Hon. General Procedures & Educational Materials · U.S. Bankruptcy Court for the District of New Mexico
=== Scheduling Conferences, Status Conferences, and Pretrial Conferences ===
SCHEDULING, STATUS, AND PRETRIAL CONFERENCES IN ADVERSARY PROCEEDINGS 1. Scheduling Conference. The scheduling conference in an adversary proceeding is typically conducted by the Courtroom Deputy, although the presiding judge may elect to conduct it. Counsel and pro se parties may appear by telephone. At the scheduling conference, pretrial deadlines will be set that will be reflected in an Order Resulting from Scheduling Conference, a form of which is posted on the web page. 2. Status Conference. The status conference is typically conducted by the Courtroom Deputy, although the presiding judge may elect to conduct it. Counsel and pro se parties may appear by telephone. A proposed, completed Pretrial Order, in the form posted on the web page, should be submitted to the Court before the scheduled status conference. At the status conference, both the pretrial conference and the trial on the merits typically are scheduled. 3. Pretrial Conference. The judge will preside over the pretrial conference. The Pretrial Order will be entered following the pretrial conference. Trial counsel and unrepresented parties are expected to appear at the pretrial conference in person, although out-of town counsel and unrepresented parties may be allowed to appear by telephone.
=== Telephonic Appearance at Hearings ===
TELEPHONIC APPEARANCE AT HEARINGS 1. When Appearance by Telephone is Permitted. A. Preliminary Hearings, Scheduling Conferences, etc. Generally, counsel or parties may appear telephonically at preliminary hearings where no evidence is presented,1 scheduling conferences, and presentment hearings if they seek timely permission as set forth below. B. Final Hearings. Generally, counsel will not be permitted to appear telephonically at final hearings where evidence or testimony will be presented. If no evidence or testimony will be presented at a final hearing, counsel or parties may appear telephonically at the final hearing with permission from the Court. If you wish to appear at a final hearing by telephone, you should begin by contacting opposing counsel to find out whether opposing counsel objects to you appearing by telephone or intends to offer evidence or testimony at the final hearing, and report the results of that check when you contact chambers to request permission to appear telephonically at the final hearing. The Court will then determine on a case by case basis whether to permit the requesting counsel or party to appear telephonically at the final hearing. Except in very rare or unusual circumstances, the Court will not take testimony by telephone and persons appearing by telephone will not be permitted to present evidence or cross examine witnesses. 2. How to Request Appearance by Telephone. A. When to Request Permission. Unless the Court orders otherwise, requests to appear by telephone should be made to the Court’s staff at least one business day before the hearing. B. How to Request Permission. There are two ways to request permission to appear telephonically at a hearing: i) ii) Call the appropriate chambers: Judge Jacobvitz - (505) 600-4650; or Judge Thuma - (505) 600-4640. Submit your request to the appropriate chambers by e-mail: [email protected] or [email protected]. The e-mail message must have a subject heading that includes the word “telephone” correctly spelled. The e-mail message also should include the name of the person who wishes to appear by telephone, who that person represents, the matter to be heard, the date and time of the hearing, the name of the debtor, the case number, and the telephone number to be called. This is a sample message: [email protected] 1 The Court may take evidence at a preliminary hearings (also known as an emergency hearings) on use of cash collateral, debtor in possession financing, or other emergency “first day” motions. Re: John Doe, case no 12-12345 j7; Request to Appear by Telephone Requesting party: Sally Smith Representing: The debtor John Doe Hearing on: XYZ Bank’s Motion for Relief from Stay Hearing date and time: April 1, 2012 at 1:30 P.M. Telephone number: 505-123-1234 3. Importance of Being Available at the Scheduled Time and Until You are Called. Preliminary hearings a re o f t e n scheduled on a trailing docket. If you have requested to appear by telephone, please ensure that you are available at the scheduled time and until you are called, and that your telephone line is free until you are called. If you are not available when called, for example if your telephone line is busy or if we are directed to voice mail, the Court may deny your motion or overrule your objection by default, and may revoke or place restrictions on your privilege of appearing telephonically in the future.
