondition of the debtors at the time the charges were made; 6) whether the charges were abovethe credit limit of the account; 7) whether debtor made multiple charges on any given day; 8)whether the debtor was employed; 9) the debtor's employment prospects; 10) the debtor'sfinancial sophistication; 11) sudden changes in buying habits; 12) whether the purchases weremade for luxuries or necessities. Notwithstanding the foregoing, although a debtor's financialcondition is a factor, a finding of hopelessness of the state of the debtor's financial conditionshould not become a substitute for a finding of fraudulent intent. The creditor has a duty toinvestigate and "use its senses" and make at least a cursory examination or investigation of thefacts of the transaction before entering into it. Justifiable reliance on the debtor's representationdoes not exist where there are facts which are known or should be known from a cursory glance,or if the creditor has discovered something which would serve as a warning required to make aninvestigation. However, a creditor can establish justifiable reliance on the debtor's promise topay merely by virtue of the fact that the use of the credit card is an implied promise to pay.

14. In Re Bushyhead, 525 B.R. 136 (Bankr. N.D. Oklao, January 21, 2015)

Headnote: Standards for dismissal of a Chapter 7 case "for cause" under § 707(a)

Facts: Debtors filed a Chapter 7 bankruptcy case in response to collection efforts by acreditor holding a claim for a very large non-consumer debt. The debtors' schedules, asultimately amended, showed that the debtors had an ability to repay a portion of the debt frompost-petition earnings. The schedules also showed non-exempt assets. The U.S. Trustee filed amotion to dismiss the banlc~uptcy case alleging that the case had been filed in bad faith basedupon the debtors' ability to repay a portion of the debt out of significant excess disposableincome.

Issue: Whether a Chapter 7 debtor's ability to pay, or make substantial payments on,dischargeable debt constitutes bad faith and thus cause to dismiss anon-consumer Chapter 7bankruptcy case.

Holding: The Bankruptcy Court found that § 707(a) provides anon-exclusive list forcause to dismiss a Chapter 7 bankruptcy case. Bad faith filing, or a debtor's ability to pay, is notone of the enumerated factors. The Court undertook a thorough analysis of the case law, whichis not uniform, and held that bad faith, particularly when based on a debtor's ability to pay, doesnot constitute cause for dismissal of a bankruptcy case under § 707(a). Section 707(b) doescontain a bad faith element and an extensive scheme for calculating the debtor's ability to repayin cases where the debts are primarily consumer debts. Section 707(a) contains no suchprovisions. The Court noted that Congress could have included a bad faith ability to pay

10

requirement in § 707(a) but it did not do so. "The ultimate question is whether the petition wasfiled with the intent and desire to obtain the relief that is available under a particular chapter ofthe Bankruptcy Code, through the means Congress has specified, or whether the debtor ispursuing some other goal. In Chapter 7, a case should be dismissed on account of bad faith onlywhere the debtor has taken advantage of the Count's jurisdiction in a manner abhorrent to thepurposes of Chapter 7." The Bankruptcy Court here found that a debtor's desire to utilizeChapter 7 to discharge debt was contemplated by Congress and is no evidence of bad faith,regardless of whether the debtor has some ability to pay debts in the future.

15. HeN~rran a Wlzite (In Re Wlzite), Case No. 13-12131-M, Adversary No. 13-01703-M,519 B.R. 832 (Bankr. N.D. Olcla., October 6, 2014)

Headnote: Sale of collateral and failure to remit the proceeds of the sale to the securedparty as a basis for non-dischargeabilty.

Facts: Prior to the bankruptcy case, the debtor owned equipment which served ascollateral for a debt. The debtor sold the equipment but did not remit the proceeds of the sale tothe secured creditor. In the debtor's subsequent bankruptcy, the creditor filed a complaintobjecting to the dischargeability of its debt as a debt incurred for willful and malicious injuryunder § 523(a)(6).

Issue: Does conversion of a secured creditor's collateral, standing alone, constitutewillful and malicious injury so as to prevent discharge of the debt?

