Hon. Click here · U.S. Bankruptcy Court for the Central District of Illinois
=== Chapter 7 Case Trustees Notice of Compromise ===
UNITED STATES BANKRUPTCY COURT OFFICE OF THE CLERK CENTRAL DISTRICT OF ILLINOIS SPRINGFIELD, ILLINOIS 62701 KHADIJIA V. THOMAS 226 U.S. COURTHOUSE CLERK 600 EAST MONROE STREET 217.492.4559 May 16, 2012 Dear Chapter 7 Case Trustees: Re: Motions and Notices of Compromise - Change in Procedures Effective June 4, 2012, for Springfield Division Only As of June 4, 2012, Chapter 7 Trustees in the Springfield Division will be responsible for serving their own Notices of Compromise. Trustees should continue to use the same style of form for the Notice of Compromise as is currently in use, but will be responsible for completing the objection date information on the form and for mailing the Notice. A Motion to Compromise must be filed with the Notice. The Motion must be served on the debtor’s attorney or on the debtor if not represented. The objection date inserted on the Notice of Compromise must be not less than 21 days from the date the Notice of Compromise is mailed. See Fed. R. Bankr. P. 2002(a) (3). If a Trustee wants to request a shortened notice period, a motion seeking such relief must be filed, and the Notice of Compromise with the shortened date for objections may only be mailed after an order has been entered shortening the period. Motions to shorten the notice period have generally not been favored by the Court. The Notice of Compromise generally must be served on all parties on the case mailing matrix. However, when the claims bar date has run, unsecured creditors who have not filed claims need not be served. A certificate of service evidencing proper service must be filed with the completed Notice of Compromise. The certificate of service must specifically identify the persons or entities served electronically and must specifically identify by name and address the persons or entities served by mail. To determine which parties in a case are receiving electronic service: Utilities >Miscellaneous >Mailings >Mailing Information For a Case > provide the case number > Submit. The Header will display Mailing Information for Case with an associated message listing the parties who are currently on the list to receive email notice/service in this particular case. The Motion to Compromise and Notice are two separate ECF events. The completed Notice of Compromise with the certificate of service should be uploaded after the Motion to Compromise is filed as follows: Bankruptcy >Trustee/US Trustee >Notice of Compromise (Springfield Ch7 Trustees only) > Browse to upload the Notice of Compromise in pdf format > Select the corresponding Motion to Compromise to link to the Notice > Select Next, verify the Objections Date calculated in ECF > continue to select Next to complete e-filing the Notice. It is very important to ensure the objection date that is automatically calculated in ECF is the actual date provided in the Notice of Compromise. The objection date in ECF will automatically calculate to a date that is not less than 21 days from the date the Notice is to be mailed. The Notice should be uploaded and mailed simultaneously. The user will be prompted to verify and accept the date or change it. The Clerk’s office staff will not review the certificates of service to determine whether Trustees have correctly identified the parties being served electronically or have otherwise complied with the requirements of the Rules for proper service. Accordingly, Trustees are urged to review Rules 2002, 7004, and 9014 to make sure that they and their staff are fully acquainted with the requirements for proper service. Costs for copying and mailing the Notice of Compromise may be claimed as a reimbursable expense on Chapter 7 Trustee fee applications. The application should specifically itemize the costs claimed and identify the specific Notice of Compromise for which the reimbursement is sought. Per Judge Gorman, the following are requirements for Motions and Notices of Compromise filed in the Springfield Division: 1. Motions to Compromise are provided for by Rule 9019. See Fed. R. Bankr. P. 9019. Rule 9019(b) provides that after notice and a hearing, the court may approve a compromise or settlement. 2. The description of the settlement/compromise in the Notice of Compromise must be clear and precise. The Notice should be sufficient to advise all pertinent details of the compromise because most parties receiving the Notice will not have received the Motion. Because Trustees will be completing and mailing their Notices of Compromise before filing them, Clerk’s office staff will no longer review the Notices to determine the adequacy of descriptions. 3. The relief in an order granting a Motion to Compromise is generally limited to the pertinent details set forth in the Notice. The order should also be limited to approving the compromise and authorizing the Trustee to compromise. The order should not include language which purports to compel the other party to actually compromise. Please contact the Clerk’s Office if there are questions. Sincerely, ^{tw|}|t iA g{ÉÅtá U.S. Bankruptcy Clerk cc: Judges, United States Bankruptcy Court, Central District of Illinois Nancy Gargula, U.S. Trustee, Office of the U.S. Trustees Timothy Ruppel, Assistant U.S. Trustee, Office of the U.S. Trustees Case Trustees
=== Chapter 7 Case Trustees Interim and Supplemental Distribution ===
UNITED STATES BANKRUPTCY COURT OFFICE OF THE CLERK CENTRAL DISTRICT OF ILLINOIS SPRINGFIELD, ILLINOIS 62701 KHADIJIA V. THOMAS 226 U.S. COURTHOUSE CLERK 600 EAST MONROE STREET 217.492.4559 Dear Chapter 7 Case Trustees: July 16, 2012 Re: Motions and Notices of Interim Distribution and Supplemental Distribution - Change in Procedures Effective July 17, 2012 This letter provides notice of a change in the Clerk’s Office procedures as it relates to the entry of Motions, Notices and Orders of Interim Distribution and Supplemental Distribution. At the request of the US Trustee’s Office, the Clerk’s Office has added a new Motion and Order to CM/ECF. In the past, Chapter 7 Trustees have filed Motions for Interim Distribution or Supplemental Distribution using a variety of docket events in each office. These new events have been created to allow Chapter 7 Trustees to e-file using the same event in CM/ECF throughout the district. In the Peoria and Danville Divisions, Chapter 7 Trustees will file the Motion for Interim or Supplemental Distribution. The Motion filing event can be found under Bankruptcy Events> Trustee/US Trustee> Interim/Supplemental Distribution. Once the Motion is filed, the Clerk’s Office will send an Objection Notice to all parties in the bankruptcy case. For submission of the Order, the Trustee should reference the respective Motion filed when uploading the order under Bankruptcy Events>Order Upload. In the Springfield Division, Chapter 7 Trustees will file the Motion for Interim or Supplemental Distribution. The Motion filing event can be found under Bankruptcy Events> Trustee/US Trustee> Interim/Supplemental Distribution. Chapter 7 Trustees in the Springfield Division are also responsible for filing the Objection Notice with a 21-day objection deadline, using the local form which is located on the Court’s internet site. The Objection Notice filing event can be found under Bankruptcy >Trustee/US Trustee >Notice of Trustee’s Motion for Interim/Supplemental Distribution (Springfield Ch7 Trustees only). Trustees are required to file a certificate of service showing the Motion and Objection Notice was served on all parties in the bankruptcy case. Alternatively, if there is an exhibit that details the proposed distribution, the exhibit may be attached to the Objection Notice. This would require service of the Objection Notice and exhibit only. This is only acceptable if the exhibit contains specific details of the proposed Interim or Supplemental Distribution. For submission of the Order, the Trustee should reference the respective Motion filed when uploading the order under Bankruptcy Events>Order Upload. Costs for copying and mailing the Motion and Objection Notice may be claimed as a reimbursable expense on Chapter 7 Trustee fee applications. The application should specifically itemize the costs claimed and identify the specific Motion and Notice for Interim Distribution or Supplemental Distribution for which the reimbursement is sought Please contact the Clerk’s Office if there are questions. Sincerely, Khadijia V. Thomas U.S. Bankruptcy Clerk cc: Judges, United States Bankruptcy Court, Central District of Illinois Nancy Gargula, U.S. Trustee, Office of the U.S. Trustees Timothy Ruppel, Assistant U.S. Trustee, Office of the U.S. Trustees Case Trustees