=== Offers of Proof in Support of Plan Confirmation (Sample) ===
SAMPLE1 (If Cram Down is Not Required) DEBTOR’S PROFFER OF EVIDENCE DEMONSTRATING COMPLIANCE WITH SECTION 1129 OF THE BANKRUPTCY CODE At a chapter 11 confirmation hearing, even if no party in interest opposes confirmation, the Debtor is required to make an offer of proof showing that all confirmation requirements have been satisfied. The offer of proof may be made by counsel or by affidavit if the witness(es) whose testimony is offered are in the courtroom. The offer of proof should set forth facts upon which the Court may conclude that the confirmation requirements are satisfied. If a class of creditors votes to reject the plan, then the offer of proof should also set forth facts upon which the Court may conclude that Bankruptcy Code §1129(b) is satisfied as to the dissenting class. The following is an example of an adequate offer of proof made by counsel at a hypothetical chapter 11 confirmation hearing. It is given for illustrative purposes only. In the hypothetical case, the debtor is a closely held corporation that operates a dairy. The Debtor proposes under the plan to continue its dairy operations. The plan provides that all secured and unsecured priority claims will be paid in full with interest, and that unsecured non-priority claims will be paid in part without interest. In the example, all impaired classes voted to accept the plan, so it was not necessary to give a proffer that Bankruptcy Code §1129(b) (cramdown) was satisfied as to any dissenting classes. Sample Proffer This offer of proof is made to demonstrate compliance with Bankruptcy Code §1129 in support of confirmation of Debtor’s Plan of Reorganization filed on [insert date]. A. Sources of Evidence of Compliance with 11 U.S.C. §1129. 1. Judicial Notice. The Debtor asks the Court to take judicial notice of all documents filed in Debtor’s bankruptcy case, including proofs of claim. 2. Proffered Testimony of the Debtor’s president, John Doe. John Doe is in the Courtroom today. If called to testify, Mr. Doe would testify under oath as set forth below, from his own personal knowledge and information provided to him by certain of the Debtor’s 1 One or more affidavits or declarations may be used as part of the offer of proof. employees and professionals, from his review of business records maintained by the Debtor in the ordinary course of its regularly conducted business activities, from his knowledge concerning the operations and financial affairs of the Debtor, and as an expert on the financial affairs, management and operation of the dairy business. Mr. Doe would testify that XYZ Corporation owns and operates a dairy outside of Cowtown, New Mexico. John Doe is the President of the Debtor, XYZ Corporation. Mr. Doe, along with his wife Jane Doe, owns 100% of the capital stock of XYZ Corporation. Mr. Doe has been in the dairy business for over thirty years, and has for the past 20 years had ultimate authority over the day-to-day operation, business and affairs of the Debtor. Mr. Doe is familiar with the Debtor’s operations, facilities, policies and financial affairs. He is the person the Debtor designated to be responsible, in consultation with legal counsel and other court approved professionals, for the supervision of the Debtor’s chapter 11 case, including compliance with the requirements of the Bankruptcy Code and with respect to the Debtor’s Disclosure Statement and Plan. In addition, as manager of the Debtor’s business operations, Mr. Doe’s duties include, but are not limited to, long range planning, financial oversight, supervising dairy personnel, and making decisions concerning dairy operations such as decisions on purchasing and selling cows, feed rations and purchases, hedging, herd health, environmental compliance, equipment purchases, and growing crops. Mr. Doe has reviewed and is familiar with the terms and provisions of the Debtor’s plan and disclosure statement. Based upon his supervision and administration of Debtor’s chapter 11 case, his review and knowledge of Debtor’s books and records maintained in the ordinary course of its business, his knowledge of the Debtor’s operations and financial affairs, and his review of matters with Debtor’s outside professionals, Mr. Doe is familiar with and has personal knowledge of -2- matters relating to confirmation of the Plan. Mr. Doe would testify that the Debtor’s dairy is known as Mootown Farms. As of January 1, 201X, the dairy herd consisted of approximately 2,000 owned cows and 100 leased cows. The Debtor raises its own replacement cows, and has approximately 600 cattle from day old to springers. The dairy, without the adjoining farmland, is situated on approximately 120 acres. The dairy improvements include a milk barn, a commodity shed, two hay sheds, shades, corrals and a lagoon. The Debtor owns approximately 750 irrigated