Holding: The Count found that the sale of the collateral and failure to remit the proceedsto the secured creditor constitutes conversion of the collateral under Oklahoma law. The Courtfound that an act of conversion, if willful and malicious, falls within the scope of the bankruptcydischarge of § 523(a)(6) discharge exception, but that willful and malicious injury does notfollow as a matter of course from every act of conversion. The equipment collateral here,although subject to the security interest, was the debtor's property which the debtor had everyright to sell. The evidence supported the creditor's allegation that there was a lien on themachine (by virtue of a lease which was a de facto security interest.) Debtor's decision to sellthe machine was made because the machine was in need of frequent repairs and that he felt hecould make better use of the capital to keep the business in operation and therefore continue tomake payments to creditors. The Court found that, while the debtor's actions were willful andmay have been misguided, the Court could not find that they were malicious, and thus the debtwas discharged.

3625179v1

11

RULES AMENDMENTS

12

10 FEDERAL RULES OF BANKRUPTCY PROCEDURE

1 Rnle 3002.1. Notice Relating to Claims Secured by .2 Security Interest in the Debtor's3 Principal Residence

4 (a) IN GENERAL, This rule applies in a chapter 13

5 case to claims ,~1,2.that aY•e (}secured by a security interest

6 in the debtor's pi7ncipal residence, and (2) for which the

7 plan provides that either the trustee or the debtor will make

8 contractual installment pavmentsY~~~~~=R~e~

9 c ~ ~~~n.vc~ ,.~ +ti„ r„a„ ;r ,t,o ao~,+,,,.>~ „i~r, Unless the

10 court orders otherwise, the notice requirements of this rule

11 cease to apply when an order terminating or annulling the

12 automatic stay becomes effective with respect to the

13 residence that secures the claim.

1~4 ***~*

Committee Note

Subdivision (a~ is amended to clarify thea~blicability of the rule, Xts provisions a~lv whenever achapter 13 plan provides that contractual pa~vments on thedebtor's hone mortgage will be maintained, whether theXwill be paid b;~ the hustee or directlX by the debtor. Thereference toy 1322(bl(5) of the Code is deleted to make

13

PEDERAT, RULES OF BANI~UPTCY PROCED~ 11

clear that the rule allies even if there is no prepetitionaiyearage to be cured. So long as a creditor has a claim thatis secured by a security interest in the debtor's principalresidence and the plan provides that conhactual pawon the claim will be maintained, the rule a~blies.

Subdivision (a) is further amended to provide that,unless the court orders otherwise, the notice obli atg ionsimposed by this rule cease on the effective date of an orderiantm~relief from the automatic stay tivith regard to the

debtor's principal residence. Debtors and trustees t~icallXdo not make payments on mo~~tga~es after the stay relief iswanted, so there is generally no need for the holder of theclaim to continue ~roviding~ the notices required by thisrule. Sometimes, however, there may be reasons for thedebtor to continue receiving rnort~age infol~nation afterstay relief, For example, the debtor may intend to seek amortgage modification or to cure the default. When thecourt determines that the debtor has a need for theinformation required by this rule, the court is authorized toorder that the notice obligations remain in effect or bereinstated after the relief fiom the stay is •age rated,

14

PROI'OSED'AMENDMENTS TO'z'~E FEDERALRT7LES OF BANI~R.~'~TC'S'' ~'~2.00EDiTR~'~

1 Rule 7.008, Gez~exa~ Rules of pleadzng

2 Rule 8 ~,IZ..Civ.P, applies zn advexsary proceedx~bs.

3 The allegation off' juX~sdietxo:n required by Rule 8(a) shall

4 also co~.taiii a'reference to the nee, z-~umber, and c~~aptex

S of ,the case uz~dex tk~e Code to wl~iclx tl~.e advez~saiy

6 pz~ocaeding relates and fo the dzstrict and divis:~on were the

7 case iu~der tie Code is pe~dzng. ~Tn an adversary

8 proceeding before a banlaupicy ~gacoui~t, the complaint,

9 counterclaim, cross-claim, ox thixd-pa~~ty co~plaz~t shall

10 contaxr~ a statement ~-'~~~^~~~~r~-'

11 ~-z~;-i~-~e~-c-e~~ that the pleader does or does got consent to

l.2 envy ~ of final ordexs ox judgment by the bankruptcy ~ ,

13 ~t~c~gecourt.