=== Chapter 7 Case Trustees Notice of Intent to Sell ===
UNITED STATES BANKRUPTCY COURT OFFICE OF THE CLERK CENTRAL DISTRICT OF ILLINOIS SPRINGFIELD, ILLINOIS 62701 KHADIJIA V. THOMAS 226 U.S. COURTHOUSE CLERK 600 EAST MONROE STREET 217.492.4559 Dear Chapter 7 Case Trustees: April 23, 2012 Re: Notice of Intent to Sell - Change in Procedures Effective May 7, 2012, for Springfield Division Only As of May 7, 2012, Chapter 7 Trustees in the Springfield Division will be responsible for serving their own Notices of Intent to Sell. Trustees should continue to use the same style of form for the Notice of Intent as is currently in use, but will be responsible for completing the objection date information on the form and for mailing the Notice. The objection date inserted on the Notice of Intent to Sell must be not less than 21 days from the date the Notice of Intent is mailed. See Fed. R. Bankr. P. 2002(a)(2). If a Trustee wants to request a shortened notice period, a motion seeking such relief must be filed, and the Notice of Intent to Sell with the shortened date for objections may only be mailed after an order has been entered shortening the period. Motions to shorten the notice period have generally not been favored by the Court. The Notice of Intent to Sell generally must be served on all parties on the case mailing matrix. However, when the claims bar date has run, unsecured creditors who have not filed claims need not be served. A certificate of service evidencing proper service must be filed with the completed Notice of Intent to Sell. The certificate of service must specifically identify the persons or entities served electronically and must specifically identify by name and address the persons or entities served by mail. Please note that the Clerk’s Office previously had issues with some Trustees and other parties assuming that electronic service is being made by the Clerk on a variety of parties who are not, in fact, receiving electronic service. To determine which parties in a case are receiving electronic service: Utilities >Miscellaneous >Mailings >Mailing Information For a Case > provide the case number > Submit. The Header will display Mailing Information for Case with an associated message listing the parties who are currently on the list to receive email notice/service in this particular case. The completed Notice of Intent to Sell with the certificate of service should be uploaded as follows: Bankruptcy >Trustee/US Trustee >Notice of Intent to Sell (Springfield Ch7 Trustees only) > Browse to upload the Notice of Intent to Sell in pdf format > Select Next, verify the Objections Date calculated in ECF > continue to select Next to complete e-filing the Notice. It is very important to ensure the objection date that is automatically calculated in ECF is the actual date provided in the Notice of Intent to Sell. The objection date in ECF will automatically calculate to a date that is not less than 21 days from the date the Notice is to be mailed. The Notice should be uploaded and mailed simultaneously. The user will be prompted to verify and accept the date or change it. The Clerk’s office staff will not review the certificates of service to determine whether Trustees have correctly identified the parties being served electronically or have otherwise complied with the requirements of the Rules for proper service. Accordingly, Trustees are urged to review Rules 2002, 6004, 7004, and 9014 to make sure that they and their staff are fully acquainted with the requirements for proper service. Costs for copying and mailing the Notice of Intent to Sell may be claimed as a reimbursable expense on Chapter 7 Trustee fee applications. The application should specifically itemize the costs claimed and identify the specific Notice of Intent to Sell for which the reimbursement is sought. Per Judge Gorman, the following are requirements for Notices of Intent to Sell filed in the Springfield Division: 1. Notices of Intent to Sell are provided for by Rule 6004. See Fed. R. Bankr. P. 6004. Rule 6004(b) provides that the objection date in the Notice of Intent to Sell should be not less than seven days before the sale. In the past, Trustees have not always allowed enough time between the date they uploaded the Notice of Intent to Sell and their sale date to facilitate compliance with this Rule. The earlier that a Notice of Intent to Sell is filed, the more likely it is that any objections to it can be resolved without having to cancel or postpone the sale. 2. The description of the property on the Notice of Intent to Sell should be clear and precise. In the past, some Notices have been rejected because the description of what was to be sold was vague or unclear. Real estate should be described by reference to the type of structure to be sold, e.g., single-family residence, 12-unit apartment building, warehouse, or the like, and by common address. Legal descriptions are not required but may be helpful when unimproved land such as farm acreage is being sold. Sales of assets such as equipment should include a listing of the specific items to be sold. Because Trustees will be completing and mailing their Notices of Intent to Sell before filing them, Clerk’s office staff will no longer review the Notices to determine the adequacy of property descriptions. 3. When property is to be sold at public sale, the Notice of Intent to Sell must, at a minimum, contain the date, time, and place of the sale. For a private sale, the Notice of Intent to Sell must contain the terms and conditions of the sale including, at a minimum, the name of the buyer and the price to be paid. Generally, it is helpful if more information about the proposed sale is included and, frequently, when objections are filed, it is because creditors have questions about the sale rather than any actual objection to the sale taking place. Because scheduling objections for hearing can cause delay in closing a transaction or cause postponement of a scheduled public sale, including more information about the sale in the Notice may be beneficial. 4. Requests to sell an asset free and clear of liens must be made by separate motion. See 11 U.S.C. § 363(f). The motion must state the name of the creditor holding the lien, describe the type of lien involved, state the claimed amount of the lien, and identify the specific sub- paragraph of § 363(f) which allows the free and clear sale. The requested relief of a sale free and clear as set forth in a separately-filed motion may be included in the Notice of Intent to Sell provided that all of the required information from the motion is included on the Notice. See Fed. R. Bankr. P. 6004(c). Please contact the Clerk’s Office if there are questions. Sincerely, ^{tw|}|t iA g{ÉÅtá U.S. Bankruptcy Clerk cc: Judges, United States Bankruptcy Court, Central District of Illinois Nancy Gargula, U.S. Trustee, Office of the U.S. Trustees Timothy Ruppel, Assistant U.S. Trustee, Office of the U.S. Trustees Case Trustees
=== Chapter 7 Case Trustees Self Noticing Events ===
UNITED STATES BANKRUPTCY COURT OFFICE OF THE CLERK CENTRAL DISTRICT OF ILLINOIS SPRINGFIELD, ILLINOIS 62701 KHADIJIA V. THOMAS 226 U.S. COURTHOUSE CLERK 600 EAST MONROE STREET 217.492.4559 Dear Chapter 7 Case Trustees: January 9, 2013 Re: Self-Noticing by Chapter 7 Trustees – Change in Procedures Effective February 4, 2013, for Springfield division I am writing to provide information and instructions regarding additional pleadings and documents which Chapter 7 Trustees in the Springfield Division will be required to self-notice as of Monday, February 4, 2013. Trustees will now be required to self-notice Applications to Employ, Applications for Compensation, Reports of Sale, Notices of Intent to Abandon, Motions to Pay and Final Reports for all cases in the Springfield Division. As you know, Springfield Trustees have previously been instructed to self-notice Notices of Intent to Sell, Motions and Notices of Compromise and Motions for Interim Distributions. These changes in noticing practices are coming at the urging of the Administrative Office of the U.S. Courts in an effort to reduce costs associated with the Bankruptcy Noticing Center (“BNC”). The BNC was established in 1994 to provide assistance to Bankruptcy Clerks in meeting their obligations set forth in the Code and Rules to provide certain notices. Over time, many courts have recognized