acres of farmland adjoining the dairy on which it principally grows corn silage and alfalfa to feed to the cows, and winter wheat. The Debtor has a discharge permit from the New Mexico Environment Department. B. 1. Compliance with §1129. §1129(a)(1). A review of the Plan, together with a proffer of testimony of John Doe, will show that the Debtor has satisfied Bankruptcy Code §1129(a)(1). The plan complies with the mandatory plan requirements set forth in Bankruptcy Code §1123(a), and all plan provisions are permitted by Bankruptcy Code §1123. The plan provides for adequate means for its implementation, through among other things, re-vesting property of the estate in the Debtor, providing that the Debtor will continue its operations after the effective date of the plan free of any restrictions of the Bankruptcy Code, and providing an adequate means for the Debtor to fund the plan. The plan also complies with Bankruptcy Code §1124. Valid business, legal and factual reasons exist for the separate classification of each of the classes of claims created and treated under the plan. The claims in each class are substantially similar to the other claims in the same class. Each secured creditor is separately classified. All unsecured non-priority claims, including unsecured deficiency claims and claims arising from the rejection of executory contracts and unexpired leases, are in the same class. -3- 2. §1129(a)(2). Mr. Doe would testify that to the best of his knowledge, the Debtor has complied with the requirements of the Bankruptcy Code while a debtor in possession. Mr. Doe would testify that after filing its chapter 11 case, the Debtor used only debtor in possession bank accounts; filed its monthly operating reports on a timely basis; used cash collateral only as permitted by court orders, borrowed money and paid professionals only pursuant to court orders; paid obligations arising before the bankruptcy filing only with court approval; sold assets outside the ordinary course of business only with prior court approval; and did not solicit votes on its plan until after court approval of the disclosure statement. This testimony, together with documents on file in this bankruptcy case, including cash collateral orders and the debtor in possession financing order, orders approving retention of professionals and approving fee applications, orders approving assumption of executory contracts unexpired leases, the monthly operating reports, the disclosure statement and plan of reorganization, the order and notice approving the disclosure statement and fixing the plan confirmation deadlines, and the certificate of service of the plan packages, establish that Bankruptcy Code §1129(a)(2) has been satisfied. 3. §1129(a)(3). Mr. Doe would testify, and the Court file reflects, that Debtor’s principal indebtedness consists of approximately $3 million owed to Land Lender, secured by a first lien against all real estate owned by Debtor, including improvements; $1.8 million owed to Bank Lender secured by livestock, feed, equipment, and substantially all other non-real estate assets of the estate; $200,000 owed to the Internal Revenue Service; and $1.5 million owed to pre-petition creditors holding unsecured non-priority claims. The Debtor is current on all obligations arising after commencement of this bankruptcy case. Mr. Doe would testify that from the beginning of this case, Debtor has worked in good -4- faith toward confirmation of the Plan. The Plan provisions relating to the secured creditors were formulated after good faith, arms-length negotiations with those creditors. The Plan provisions relating to treatment of unsecured non-priority claims were formulated after good faith, arms- length negotiations with the Official Unsecured Creditors Committee. Mr. Doe would testify that the principal purpose of the Plan is to reorganize the Debtor’s dairy operation, and is not to avoid taxes or any applicable securities laws. Confirmation of the Plan is consistent with the important public policy of maintaining the adequacy of the nation’s supply of milk. The Debtor has proposed the Plan in good faith after negotiations with creditors and not by any means known to the Debtor that are forbidden by law. The Debtor solicited acceptances of the Plan only after approval of the disclosure statement. This testimony establishes that Bankruptcy Code §1129(a)(3) has been satisfied. 4. §1129(a)(4). Mr. Doe would testify that any payment made by the Debtor to any professional person for services or for costs and expenses in connection with the plan or incident to this bankruptcy case has been approved by this Court. The Debtor does not intend to make any further such payments without Court approval if Court approval is required. There are no persons issuing securities or acquiring property under the Plan. This testimony establishes that Bankruptcy Code §1129(a)(4) has been satisfied. 