~ New rr~aterial is undez'lined; mattes; to be oinitt~d is linedtlu~ough.

15

2 FEDERAL RULES Off' BANI{RUI'TCY PROC~DURG

Committee Note

Tl~e rule is a~nez~ded to ~•ez~ove the ~equizement thatthe ~~eader state wlletlier the proceeding is core oz non-core,and to. require zn all ~proceedin~s that the ~leadex~ statewhether the panty does or does not consent to the entz~v offinal orders or iudaine~it by the banlau~tc~cou~~t. Soxnepzoeeedin s~ that satzsfv floe statutozy definition of coreproceedings, 28 U,S,C. § 157(b~(2), may x•eznai~l beyondthe coz~stztutional dower o£ a banlc~uptcy judge toadjudicate ~z~all~. The amended rule calls for the deaderto make a state~:zent xegatdin~ coxzsent, whethe7~ or not aproceedzn~ is te~zx~ed iioii-core. Role 7012(b) has beenamended to requixe• a samilax statent~e~t X~ a responsivepleading. The ba~luuptcv judge will then detexmine thea~~xopz~iate eouxse o~ p~oeeedixl~s undex Rine 7016.,

16

FEDERAL ~i.UI.,ES Ok' BAI~II{RUPTC'~' PROCEDURE 3

1 Rule'7012. Defenses and Objectxous—When and How2 P~~esented—By ~leadix~g or Motio~a-3 1V.Cotion for .~uc~gment ors tl~e Pleadings

q. ~~~:**

5 (b) APPLICABI~,ZT~'' 0~' RULE 12(b)~(i)

6 F,R.CIV.P. Rula 12(b)-(z) ~;R,Ci~.~'. a~~lies in adversary

7 pxoceedings.:A, responsive pleading ~'~^" ̂ ~'~a* ̂ ~ -'~~~, ̂ N

8 ^'~'~~~~~~:e~oc-s ''Yen ~~~~e~e-o~^~e~e~.~t~re

9 .. +~,~ ++~,~ „ ~~„ea,,, ~~.~~ ~+shall include a

10 state~ae:~t t~.at tl~e party does ox does not consent to entry of

I 1 final ordexs ox judgment by the banlcruptc~ ~gecourt.-~-~

12 ~.s~:-sere-~~e,.00,~;,,n~ ~:.,.,~ ,.,,,a~,.~ ,,,,a a,,,~n,,,o„+,. ~~,,,ri ,,,.+

13 ~V VAA1V~

~'T onn n oNf /~~~-~~ v~nti~/-~on

Committee Note

Subdivision (b) zs as~e~.ded to xeraove the xeauixe~.entthat the pleader sfiate wk~et,~.ex tk~e pxoceedin ire ox non-coxe and to require in all proceedi~~s tk~at ~tkze pleader state '~whether the party does ox does not consent to the e~try offinal orders or judgrr~ent b~ tk~e ba~nlcruptc~v cout-~. The