the efficiencies of the BNC and have undertaken to notice matters beyond what they are obligated to do pursuant to specific provisions of the Code and Rules. However, due to current fiscal issues and reduced funding for all court operations, Clerks are now being asked to review their noticing practices and to return to the parties noticing responsibilities for matters not specifically assigned by the Code or Rules to the Clerk. Copy and postage costs associated with the new noticing procedures may be claimed for expense reimbursement on final reports. We have noted that some Trustees appear to be sending complete copies of their certificates of service along with their notices. A certificate of service must be filed with the notice or other document served but it need not be served on all parties. This practice of sending the additional two or three pages of service information with every notice raises copy and postage costs unnecessarily and should be discontinued. Judge Gorman recognizes that there are also internal staff costs in your offices associated with the additional noticing. Those costs along with the reimbursable out-of-pocket expenses for the noticing should be considered in making decisions about whether to pursue assets. Some Trustees have already discovered that sending the notices associated with liquidating assets can cost hundreds of dollars. The reality is that even with the reduced costs of the bulk operation of the BNC, mailing costs in cases with a large number of creditors often run into thousands of dollars. Asset cases in the Springfield Division must now bear their own costs and when estate assets are insufficient to cover the costs of liquidation, an estate should not be opened. Likewise, individual assets should not be pursued where the costs involved exceed the benefit to the estate. 1 The following instructions should provide guidance on our new noticing procedures. Comments about legal issues related to pleadings, notices and other documents come from Judge Gorman. Applications to Employ All Applications to Employ should contain all if the information required by Fed. R. Bankr.P. 2014(a). A verified statement must also be filed with every Application and must contain all of the information required by Fed. R. Bankr. P. 2014(a). Many of you have updated your verified statement forms but we continue to see out-of-date forms particularly when the professionals being hired are appraisers or real estate brokers. Please make sure that you have a form that fully complies with the Rule and that form is used for all Applications. Care should also be taken in completing the verified statements of the professionals. Every connection to a party in interest is not disqualifying but every connection must be disclosed. In many cases, the professional to be employed has prior connections with the debtor - having represented the debtor in the personal injury lawsuit before the bankruptcy was filed or having already listed the debtor’s house for sale. Likewise, many times an accountant or auctioneer has multiple engagements for the same trustee and, therefore, has a connection to the trustee who is a party in interest. All of these connections must be disclosed. If questions arise later about the services rendered or the compensation requested, any discrepancies in the verified statement of the professional could be considered in resolving such issues. You should also be aware of Fed. R. Bankr. P. 2014(b) which provides that if an attorney or accountant is employed, other attorneys or accountants in the firm may also bill time in the case. Accordingly, you do not need to formally employ everyone in a firm who will work on a case. But, if you choose to employ multiple persons from a firm - and many of you choose to do so - then you must complete a verified statement for every professional specifically employed. Both the Application and Objection Date Notice should contain a certificate of service evidencing service on the UST and the debtor’s attorney, if represented, or on the debtor, if pro se. File the Application to Employ with certificate of service as follows: Bankruptcy>Motions/Applications>Select the Employ event> continue to complete e-filing the Application to Employ. Prepare an Objection Date Notice with a certificate of service giving not less than 14 days notice to object to the Application to Employ as follows: Bankruptcy>Trustee/US Trustee>Notice of Objection Ddl re: Motion to Employ (Spfld Ch 7 Trustees)>Browse to upload the appropriate Notice in pdf format>Select the appropriate event to which the Objection Date Notice relates>Select Next, verify the Objections Date calculated in ECF> continue to select Next to complete e-filing the Notice. 2 Applications for Compensation Applications for compensation should comply with requirements of Fed. R. Bankr. P. 2016. See also 11 U.S.C. 330. Cost reimbursement claims must be specifically itemized. Judge Gorman has issued a number of Opinions on the requirements to obtain awards of fees and costs and those should also be consulted. Applications for compensation should be filed before the filing of a final report which incorporates payment of the professional fees. As trustees will now be noticing their own final reports, it may be wise to wait until fees are specifically approved before noticing a final report. Trustees have been previously instructed that when a professional such as an auctioneer or broker is hired on a commission basis for a sale of estate assets, no Application is required. That remains the same. Those fees can be approved when included in a report of sale which will be discussed in more detail below. Likewise, most costs associated with sales can be approved in a report of sale. The complete Application for Compensation must be served on the UST and on the debtor’s attorney, if represented, or on the debtor, if pro se. A certificate of service evidencing such service must be filed with the Application. If the total compensation - fees and costs - requested for the professional is $1000 or less, the Objection Date Notice may be served only on the UST and the debtor’s attorney, if represented or the debtor. if pro se. If the total compensation exceeds $1000, the Objection Date Notice must be served on the entire matrix with the exception that if a claims bar date has run, notice does not need to go to unsecured creditors who did not file claims. File the Application for Compensation with certificate of service as follows: Bankruptcy>Motions/Applications>Select the Compensation event> continue to complete e-filing the Application for Compensation. Prepare an Objection Date Notice with a certificate of service giving not less than 21 days notice to object to the Application for Compensation which complies with Fed. R. Bankr.P. 2002(c)(2) as follows: Bankruptcy>Trustee/US Trustee>Notice of Objection Ddl re: Report of Sale and Aplc to for Compensation (Spfld Ch 7 Trustees)>Browse to upload the appropriate Notice in pdf format>Select the appropriate event to which the Objection Date Notice relates>Select Next, verify the Objections Date calculated in ECF> continue to select Next to complete e-filing the Notice. Reports of Sale Reports of sale must be filed pursuant to Fed. R. Bankr. P. 6004(f)(1). Reports of Sale must be served on the UST and should also be served on debtor’s attorney, if represented, and on the debtor, if pro se. Because Clerk’s office staff traces for a Report of Sale whenever a Notice of Intent to Sell has been filed, a report of no sale should be filed if a sale is cancelled. Reports of 3 Sale do not have to be noticed and the Rules do not require court approval. The “confirmation” of a sale is not provided for by the Rules and is not required. As you have been previously notified, however, in order to make sales more efficient, when you have retained an auctioneer or broker who will be paid a percentage commission (or minimum flat fee) and expenses which are customary and have been outlined, at least generally, in the Notice of Intent to Sell, then you may pay all such fees and expenses at closing and obtain approval for the payments by the use of a Report of Sale. This avoids the necessity of doing a separate Application for Compensation for the fees and costs. When a Report of Sale is used to obtain approval of professional fees, the content of the notice, the amounts of notice time and the entities entitled to notice are the same as set forth above for Applications for Compensation. File the Report of Sale with certificate of service