5. §1129(a)(5). Mr. Doe would testify that the Debtor has fully and accurately disclosed section ___ of the Disclosure Statement the identity and any affiliations of the all of the individuals proposed to serve as officers and directors of Debtor after the Plan is confirmed, and the compensation to be paid to such individuals after confirmation of the Plan. In Mr. Doe’s opinion the appointment or continuance in office of such individuals is consistent with the interests of creditors. This testimony establishes that Bankruptcy Code §1129(a)(5) has been -5- satisfied. 6. §1129(a)(6). Mr. Doe would testify that he believes and is reliably informed that the Debtor does not charge any rate that is subject to the jurisdiction of any governmental regulatory commission which would require it to seek such commission’s approval of any rate changes. This testimony establishes that Bankruptcy Code §1129(a)(6) has been satisfied. 7. §1129(a)(7). Mr. Doe would testify that he has been primarily responsible for directing the preparation of an estimate of the expected proceeds from a liquidation of Debtor’s assets in the hypothetical event that all of Debtor’s assets were to be liquidated pursuant to chapter 7 of the Bankruptcy Code. The liquidation analysis is attached to the Court approved Disclosure Statement as Exhibit ( X ) . For purposes of the liquidation analysis, Debtor has assumed that this chapter 7 case converted to a case under chapter 7 on the plan effective date, that a chapter 7 trustee were appointed, that the trustee would abandon an asset if there is no realizable equity for the trustee after payment of claims secured by the collateral and any estate tax liabilities resulting from the sale, and that hypothetical liquidation sales for cash would be made with the assistance of professional brokers as appropriate. Mr. Doe would testify that in his opinion the liquidation analysis reflects a reasonable estimate of liquidation values; and, based on the amount of secured debt held by creditors and the nature of their collateral and the tax liabilities resulting from the sale of the collateral, holders of unsecured non-priority claims likely would receive less than 15% of the amount of their allowed claims in a chapter 7 liquidation. By contrast, under the plan, such holders are to receive at least 50% of the allowed claims over a period of years without interest. This testimony establishes that Bankruptcy Code §1129(a)(7) has been satisfied. 8. §1129(a)(8). The Plan contains seven impaired classes of claims, Classes 1, 2, -6- 3, 4, 5, 6 and 7. As shown by the Tally of Ballots presented to the Court, all seven classes of impaired claims voted to accept the plan, including all classes of secured claims, unsecured priority claims, and unsecured non-priority claims. Therefore, the Debtor has satisfied Bankruptcy Code §1129(a)(8), and it is not necessary for the Debtor to satisfy the Bankruptcy Code § 1129(b) requirements as to any dissenting classes. 9. §1129(a)(9). Section (X) of the plan provides that each allowed administrative claim is to be paid in full in cash on the effective date of the plan, or when the claim is allowed, unless the holder of the claim agrees otherwise. The plan also provides that each tax claim will be paid the full allowed amount of its claim, monthly, over a period that ends five years after the date of commencement of the bankruptcy case, with interest at the applicable statutory rate. The plan provides that holders of allowed unsecured non-priority claims are to be paid over the same period. There are no secured tax claims, and no non-accepting classes of claims of a kind specified in Bankruptcy Code §§ 507(a)(1), (a)(4), (a)(5), (a)(6) or (a) 7). Therefore, the Debtor has satisfied Bankruptcy Code §1129(a)(9). 10. §1129(a)(10). The Tally of Ballots presented to the Court shows that all seven impaired classes of claims voted to accept the plan without including any acceptances by an insider. Therefore, Debtor has satisfied the requirement that at least one impaired classes of claims voted to accept the plan without including any acceptances by an insider. The Debtor has satisfied Bankruptcy Code §1129(a)(10). 