17

~ FEDERAL RULES O~ BANKRUP'TC'Y' PROCEDURE

amended rule also zemoves the ~~rovision requiringpressconsent be~'o~re the er~~ry of final ordexs and judgments innon-core proceedin~ome procaedin~s that satisfy thestatutory de~initzon. of core pzocaedi~.~s, 28 U,S.C.& ~57fb)(2), ~m.av x•e:maan be~vond tie constitutionaX pOWeToff' a banlcruptc~jud eg to adjudicate finally. The amendedxule calls for the pleader to x~rxake a statement regardingconsent, whether o~~ not a proeeedin~ xs termed non-core.This amendment complements the xeauirements o~amended Rule 700$(a~ The banlcruptc~iud.e'ssubsequent dete~in.at~o~ o~ the appropxxate course o~~xoceedzz~~s; inc~udi~.~ wk~ether to entex final ordexs aidjud~menfis ar to issue proposed fiz~din~s of fact aidconclusions of Iaw, is a pxettzal z~attar row pxovided ~o:r inamended Rule 7016,

18

~~DERAL RULES OF BANt{.~2UPTGY PROCEDU~ S

1 , R.u~e 7016. Pre-atrial Procedures; r, ...,.,,~.,,,~-;,..b r.,~,.,,n

2 (a) PRETRIAL CONFERENCES; SCH~DULIN~;

3 MAI~A.GBMBNT. Rule 16 ~'.R.Civ:~', applies i~ ad~e~~sary

4 px'oceedi~gs.

'S (b) DETERMINING ~'ROCED~UI~E, Tlie banla•uptcv

6 count shall decide, on its own motion or a party's tzinely

7 nnotion, whetl~ex:

8 (l.) to klea~ an,d detexmine tl~e pzoceeding;

9 ~ (2 .fio Bear the proceeding and issue ~pzo~osed

10 £indan~s o~ fact anal conclusions off' law; ox

X X , (3) to taxce some other action,~.

CoYnmittee Note

This rule is amended to cxeate a new subdzvisiozz (bthat provides fox the banlcruptc;y court to enter ~~.aZ ordersand iud~:nr~ezat, issue proposed ~r~diza~s a.~d eoz~.cluszons, ortake some atlzex action in a pxoceedin~~, Tk~e rule Leaves thedecision as to the a~pro~riate course off' pzoceedin s to thebankruptcy eout~. The couxt's deeisiorz wi1X be infarm.ed b~tha parties' statexxzents, requixed under Rules 7Q08(a)7012(bl, and 9027(a) Vie), xe ag~ xdin~ consent to the entryof final orders ~ and ;Xud~ment. Zf the bankrupted couxt

19

6 FEDERAL, RULES OF BANZCRUPTCY PROCEDURE

chooses to issi~e proposed ~ndu~~s of £act aild conclusxozasof law, Rule 9033 a~ Ip ie5.

20

I2 FEDERAL RULES OF BAI~TKRUPTCY PROCEDURE

1 Rule 9006. Computing and Extending Time; Time for2 Motion Papers

~ ~~*~*

~ (f~ ADDITIONAL TIME AFTER SERVICE

5 BY MAIL OR ITNDER RULE 5(b)(2)(D), OR (F)

6 F,R.CIV,P. When there is a right or requirement to act oY•

7 undertake some proceedings tivithin a prescribed period

8 after ee~eebein sg erved and that service is by mail or

9 under Rule 5(b)(2)(D),~leavin~ with the clerk , , , or (F)

10 (other means consented tol F,R,Civ,P., three days are added

11 after the prescribed period would otherwise expire under

12 Rule 9006(a).

13 *****

Committee Note

Subdivision (fl is amended to remove service byelechonic means under Civil Rule S~b~(2)(E) from themodes of service that allow thxee added days to act afterbein s~ erved'

Rule 9006(fl and Civil Rule 6(d) contain similarprovisions providing additional time for actions after being

21

FEDERAY, RUI,~S Off' BANKRUPTCY PROCBD~URE 13

served by mail oY• by certain modes of service that areidentified by reference to Civil Rule 5(bl(2),Rule 9006(f~—like Civil Rule 6(~—is amended to removethe reference to service by electronic means underRule 5(bll21(E). The amendment also adds clarifyingparentheticals identifying the forms of service underRule S~b)(21 for which tluee days tivill still be added,