as follows: Bankruptcy>Trustee/US Trustee> Select the Report of Sale event> continue to complete e-filing the Report of Sale. Prepare an Objection Date Notice with a certificate of service giving not less than 21 days notice to object to the Report of Sale as follows: Bankruptcy>Trustee/US Trustee>Notice of Objection Ddl re: Report of Sale and Aplc for Compensation (Spfld Ch 7 Trustees)>Browse to upload the appropriate Notice in pdf format>Select the appropriate event to which the Objection Date Notice relates>Select Next, verify the Objections Date calculated in ECF> continue to select Next to complete e-filing the Notice. Notices of Intent to Abandon Springfield Chapter 7 Trustees currently prepare Notices of Intent to Abandon which include objection date language. Trustees upload the Notices and the Clerk’s office staff inserts the objection date and mails the Notice through the BNC. Chapter 7 Trustees should now insert an objection date not less than 14 days after the Notice will be mailed. Service of the Notice of Intent to Abandon should be made on the entire matrix with the exception that if a claims bar date has run, service does not need to be made on unsecured creditors who did not file claims. Complete the Notice of Intent to Abandon with the certificate of service giving not less than 14 days notice to object to the Notice as follows: Bankruptcy>Trustee/US Trustee>Notice of Intent to Abandon (Springfield Ch. 7 Trustees only)>Browse to upload the Notice of Intent in pdf format>Select Next, verify the Objections Date calculated in ECF>continue to select Next to complete e-filing the Notice. 4 Motions to Pay The Code does not specifically provide for Motions to Pay. In many cases, these Motions are used to obtain comfort orders or to supplement other motions or notices. Motion to Pay are frequently filed when a Trustee has not adequately set forth the terms of a proposed compromise or sale in the initial documents filed and then decides that additional authority is needed to complete the compromise or sale. Further, Motions to Pay are sometimes filed to seek authority to make a distribution such as paying debtors their exemption amounts from sale or settlement proceeds even though there is no question but that the exemption must be paid and notice that the exemption is to be paid could have - and should have - been included in the original Notice of Intent to Sell or Motion to Compromise. Generally, the matters set forth in most Motions to Pay would be more properly addressed by the filing of more detailed Notices of Intent to Sell or Motions to Compromise. In some cases where new details present themselves after initial approval to sell or settle has been obtained, the proper method to address such changes would be to file an Amended Notice of Intent to Sell or Amended Motion to Compromise rather than a Motion to Pay. To the extent that Motions to Pay continue to be filed, Trustees must notice them and must prepare and serve an objection notice. The amount of notice time and the parties to be served will vary depending on what is proposed to be paid. For example, a Motion to Pay which really is a supplement to a Motion to Compromise should be noticed and served in the same manner as the Motion to Compromise. File the Motion to Pay with certificate of service as follows: Bankruptcy>Trustee/US Trustee>Select the Pay event>continue to complete e-filing the Motion to Pay. Prepare an Objection Date Notice with a certificate of service providing the appropriate amount of time to object to the Motion to Pay as required by the Rules: Bankruptcy>Trustee/US Trustee>Notice of Objection Ddl re: Motion to Pay (Spfld Ch 7 Trustees)>Browse to upload the appropriate Notice in pdf format>Select the appropriate event to which the Objection Date Notice relates>Select Next, insert the appropriate Objections Date in ECF> continue to select Next to complete e-filing the Notice. Final Reports Currently, Chapter 7 Trustees File their Final Report and Application for Compensation and separately docket their Notice of Trustee’s Final Report and Application for Compensation. The Notice contains objection date language but Trustees have been instructed not to fill in the date on the Notice and the Clerk’s office staff has been creating a separate objection notice. Chapter 7 Trustees should now fill in the date on the Notice on the line for “Date Mailed.” The Notice itself says objections are due in 21 days. 5 The completed Notice should be served on the entire matrix. See Fed. R. Bankr. P. 2002(f)(8). A certificate of service must be filed with the Notice as follows: Bankruptcy>Trustee/US Trustee>Notice of Trustee's Final Report, Aplc for Compensation and Ddl to Obj (NFR)(Spfld Ch 7 Trustee)>Browse to upload the appropriate Notice in pdf format>Select Next, verify the Objections Date calculated in ECF>continue to select Next to complete e-filing the Notice. With respect to the new noticing procedures, Clerks’ office staff will do only limited review of documents as they are filed. Staff will not review for compliance with the legal requirements for the various documents. Generally, documents will not be sent to chambers for review until objections dates have passed and orders have been submitted. We remain open to your questions and suggestions as they relate to these new noticing practices. If there are additional ECF events which you believe should be added to facilitate your filings or if you have suggestions for combining ECF events, please contact me at 217-492-4559 or via email at [email protected]. Sincerely, Khadijia V. Thomas Khadijia V. Thomas U.S. Bankruptcy Clerk cc: Judges, United States Bankruptcy Court, Central District of Illinois Nancy Gargula, U.S. Trustee, Office of the U.S. Trustees Timothy Ruppel, Assistant U.S. Trustee, Office of the U.S. Trustees 6
=== Chapter 7 Case Trustees Noticing Clarification ===
KHADIJIA V. THOMAS CLERK OF COURT UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF ILLINOIS 226 U.S. COURTHOUSE 600 E. MONROE STREET SPRINGFIELD, ILLINOIS 62701 April 23, 2013 TEL 217-492-4551 FAX 217-492-4556 www.ilcb.uscourts.gov Dear Chapter 7 Case Trustees: This letter provides general information to address several noticing issues and questions the Springfield Clerk’s office has received. As you know, staff cannot provide legal advice. I will, however, attempt to provide some general guidelines pertaining to noticing in response to recent questions received. You are also encouraged to review Fed. R. Bankr. P. 2002. One issue which has been raised involves the use of the Bankruptcy Noticing Center (“BNC”) by case trustees. The Clerk’s office uses the BNC for most of its noticing. The BNC also offers services to case trustees. For specific information about using the BNC for your noticing, please contact Joe Speetjens at (703) 563-8460 or [email protected]. When the Clerk’s office uses the BNC, we experience a two day delay between when we send a document to the BNC and when the document is actually mailed. Accordingly, you may have seen that when a 21 day objection period is required, the actual time period we insert in a document is 23 days. Thus, the only caution to you about using the BNC is that you must have a clear agreement with the BNC about when each of your notices will be mailed. If you insert a required 21 day deadline in a notice but the BNC does not mail the document for a day or two, your notice will not comply with the Rules. A second issue involves returned mail. Some trustees have received returned mail and have called the Clerk’s office asking what their obligations are with respect to that mail. The answer requires a legal analysis and, again, staff cannot provide legal advice. We can only provide general information about how we handle return mail. When we send notices through the BNC, the debtor’s attorney’s address is used as the return address. Accordingly, we do not receive return mail although we do receive an email from the BNC regarding the fact that mail has been returned to the debtor’s attorney. Generally, we consider that debtors have an obligation to provide complete and correct addresses for all creditors when a case is filed and that creditors who receive the initial notice of filing have a duty thereafter to update their address if they move. The BNC does not continue to send notices to “bad addresses” and you may have noticed a section at the bottom of some BNC certificates of service identifying creditors not served due to bad addresses. Based on recent questions, there may be a perception