11. §1129(a)(11). Mr. Doe would testify that the source of funds to make payments to creditors under the Plan will be from future dairy operations. The projections attached as Exhibit (Y) to the Court approved Disclosure Statement were prepared under Mr. Doe’s supervision to reflect the financial restructuring contemplated under the Plan. Based upon Mr. -7- Doe’s experience as a dairy farmer for more than 30 years and his knowledge of market conditions and his knowledge of the Debtor’s dairy operations and financial affairs, and based further upon Debtor’s historical performance, in Mr. Doe’s opinion the assumptions that underlie the projections are reasonable and supportable. It is further Mr. Doe’s opinion that the Debtor will generate sufficient funds after the effective date of the plan to fund fully its ongoing operations and to pay all obligations set forth in the Plan as and when due. Mr. Doe would testify that the Debtor has evaluated each of the executory contracts and leases to be assumed or rejected under the Plan. Those executory contracts and leases to be assumed are important to ongoing business operations of the dairy that will continue after the effective date of the Plan. Accordingly, in the good faith exercise of its business judgment, as debtor in possession, Debtor has concluded that is in the best interest of its creditors and the estate to assume such contracts and leases. Mr. Doe would testify that either the Debtor is not in default under the contracts and leases to be assumed under the plan, or payment of any arrearage is provided for in the Plan. Mr. Doe would testify that he expects and has good reason to believe that, after the effective date of the Plan, the Debtor will perform fully all of its obligations under the contracts and leases to be assumed under the Plan and that future performance by the Debtor is adequately assured. In Mr. Doe’s opinion consummation of the Plan is not likely to be followed by the liquidation or need for further financial reorganization of the Debtor. This testimony establishes that Bankruptcy Code §1129(a)(11) has been satisfied. 12. §1129(a)(12). Mr. Doe would testify that the Debtor is current on its payments to the United States Trustee. The Debtor intends to pay any and all additional fees -8- payable to the Office of the United States Trustee as and when due and payable. This testimony establishes that Bankruptcy Code §1129(a)(12) has been satisfied. 13. §1129(a)(13). Mr. Doe would testify that the Debtor did not prior to or after its chapter 11 filing provide any retiree benefits to any of its employees. This testimony establishes that Bankruptcy Code §1129(a)(13) is not applicable and therefore has been satisfied. 14. §1129(a)(14) and (15). Because the Debtor is a corporation, Bankruptcy Code §§ 1129(a)(14) and (15), which relate to domestic support obligations and required payments by individual debtors, are not applicable and therefore are satisfied. 15. §1129(a)(16). Because the plan does not provide for the transfer of property, Bankruptcy Code § 1129(a)(16) is satisfied. -9-
=== Requirements and Procedures in Individual Debtor Chapter 11 Cases ===
LAW AND PROCEDURES FOR INDIVIDUAL CHAPTER 11 CASES The following discusses requirements and certain procedures in cases under chapter 11 where the debtor is an individual. Section numbers citations are to the United States Bankruptcy Code, 11 U.S.C. §101 et. seq. Rules citations are to the Federal Rules of Bankruptcy Procedure. A. Financial Management Course. An individual chapter 11 debtor is required to complete a financial management course when the plan provides for the liquidation of all or substantially all of the property of the estate and the debtor does not engage in business after consummation of the plan. This is because §1141(d)(3)(C) provides that “[t]he confirmation of a plan does not discharge a debtor if the debtor would be denied a discharge under §727(a).” Under §727(a)(11), the discharge is denied if the course requirement is not satisfied. Bankruptcy Rule 1007(b)(7) requires an individual debtor in a chapter 11 case to file a statement of completion of the financial management course if course completion is required. B. Domestic Support Obligations. For a plan to be confirmed, the debtor must pay all domestic support obligations that accrue post-petition. §1129(a)(14). There is no requirement that domestic support obligations have been paid as a condition to discharge. However, a debtor who has not paid all post-petition domestic support obligations risks dismissal or conversion of the case pursuant to §1112(b)(4)(P). C. Discharge. Unlike other Chapter 11 cases, in individual cases the grant of a discharge requires a court order. 1. Three Grounds for Obtaining a Discharge. There are three grounds for entering a discharge in individual chapter 11 cases: discharge will be entered after completion of all plan payments. §1141(d)(5)(A). a. Discharge Upon Completion of Plan Payments. Ordinarily, the b. Early Discharge For Cause. A discharge may be granted before completion of all plan payments "for cause." §1141(d)(5)(A). For example, if there is sufficient assurance that claims will be paid as provided by the plan, such as from the grant of lien rights or protection under a letter of credit, an early discharge for cause may be warranted under §1141(d)(5)(A). c. Early Discharge Under Modified Best Interests Test and Impracticability of Plan Modification. A discharge may also be granted before completion of plan payments if (i) unsecured creditors holding allowed claims have actually received under the plan at least as much as they would have received in a hypothetical chapter 7 case in which the estate assets were liquidated on the plan effective date; and (ii) modification of the plan under section §1127 is not practicable. §1141(d)(5)(B). For example, if a plan provides for payment in full of all claims within five years after the plan effective date, and further provides for payment without impairment of obligations under a note secured by a mortgage against the debtor's principal residence that under §1123(b)(5) cannot be modified, a discharge after completion of the payments to be made within five years may be warranted under §1141(d)(5)(B). 