Civil Rule 5(b —made a~licable in banla~uptcXproceedings by Rules 7005 and 901~}(bl—tivas amended in2001 to allow service by elech•onic means with the consentof the person served. Although electronic transmissionseemed virtually instantaneous even then, electronic servicevas included in the modes of service that allow three addeddays to act after being served. There were concerns that thetransmission mi~;ht be delayed for some time, andparticular concerns that incompatible systems might makeit difficult or impossible to open attachments. Thoseconcerns have been substantially alleviated by advances intechnology and widespread s1ci11 in using elechonictransmission,

A parallel ~aason for allowing the three added dayswas that electronic service was authorized only with theconsent of the person to be served. Concerns about thereliability of elect~•onic transmission might have led torefusals of consent; the tlu•ee added days were calculated toalleviate these conce~~ns.

Diminution of the concerns that prompted thedecision to allow the three added days for• electronictransmission is not the only reason for discardinghisindulgence. Many rules have been changed to ease the taskof com~utin~ time by adopting 7-, 14-, 21-, and 28-day

22

14 ~'EDERAT. RYJI,ES OF BANI{RUPTCY PROCEDURE

periods that atlow "day-of-the-week" counting, Addingthree days at the end complicated the countingandincreased the occasions for further• complication byinvoking t~provisions that a~ply when the last day is aSaturda;~, Sunday or le~:al holiday

Electronic service after business hours, or dustbefore or during a Gveelcend or holiday. may result in apractical reduction in the time available to respond.Extensions of time may be warranted to prevent prejudice.

Eliminating Rule S(b) subparagraph (2)~El from themodes of service that arrow tluee added days means that thethree added days cannot be retained by consenting toservice by electronic means. Consent to electronic servicein re is~ tering for electronic case ding, for example, doesnot count as consent to service "bv any other means" ofdelivery under sub~ara,~raph (Fl.

Subdivision (fl is also amended to confoi7n to acoires~onding amendment of Civil Rule 6(dl. Theamendment clarifies that onl~the party that is served bXmail or under the specified provisions of Civil Rule 5—andnot the party mar{ink service—is permitted to add threeda s~v prescribed period for farting action after sezviceis made.

23

FEDERA.I, RU~,~S OF~BANTCRU~'`i'CY P1tOC~DURE 7

1 Rule 9027. Removal

2 (a) NOTXCE O~ ~MOVAL.

3 (1) Where .Filed; Forn2 and Content. A notice

4 of removal sk~a~I be filed wzth the cleric fox tk~e dis~tzct

5 and divisiaz~ within ~v~rhrc11 is located ilxe state oz•

6 federal cotiu~t where the civil actioza is pez~.ding. Tk~e

7 notice shall be signed' ~ursuaa~t to ~Zu~e 9011 and

8 contain a shoz-t and plain statex~ez~t of tha facts vvhieh

9 entitle the party ding t11e notice to remove, contain a

10 ~ statement that upon zemoval o:f tie claim ox cause off'

11. action~e~ec„^~';rb ; ^~~ ̂ - „ Gaxo -~a=a, i~ ~~~u

12 ce~e, -the paa~ty ~li;ng th.e notice does or does not

13 consent to e~.#~y o~ £i~.a~ orders ox judgment by the

14 banlcxuptcy~t~ecourt, and be accompanied by a copy

l.5 0~ all pxoaess and pleadings.

16 :~~*~x

24

8 k'EDERA.L RULES O~ BANKRI'JPTCY PROCEDURE

X7 (e) PROC~DY.T~ZE ASTER REMOVAL.

19 (3) Ax~.y party vvho has filed a ~~eading in

20 co~ection with tl~.e ~•emoved claim oz cause of action.,

2l otk~er. than the panty ~"iling the ilofice o£ z•e~oval, sha11

22 file a sfiatemezit ..,a,,.,;++.,,,. ,,,. ,~~,,..:,,n ., „yT,,,~,.f;,,N~.J Haag 4.x:~j w~.a..b.,..~.v.~,.i.

iv r ~.~.x

2~ ~ „~r .,,.+;,. +~,~ „~o„a; ,Goy,.