that when the Clerk’s office prepares and mails a notice whether through the BNC or directly, that the service is good and a safe harbor is created preventing that service from being challenged later by someone who did not get proper or timely notice. That perception is inaccurate. If someone does not receive a notice they are entitled to receive, they may bring that problem to the Court’s attention and seek relief regardless of who had the responsibility for sending the notice. To the extent that you receive returned mail, inquiries of the debtor or particular creditors will ensure proper noticing of future documents and reduce the risk of lack of notice to interested parties as the case progresses. Also, having proof in your own files from your receipt of returned mail that a creditor has moved and left no forwarding address may provide a higher comfort level. A final issue which has been raised involves recently posted changes in Judge Gorman’s procedures relating to adding creditors and new creditor addresses to a mailing matrix based on a certificate of service filed with a motion or other document. In the Springfield Division, the clerk’s office staff will no longer add creditors or change creditors addresses based on a review of the certificates of service. This new procedure applies to all Springfield practitioners and trustees managing cases in the Springfield Division. It is my intent to ensure case trustees are kept informed regarding procedural changes and how best to address the respective changes. Please let me know if you have any further noticing questions as it applies to the recent changes in the Springfield Division. Sincerely, Khadijia V. Thomas U.S. Bankruptcy Clerk cc: Judges, United States Bankruptcy Court, Central District of Illinois Nancy Gargula, U.S Trustee, Office of the U.S. Trustee Tim Ruppel, Assistant U.S. Trustee, Office of the U.S. Trustee Case Trustees The Noticing Center Send bankruptcy notices easily - create an account now.. It’s simple: Upload your bankruptcy notice PDF and an address list. We take care of the rest. Here is what our service includes: • Reliable noticing procedures that have served the courts for years. • Automatic removal of any duplicate documents if your mailing list contains multiple entries for a single recipient – this is a common occurrence. • A Certificate of Service customized to the local rules for your district. Import a CM/ECF address list with no additional formatting steps. • • Address standardization to determine ZIP+4 and Intelligent Mail Barcodes to speed the notices through the USPS. • Live support when you need it. The Noticing Center is a service provided by BAE Systems. We are a bankruptcy noticing provider approved by the Administrative Office of the U.S. Courts. How the Noticing Center works. If you’re an attorney, trustee, or other bankruptcy practitioner, you can use the Noticing Center to send bankruptcy notices by uploading a PDF copy of the document and an address list. Create a new account or login now. The process is simple: 1. First, create an account or login. 2. Upload the PDF document and address file. 3. Select the court where the case is filed and enter the case number. 4. Complete your upload through a credit card payment or use your prepaid balance. 5. After mailing is complete, view the Certificate of Notice in your Account History Mailed tab. 6. File the Certificate of Notice through CM/ECF. We can accommodate any size document. All documents will be printed double-sided in black and white on letter size paper, or 8.5 x 11 inches. One to five sheets will fit in a #10 windowed envelope and six to 60 will be in a 9x12". The envelopes are stamped “Official Business” so your notices are clearly recognized as legal material. Pricing is as follows: • Printed Sheet (single or double sided) - $0.14 per sheet • Postage USPS first class mail rates Contact Information: Website: www.noticingcenter.com Contact Person: Joe Speetjens 703-563-8460 [email protected]
=== Chapter 7 Case Trustees Self Noticing Events Additions ===
KHADIJIA V. THOMAS CLERK OF COURT UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF ILLINOIS 226 U.S. COURTHOUSE 600 E. MONROE STREET SPRINGFIELD, ILLINOIS 62701 April 28, 2014 TEL 217-492-4551 FAX 217-492-4556 www.ilcb.uscourts.gov Dear Chapter 7 Case Trustees: Re: Self-Noticing by Chapter 7 Trustees – Change in Procedures Effective May 5, 2014, for Springfield division I am writing to advise you of two changes in procedures in the Springfield division regarding Chapter 7 Trustee noticing. Beginning May 5, 2014, Chapter 7 Trustees will be responsible for noticing Motions to Extend Time to Object to Discharge and Motions to Extend Time to Object to Exemptions. Motions to Extend Time to Object to Discharge Motions to Extend Time to Object to Discharge should continue to be filed as they have been in the past. Motions may be filed by either the Chapter 7 Trustee or the U.S. Trustee seeking an extension of time for both the Trustee and U.S. Trustee. Motions seeking extensions for both must clearly state for whom relief is sought. Motions must also provide a reason why the extension is requested. All requested extensions must be to a fixed date. A standard objection date notice per Official Form 20A which includes a date for objections not less than 14 days after mailing (but does not include the language about attending a hearing) must be prepared. The objection date notice and the motion must be served on the debtor and the debtor’s attorney, if the debtor is represented. Prepare an Objection Date Notice with a certificate of service giving not less than 14 days notice to object to the Motion to Extend Time to Object to Discharge as follows: Bankruptcy>Trustee/US Trustee> Notice of Objection Ddl re: Motion to Extend Time (Spfld Ch 7 Trustee) > Browse to upload the Notice in pdf format > Select the appropriate event to which the Objection Date Notice relates > Select Next, verify the Objections Date in ECF > continue to select Next to complete e-filing the Notice. Both the motion and objection date notice should include a certificate of service. In the event no objections are filed to the motion, a text order will be entered allowing the extension as requested. This procedure may be used to seek not more than two extensions for a total of not more than 120 days. All motions after a second extension or which seek an extension which, if granted, would bring the total extension over 120 days will be set for in-court hearing. Motions to Extend Time to Object to Exemptions Motions to Extend Time to Object to Exemptions should continue to be filed as they have been in the past. Generally only Chapter 7 Trustees and not the UST file these motions. Accordingly, if the UST wants an extension of time to file an objection to exemptions, that request should be made in a separate motion and not combined with a trustee’s request. Motions must provide a reason why the extension is requested. All requested extensions must be to a fixed date. A standard objection date notice per Official Form 20A which includes a date for objections not less than 14 days after mailing (but does not include the language about attending a hearing) must be prepared. The objection date notice and the motion must be served on the debtor and the debtor’s attorney, if the debtor is represented. Prepare an Objection Date Notice with a certificate of service giving not less than 14 days notice to object to the Motion to Extend Time to Object to Exemptions as follows: Bankruptcy>Trustee/US Trustee> Notice of Objection Ddl re: Motion to Extend Time (Spfld Ch 7 Trustee) > Browse to upload the Notice in pdf format > Select the appropriate event to which the Objection Date Notice relates > Select Next, verify the Objections Date in ECF> continue to select Next to complete e-filing the Notice. Both the motion and objection date notice should include a certificate of service. In the event no objections are filed to the motion, a text order will be entered allowing the extension as requested. This procedure may be used to seek not more than two extensions for a total of not more than 60 days. All motions after a second extension or which seek an extension which, if granted, would bring the total extension over 60 days will be set for in-court hearing. Please contact the clerk’s office if there are questions. Sincerely, Khadijia V. Thomas U.S. Bankruptcy Clerk cc: Judges, United States Bankruptcy Court, Central District of Illinois Nancy Gargula, U.S. Trustee, Office of the U.S. Trustees Timothy Ruppel, Assistant U.S. Trustee, Office of the U.S. Trustees Case Trustees