2. Procedures For Seeking A Discharge Order. To seek entry of a discharge order, the debtor should file a motion requesting entry of the discharge as follows: a. Discharge Upon Completion of Plan Payments. To obtain a discharge order upon completion of plan payments, the debtor should file a Certificate of Completion of Plan Payments and a Motion for Entry of Discharge, and serve notice of the motion on all parties in interest, specifying a 21-day period to object. If no objections are filed timely, the Court may grant the discharge without a hearing. §1141(d)(5)(A). b. Early Discharge. If, pursuant to §1141(d)(5)(A) or (B), the Debtor asks for entry of a discharge order before completing all plan payments, the debtor should file a motion, give supporting grounds, and serve adequate notice thereof, specifying a 21-day period to object. The debtor should contact chambers to obtain a date and time for a preliminary hearing on the motion and include the hearing date and time in the notice. The Court may require a hearing even if no objections are filed. It is possible for the Debtor to seek entry of the discharge order at the time of plan confirmation, if the motion is filed and noticed separately, and served with the plan confirmation documents. In such an event the motion for early discharge would be heard at the same time as plan confirmation. 3. Discharge Provision Involving Homestead Exemption of Other States. The debtor is not entitled to a discharge, even when he or she makes all plan payments, if (i) the debtor claimed a state-law homestead or similar exemption in excess of $146,500, and (ii) there is pending at the time of the discharge request a proceeding that might result in the debtor being found guilty of certain felonies or liable for certain claims based on fraud, willful injury, or similar claims that arose in the preceding five years. §1141(d)(5)(C). This provision should not apply in most New Mexico cases, given the limit in the value of the New Mexico homestead exemption. In the unusual case of an individual chapter 11 debtor claiming the state law homestead exemption of a different state, Debtor’s counsel in encouraged to review §1141(d)(5)(C) and make sure that it does not prohibit entry of the discharge order. -2-
=== Subchapter V Chapter 11 Chart ===
Most Code provisions applicable in non-subchapter V chapter 11 cases also apply in subchapter V cases. This chart focuses on provisions that differentiate subchapter V cases from other chapter 11 cases. In some instances, there are exceptions to the general rules summarized below. (Chart prepared by Robert H. Jacobvitz, U.S. Bankruptcy Judge, DNM, 11-15-24) Sub V Feature Purpose Debtor in possession Eligibility Explanation To give small businesses a simpler, more expeditious, cost-effective vehicle to reorganize and rehabilitate their financial affairs so they may remain in business for the benefit of owners, creditors, employees, suppliers, customers, and others who rely on the businesses. The subchapter V debtor is a debtor in possession unless removed for cause. Cause includes dishonesty, incompetence, or gross mismanagement. §§1185(a), 1186(b). In general, the subchapter V debtor in possession has the same rights and powers as a debtor in possession in chapter 11 cases not governed by subchapter V. See §§ 1107 (a) and 1184. A debtor elects subchapter V in the petition for relief. Generally, an objection to the election is due 30 days after the conclusion of the § 341(a) meeting of creditors. Bankr. Rule 1020(a) and (b). An objection can be waived. Eligibility is not jurisdictional. A debtor is eligible for subchapter V if: (1) it is “engaged in commercial or business activities;” (2) the aggregate of its noncontingent and liquidated secured and unsecured debts does not exceed $3,024,725 (adjusted for inflation, § 104(a)(1 ; and (3) not less than 50 % of the debts arose from the debtor’s commercial or business activities. See §§101(51D) and 1182(1). Under the sunset provisions of the Bankruptcy Threshold Adjustment and Technical Corrections Act, § 1182(1) now defines “debtor” as a “small business debtor.” Section 101(51D), which