.,cu.e...~~.~...~ ,.x.,~: ,,..~..,. .... Y~

26 ~e~ , '+ ,., r' + + that the paa~ty does ox does not

27 cox~se~t to ex~~:y of ~na~ oxdexs or judgment by the

28 banluuptcy ~:i~ecouxt, .A, statement ~equi~red by thzs

29 ~' paragraph shall be signed puxsuant to Rule 90~ ~ ai d

30 sl~.all be £sled got Xatez• than. lA~ dags afCer the filing o~

31 tie notice of xer~.ova~, Any pa~tq who files a

32 statement pursuant to this paragraph s~a1~ m.azl a copy

25

FEDERAL. RULES O~ BANI~RYJPTCY PROCEDU~

33 to every other party t~ t11e removed claim or cause of

34 ~ action.

35 ~ ~~k~~~;~:

Cort~mittee Note

Subdi~xsio~s (a~(1) and (eZ(3) a;ee amended to deletethe zec~uxze~e~t for a statement that the ~roceedin is coreox ion.-coxe ax~.d to require in all removed, actions astatement that fihe ~a~~t~ does or does not consent ~ to theex~try of final orders oz' L merit by fil~ze ba~ctuptc cSomme pzoceedi~as that satisfy the statutory de~nztzox~ ofcoz'e pzocaedzn~s, 28 ~ U.S.C. § 157(b~~2), zx~:av remainbevox~.d the constitutional power of a banlcruptc~~ud~ toadiudzcafe fii~ally. The anaendec~ mule calls for a statementxe~ardin~ consent at the time of removal, whether or not apxoceedizig is teamed non-core.

xk~e ~v filing tk~e notice of removal zx~.ust include astatexz~e~t xe~in~ consent in the notice, and tl~e otk~erparties who ~.ave filed pleadings rrzust respond yin a separatestatement filed witllirz 14 days aftaX rezx~oval, I~ a ~ai~t~tothe xe~noved claim ox cause of action has x~ot £sled a~~pleading priox to removal, howevez, tl~exe xs no need to £alea separate statement index .subdivision (e~(3), because astatemenfi re~ardin~ con.se~t must be ii~.cluded in arespor~si~ve pXe~din~ filed pursuaa~t to .Rule 7012(b).Rule 7016 governs the banSc~ruptcv caur~t's decision whetherto heal and determine fie ~xaceedin~, issue pxoposed~"indings df fact and co~ciusions o~ law, ox tale some otkzexaction xx~ the ~xoceedin~,

26

J 0 ,FL~D~RA.L RU~,ES 0~' l3ANX{RUP~'CY PROCEDURE

X ,Rule 9033. ,~~^~,=-~-~~roposed Findings of Facf and2 Cor~clttsions of Z.,aw=x~—T ~3 , ~~~~b

4 (a) SERVICE, ~r-~:e~x ee~e~~e~r~b.~-~~r•~

5 ,Xn a proceeding in r~hich

6 tkle banlcru~tcv. court has issued ~Z~l~~txl~~-j~„

7 :~-pz~oposed findings of fact axed conclusions of law,- the

8 cleriz shall sezve fortlzwzth codes on a1X parties by mail and

9 rote the date of mailing on. the docl~et.

Committee Note

Subdivisia~i (a) zs a~.ae~ded to delete lan~~e limitingt~~zs provision to non-core pzoceedi~ngs. Some proceedingsthat satisfy fhe statutory definition of core proceedings 28U.S.C. § 157 b)~2), znav xemair~ beyond tk~e constitutiana~po~ex of a banlcruptcv iud e tb adiudieate Cx~all~v. Zf thebanlcauptc~ourt decides, puxsuant to Rule 7016, that it isappxopxiate to issue pzoposed findings of fact andeox~clusions of law xn a pxoceedzx~g, this rule ~ovezns thesubsequent~proceduxas. '

27