=== Memo re: Chapter 7 Trustee Procedures ===
UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF ILLINOIS 235 U.S. COURTHOUSE 600 EAST MONROE STREET SPRINGFIELD, ILLINOIS 62701 TELEPHONE (217) 492-4848 CHAMBERS OF MARY P. GORMAN CHIEF JUDGE October 30, 2015 To: Chapter 7 Trustees Re: Procedures for Chapter 7 Cases - Springfield and Urbana Divisions Clarification appears to be necessary with respect to some of the procedures Chapter 7 Trustees have been asked to follow in administering Chapter 7 cases in the Springfield and Urbana Divisions. This memo is intended to supplement prior correspondence from the Clerk of Court on certain issues and will be posted on the Court’s website under the section for my procedures. Your continued assistance in the efficient administration of Chapter 7 cases is greatly appreciated. 1. Rule 2013 and Applications for Compensation The Clerk of Court is required to maintain a public record of all fees awarded to trustees and to any professionals employed by trustees. Fed. R. Bankr. P. 2013(a). The Clerk is able to meet her obligation only if orders are entered specifically awarding fees to trustees and professionals. The Clerk cannot—and should not—be required to try to pick up this information from references to fees included in sale orders, orders allowing compromises, or other such orders. The Code and Rules are clear that compensation of professionals is awarded upon a proper application and, except in very limited circumstances, a distinct application for compensation must be filed in order for compensation to be awarded and for a trustee to be authorized to pay compensation to himself, herself, or an employed professional. 11 U.S.C. §330(a)(1); Fed. R. Bankr. P. 2016(a). Notices of Intent to Sell may include, for informational purposes, the details of professional fees and costs expected to be paid from sale proceeds. That information is helpful to parties in interest as they evaluate whether to object to a sale. But including the information in the Notice of Intent or even in the order authorizing the sale to proceed does not mean that an application for compensation is no longer necessary. An application for compensation must be filed unless all of the information regarding requested fees and costs is contained in a report of sale and the report of sale is noticed with a specific request for approval of the compensation. Either way, approval of all compensation paid as part of a sale must be obtained after the sale. As an aside, you have all previously been notified that it is not necessary to notice reports of sale for approval or obtain orders confirming sales unless you are using the report of sale process to also Procedures for Chapter 7 Cases - Springfield and Urbana Divisions Page -2- October 30, 2015 obtain approval of compensation. Orders approving compensation contained in reports of sale should be limited to approving the compensation and should not contain language confirming or approving the sale. Orders purporting to confirm or approve a sale will no longer be accepted. Additionally, we have noticed that occasionally a trustee will seek approval of an auctioneer or broker fee under $1000 using the report of sale and then will file a separate application for costs also under $1000. The purpose of using two separate documents may be to avoid having to notice either document to the entire matrix. But when the total compensation including costs proposed to be paid to a professional exceeds $1000, the notice must go to all, and splitting the compensation into two components does not change what is required. Motions to compromise are brought under Rule 9019 and the relief available through such motions is limited to authorizing a trustee to settle or compromise controversies in which the estate has an interest. Orders entered on motions to compromise should not include language that does anything more than grant authority to a trustee to proceed to finalize the proposed settlement or compromise. Orders submitted on motions to compromise that purport to require a debtor or third party to settle or to take other actions are generally rejected. Disclosure of fees and costs that may be paid if a settlement or compromise is effectuated is important information, and trustees have been requested to provide such information in all such motions. In the past, we have had motions to compromise filed and approved only to find out that after the payment of fees, costs, medical liens, and the like, no funds were generated to pay unsecured creditors, and the estate was insolvent. Thus, at least an estimate of all such anticipated expenses should be included in all motions to compromise. But the inclusion of information about expected fees and costs in a motion to compromise is not a substitute for the filing of the required application for compensation. Recently, we have held up several final reports because they disclosed payments to professionals for which no order approving compensation had been entered even though orders allowing compromises where the fees were disclosed had been entered. To be clear, motions to compromise may be combined in a multi-part motion with an application for compensation. This may be done only when the exact amount of fees and costs is known at the time the compromise is presented. All applications for compensation including those combined with motions to compromise must contain a complete and detailed itemization of costs. And any order entered on the multi-part motion must specifically and separately authorize both the compromise and the compensation. If a multi-part motion is used, an objection to one part may hold up the entry of an order on the other part, and, accordingly, you may prefer to file a separate application at the same time as the motion to compromise to avoid having approval of the compromise delayed if there are questions about compensation. If a multi-part motion is used, it must be captioned, docketed, and noticed as to all parts of the motion. Failure to properly caption, docket, or notice all parts of the motion Procedures for Chapter 7 Cases - Springfield and Urbana Divisions Page -3- October 30, 2015 will result in the motion being effective only as to the part, if any, that was captioned, docketed, and noticed properly. This is the same procedure used to process all multi-part motions. Information about docketing multi-part motions is available on our website and should be consulted if you or your staff are unfamiliar with the process. All costs included in applications for compensation for trustees or other professionals must be itemized. Only costs that are directly related to the case and are not of the type generally included in overhead will be allowed. Costs for copying and mailing motions and notices served on the entire matrix are allowed. The cost of a sheet or two of paper and one stamp for sending a letter would not be allowed because it is overhead. All copying and postage expenses should be specifically identified as relating to particular motions or matters. Claims for such expenses without identifying what was copied and mailed will not be allowed. Mileage within the city where a trustee’s or professional’s office is located will not be allowed. Mileage to other cities for hearings, sales, and the like will generally be allowed, but when multiple hearings in different cases are attended at the same location on a particular day, an estate should only be charged for its fractional share of the mileage involved. That is true even if some of the cases/estates for which hearings were held do not have assets to cover a share of those costs. Mileage to attend regularly scheduled creditors’ meetings is overhead for trustees and does not become a cost chargeable to a particular estate after assets are discovered. Some serious self-policing is required in this area and all professionals employed should be advised of these guidelines. Because most trustees seek approval of their compensation with their final reports, including questionable or insufficiently detailed costs in those reports is not advised as a denial of some of the costs may result in the final report having to be amended and re-noticed. 