defines “small business debtor,” now sets forth the subchapter V eligibility requirements. Courts are split regarding whether the future amount due under an unexpired lease is a noncontingent and liquidated debt. Other issues that can arise include what constitutes being “engaged in” commercial or business activities” and when is a disputed debt liquidated and noncontingent. Timeline If an affiliate of a subchapter V debtor is also a chapter 11 debtor, the affiliate’s debts count toward the debt eligibility limit. § 1182(1). A spouse must separately satisfy the subchapter V eligibility requirements. The debtor must file a plan within 90 days of the order for relief, unless the court extends the time based on “circumstances for which the debtor should not justly be held accountable.” § 1189(b). No plan payments are required prior to confirmation. The court must conduct a status conference within 60 days after the order for relief to further the expeditious and economical resolution of the case, unless extended. § 1188(a) and (b). The debtor must file a report not less than 14 days before the initial status conference that “details the efforts the debtor has undertaken and will undertake to attain a consensual plan of reorganization.” § 1188(c). There is no outside statutory deadline to confirm a subchapter V plan. Proof of claim bar date The court fixes the claims bar date. Bankr. Rule 3003(c)(3). Many courts fix a bar date around 70 days after the order for relief so claims are due before the plan is filed. The court cannot shorten the time for a governmental unit to file a proof of claim, which is 180 days after the order for relief. § 502(b)(9). The United States Trustee appoints a subchapter V trustee (either a standing trustee or a case trustee) who has statutory duties. § 1183(a) and (b). Subchapter V Trustees Duties of the subchapter V trustee include: • To facilitate the development of a consensual plan. • To object to object to claims if it would serve a purpose and oppose discharge if advisable. • To appear and be heard at (1) the §1188(a) status conference and (2) any hearing concerning (a) the value of property subject to a lien; (b) confirmation of the plan; (c) modification of the plan after confirmation; and (d) the sale of property of the estate. § 1183(b). The court for cause can give the subchapter V trustee expanded duties in lieu of removing the debtor as a debtor in possession. The subchapter V trustee has no duty to investigate the financial affairs of the debtor unless the court expands the subchapter V trustee’s duties. § 1183(b)(2). If the debtor is removed as debtor in possession, the subchapter V trustee a role similar to, but does not have all the powers and duties, of a traditional chapter 11 trustee. See § 1183(b)(5). A standing subchapter V trustee is paid a commission on disbursements. 28 U.S.C. § 586(e). A case subchapter V trustee is paid pursuant to § 330(a). Unless the court for cause orders otherwise, no committees are appointed. § 1181(b). No UST fees. 28 U.S.C. §1930(a)(6)(B). Includes after acquired property and post-petition earnings from personal services acquired or earned before the cases is closed, dismissed, or converted. § 1186(a). The subchapter V debtor must comply with various requirements imposed on the debtor in possession in a small business debtor case, including filing the § 1116(1)(A) and (B) documents upon electing subchapter V and complying with § 1116(2)-(7) and with the reporting requirements imposed by § 308. See § 1187(a). No competing plans. Only the subchapter V debtor may file a plan. § 1189(a). Unless the court for cause orders otherwise, no disclosure statement is required but the plan must contain statutorily required disclosures and the court may require enhanced disclosures in the plan. §§ 1181(b) and 1190(1). The debtor may modify a consensual plan pre-confirmation or post confirmation before substantial consummation. § 1193(a) and (b). The debtor may modify a nonconsensual plan before the term of the plan expires. § 1193(a) and (b). Unlike in chapters 12 and 13, only the debtor may modify a confirmed plan, subject to court approval. Compare § 1193 with §§ 1229(a) and 1329(a). -2- Committees UST fees Property of the estate Small business debtor requirements Competing plans Disclosure statement Plan modifications § 507(a)(8) priority tax claims There is no change under subchapter V in the allowance and treatment of § 507(a)(8) priority tax claims. The plan must provide that priority tax claims be paid in regular installments in cash over a period ending not later than five years after the date of the order for relief in a manner not less favorable than the most favored nonpriority unsecured claim provided for by the plan (other than § 1122(b) “convenience class” claims). § 1129(a)(9)(C). Consensual versus non- consensual plans Cramdown of nonconsensual