2. Contingency Fees Over the last several years, trustees have frequently requested to employ themselves and their own firms on a contingency fee basis rather than on an hourly basis. Applications to employ for purposes of collecting accounts receivable, preferences, and fraudulent conveyances on a contingency fee basis have routinely been allowed. Employment for those types of legal matters on a contingency basis is consistent with the professional and ethical guidelines that allow contingency fee representation. More recently, however, trustees are seeking to be employed on a contingency basis to obtain turnover of estate assets from debtors and to prosecute lien avoidance actions. Neither of these types of legal matters lends itself to contingency fee representation. In some of these cases, applications to employ have been denied or granted only in part. In other cases, the applications to employ may have been granted but may need to be reconsidered as improvidently granted. 11 U.S.C. §328(a). With respect to actions against debtors for turnover of property of the estate, a contingent fee may be improper because a significant amount of the initial work required to determine what is property Procedures for Chapter 7 Cases - Springfield and Urbana Divisions Page -4- October 30, 2015 of the estate and what should be turned over is trustee work not subject to additional compensation. And if a debtor takes property of the estate and refuses to turn it over, an action objecting to discharge may be—and frequently is—filed along with the action for turnover. Legal work on the objection to discharge is compensable only on an hourly basis, so it becomes difficult to sort out what is covered by the contingency fee and what should be paid on an hourly basis. Paying for all legal work on an hourly rate in related actions assures that attorneys are adequately compensated but also prevents a double payment that might occur otherwise. Employment applications providing for a contingency fee to prosecute an action against the debtor will not be routinely allowed. To the extent that a particular circumstance suggests that a contingency fee would be appropriate for a turnover action, those circumstances should specifically be set forth in the application to employ and not lumped together with a general request to be employed on a contingency basis for third party actions. Also problematic are requests to be employed on a contingency basis to pursue lien avoidance actions. In many cases, lien avoidance actions are based on allegedly faulty documents or defective perfection of the claimed lien. In either case, if a trustee prevails, it is usually because the court has found that no valid, enforceable lien exists. If there is no lien, then it is difficult to calculate the value of that nonexistent lien to compute a contingency fee. Frequently, the court will not have made any finding as to the purported value of the lien as part of the avoidance action, and there would be no reason to spend the time and resources necessary to try to value the lien after avoidance solely to establish a trustee’s contingency fee. Perhaps most troubling is the more recent practice of some trustees asking to be employed on a contingency basis to file avoidance actions where the liens in question are not even remotely sustainable. In some cases, debtors may say in their paperwork or at a first meeting that they told someone that he or she could have a lien on an asset of the debtor, but there is little or no paperwork to support the lien, the lien is not recorded anywhere, and the alleged lien holder has not appeared or filed anything in the case to enforce the lien. Over the years, some trustees have just ignored the possibility that a lien might be claimed under such circumstances. Others have filed avoidance actions for a minimal fee because of the obvious inability of such putative lien holders to make a case. Recently, however, trustees have filed lien actions for these types of cases and asked to be employed on a contingency fee basis for doing so. But again, if there is no lien, there is no value against which the contingency fee can be computed. And under these circumstances where the lien claim does not have even colorable validity, attempting to charge a significant fee for avoidance is not reasonable and is, therefore, not ethical. As with requests for costs discussed above, some serious self-policing is needed here. Employment on a contingency basis is a valid way to hire counsel and to balance the risk of no recovery with the expenses of litigation. But when you are hiring yourself or your firm, you must be reasonable and consider what you would agree to pay if you were prohibited from hiring yourself and were hiring Procedures for Chapter 7 Cases - Springfield and Urbana Divisions Page -5- October 30, 2015 unrelated outside counsel instead. Most of you would not pay thousands of dollars to an outside attorney to avoid a lien on a vehicle when you can see that the vehicle’s title is clean from the Secretary of State’s office’s public records and the purported lien holder has made no claim. As with the matters discussed above involving turnover of assets by debtors, if you think the facts of a particular case support a contingency fee for a lien avoidance action, you may request to be hired on that basis. But the request should be explained in detail in the application and not lumped with a more general request to be hired on a contingency basis to pursue third party actions. 3. Sales and Compromises by Chapter 7 Debtors When a Chapter 7 case is filed, virtually all property of the debtor becomes property of the estate and, unless and until abandoned, is subject to administration by the Chapter 7 trustee. Debtors who ignore this fundamental premise find themselves in trouble and often are denied a discharge. Nevertheless, some trustees continue to ask that debtors be compelled to turn over proceeds after they settle their own personal injury case or sell their own house. Likewise, trustees often ask that debtors be directed to cash in insurance policies or continue to collect annuity or structured settlement payments for the benefit of the estate. Such requests that imply that a debtor retains control of assets of the estate are not proper and are frequently denied. Trustees must take control of estate assets. Suggesting that a debtor can or should administer estate assets creates confusion and may put estate assets at risk. If there is a reason that a trustee does not want to take possession and control of an asset such as environmental contamination of real estate, the asset should be abandoned. Otherwise, trustees should take possession and control of estate assets to the extent allowed and should accept responsibility for the administration of such assets for the benefit of the estate and its creditors. 4. Stern v. Marshall In Stern v. Marshall, 131 S. Ct. 2594 (2011), the Supreme Court held that bankruptcy courts lack constitutional authority to enter final judgments and orders in certain cases. Stern does not raise questions of subject matter jurisdiction. In any particular case or proceeding, a bankruptcy court either has subject matter jurisdiction or it does not and if it does not, it cannot proceed. 28 U.S.C. §1334(b); 28 U.S.C. §157(b)(1). But even when a bankruptcy court has subject matter jurisdiction, it may not have constitutional authority to enter a final order. In Wellness International Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015), however, the Supreme Court held that parties may consent to final adjudication of a matter by a bankruptcy court otherwise lacking the constitutional authority provided by Article III and that such consent must be knowing and voluntary but may be implied. Procedures for Chapter 7 Cases - Springfield and Urbana Divisions Page -6- October 30, 2015 All trustees should acquaint themselves with the Stern and Wellness decisions as the implications of these cases on actions to collect estate assets are significant. Stern issues are generally implicated when actions are filed against non-debtor parties for causes of action that arise under non-bankruptcy law and would exist regardless of the bankruptcy filing. Actions to collect accounts receivable or to recover fraudulent conveyances are examples of actions frequently filed by trustees where Stern issues must be considered. Attached are excerpts from the a recent meeting of the Advisory Committee on Bankruptcy Rules regarding certain proposed amendments to the Rules to address issues raised by Stern and Wellness. Although the information is about proposed but not yet adopted Rule amendments, it may provide some guidance on what should be included in complaints, motions for default judgments, and other documents to address these important issues.
=== Chapter 7 Trustee Sale Procedures (May 2021 Update) ===
UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF ILLINOIS 235 U.S. COURTHOUSE 600 EAST MONROE STREET SPRINGFIELD, ILLINOIS 62701 TELEPHONE (217) 492-4848 CHAMBERS OF MARY P. GORMAN JUDGE May 3, 2021 To: Chapter 7 Trustees From: Mary P. Gorman, Bankruptcy Judge Re: Chapter 7 Sale Procedures – Springfield and Urbana Please see below for changes to and clarifications of required sale procedures in Chapter 7 cases. Sales by Chapter 7 Trustees Effective immediately, the practice of allowing Chapter 7 trustees to file a notice of intent to sell without a corresponding motion to sell is discontinued. Although Rule 6004(a) allows for such a procedure, the procedure is only compatible with simple private sales and public auctions. The insistence of several trustees in using the “notice only” process for complex transactions or to seek relief not directly part of the sale has caused confusion and resulted in extra work for our Clerk’s office staff. The “notice only” process works well when all information about a sale can be included in a simple notice and when no relief other than authorization to sell is requested. Nevertheless, several trustees have created and sent notices that purport to set special sale procedures and qualifications for bidding without filing an underlying motion asking for the setting of sale procedures. Other trustees have added to the notice of intent other requests for relief such as the payment of administrative expense claims. There is no authority for the setting of sale procedures or allowance of the payment of administrative expense claims without the filing of an underlying motion or application. Despite repeated discussions with the several trustees who persist in the misuse of the “notice only” process, that misuse has continued. This puts the Clerk’s office staff in the position of having to review notices for legal sufficiency and, in some cases, sending deficiency notices explaining the requirements of the Code and Rules to the trustee. In other words, the staff is assisting the trustees in their practice of law—something they are not authorized to do. Trustees must now file motions to sell assets. Trustees must also prepare and file a notice of intent to sell. Trustees will be responsible for serving both the motion and the notice on the entire matrix and all parties in interest. If a claims bar date has run, service need not be made on creditors who have not filed a claim unless a particular creditor who did not file a claim has an interest in the asset being sold. In preparing your notices, please remember that you must give not less than 21 days’ notice of a sale. Fed. R. Bankr. P. 2002(a)(2). And, you must give potential objectors not less than 7 days before the sale to object. Fed. R. Bankr. P. 6004(b). Thus, the actual sale date— whether private sale or auction—should always be at least 28 days after the date the notice is mailed. Further, an order authorizing a sale is automatically stayed for 14 days after entry unless ordered otherwise. Fed. R. Bankr.P. 6004(h). I will order otherwise and waive the 14- day stay period in the absence of objection, but only when I am specifically requested to do so. The reduction of any of these time periods may only be obtained by motion made in advance of the noticing. The Clerk’s office staff will continue to review motions and notices related to sales for standard issues such as proper captioning and docketing. I have directed staff, however, to stop reviewing for legal sufficiency and compliance with the Code and Rules. It is your job to file documents that comply with the Code and Rules and my job to review your compliance. My review comes, however, after the objection period has run. Thus, any failure to comply with the Code and Rules will be raised at a time that may preclude going forward with a sale as originally intended and scheduled. This practice complies with normal Court operations; most other parties do not get their documents reviewed for legal sufficiency upon filing. You are urged to review all provisions related to sales in the Code and Rules and update your forms and office procedures accordingly. Online Auction Sales For the last several years, many auction sales have been conducted online and, during the past year, almost all auctions have been online. Online auctions can easily comply with the requirements of the Code and Rules related to sales. We have had, however, numerous issues with the proper noticing of online auctions. Most of the issues have arisen due to the failure of several trustees to properly modify their notice of intent to sell form to address issues related to online auctions. The most common error relates to the place of the auction. Despite the fact that an auction is being held exclusively online, some trustees have persisted in listing the street address of the auctioneer as the place of the auction. Only in the small print, elsewhere on the form, will there be a reference to the auction being online and a notation of the website address. In some cases, the mistake has been compounded by a reference that the auction is online but without providing any website address. Please be clear: if an auction is online, the place of the auction is the auctioneer’s website. If the auction is online but there is also an opportunity to physically inspect the items at the auctioneer’s place of business, that information should be provided separately and clearly to avoid confusion. 2 Another frequent error relates to the time of auction sales. Most auction sales are conducted over several days or several weeks. When that is the case, the time and date of both the start of the auction and the end of the auction must be provided. In particular, we have had several auctions for which only the end date and time has been provided. In those cases, generally, the trustee has scheduled the sale without leaving enough time to obtain authority to sell before the bidding begins and the objection date on the notice falls after the sale has started. The trustee, perhaps to camouflage that issue, posts only the end date of the auction on the notice, making it appear that proper notice has been given. It does not violate the Code or Rules to start taking bids before obtaining a final order authorizing a sale. It is, however, a risky practice. If there is an objection, the sale may have to be cancelled or at least adjourned, and, depending on the objection, the terms of the sale may also change. Bidders may lose interest if a sale is started and then stopped or if the sale terms change. Trustees who file motions and notices of intent that do not allow enough time for objections to be filed and resolved, do so at their own risk. Regardless, the entire period of the sale must be in the motion and on the notice of intent to sell. Notices that do not disclose the full time period of an auction sale are inadequate, and orders will not be entered authorizing a sale based on such notices. The final issue of concern is the description of the property being sold at the auction. Many notices contain such limited and cryptic descriptions that it is impossible to get an idea of what is being sold. A general description of the property to be sold is all that is technically required. Fed. R. Bankr. P. 2002(c)(1). But just describing property as “equipment” without saying whether it is farm equipment, manufacturing equipment, sports equipment, or something else is not helpful. If you are going to spend the time and money to send out a notice of a sale, why not put in enough of a description of the property to at least try to drum up some interest by potential bidders? Again, the Clerk’s office staff will not be reviewing motion and notices for these substantive issues related to online auctions. You will be notified of problems only after an objection period has run in accordance with standard procedures. Please review your forms and update them so that clear notice of the date, time, and place of auction sales is provided. 3
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