plans A § 507(a)(8) priority tax claim is an unclassified claim (see § 1123(a)(1 and thus (i) the holder of the claim cannot vote the claim and (ii) acceptance by the claimant is not a confirmation requirement. See 1129(a)(8) and 10), which apply only to classes of claims. A penalty relating to a priority tax claim is given priority only if it is in compensation for actual pecuniary loss. § 507(a)(8)(G). A plan confirmed under § 1191(a) is known as a “consensual plan.” A plan confirmed under § 1191(b) is known as a “nonconsensual plan.” A confirmed plan is a consensual plan if (1) each class of claims has accepted the plan or is not impaired under the plan AND (2) if a class of claims is impaired under the plan, at least one impaired class of claims has accepted the plan, determined without including any acceptance of the plan by any insider. See § 1191(a). Otherwise, a confirmed plan is a nonconsensual plan. See § 1191(b). Section 1191(b) allows confirmation of a plan even if no impaired classes of claims accept the plan. Courts are split regarding whether nonvoting classes are deemed to have accepted the plan. Confirmation of a nonconsensual plan requires cramdown. There is no change under subchapter V in cramdown requirements for secured claims. The absolute priority rule does not apply for cramdown on unsecured claims, so the owners of a small business may retain their ownership and stay in control without satisfying a “new value” requirement. See § 1191(b). If § 1129(a)(8) or (10) is not met, cramdown on unsecured claims “includes”: (1) The debtor must commit all projected disposable income to fund the plan for three years, or such longer time not to exceed five years as the court may fix OR the value of the property to be distributed under the plan is not less than the projected disposable income over the 3 to 5-year period (same as chapter 12); and 2. Either (1) the debtor will be able to make all payments under the plan OR (ii) there is a reasonable likelihood that the debtor will make payments under the plan. If only the latter, the plan must provide “appropriate remedies” to protect creditors if the debtor does not make plan payments, which may include the liquidation of nonexempt assets. § 1191(b)-(d). Section 1129(a)(15), which applies to individual debtors, does not apply in subchapter V cases. § 1181(a). Section 1129(a)(15) has a disposable income requirement that differs from the disposable income requirement set forth in § 1192(c)(2) for confirmation of nonconsensual subchapter V plans. -3- Cramdown of nonconsensual plans (continued) The Code provides that confirmation of a nonconsensual plan “includes” a disposable income requirement or that the value of the property to be distributed under the plan is not less than the projected disposable income during the plan commitment period of 3 years or such longer period as the court may fix. § 1191(c). “Includes” is nonexclusive. § 102(3). The term “includes” is not used for the disposable income requirements in chapters 12 or 13 or in individual debtor chapter 11 cases. See §§ 1129(A)(15), 1225b)(1)(B), 1325(b)(1)(B). Issues that can arise include whether the debtor at least in some circumstances should be required to pay actual disposable income if it turns out to be higher than projected disposable income or whether a debtor can modify a confirmed plan if actual disposable income is less than projected disposable income. Payment of administrative expenses Plan disbursing agent Modification of residential mortgages The Code does not specify the standard for the court to apply to decide whether to fix a plan commitment period longer than 3 years. Consensual plan: Allowed administrative expenses must be paid in full in cash on the plan effective date unless the claimant agrees otherwise. § 1129(a)(9)(A). Nonconsensual plan: The debtor may pay administrative expenses, including professional and trustee’s fees, over the life of the plan. § 1191(e). Consensual plan: The debtor makes disbursements required by the plan. Nonconsensual plan: Unless the plan or order confirming the plan provides otherwise, the subchapter V trustee makes payments to creditors under the plan. § 1194(b). Section 1190(3) permits modification of a claim secured by the debtor’s principal residence if (1) that the new value received in connection with the granting of the security interest was “not used primarily to acquire the real property” and the new value was “used primarily in connection with the small business of the debtor.” Vesting of assets Consensual plan: Unless the plan or order confirming the plan provide otherwise, property of the estate vests in the debtor on confirmation. § 1141(b). Nonconsensual plan: Property of the estate vests in the debtor upon completion of the plan. See § 1186(a). Discharge Comment. When property of the estate vests it no longer is property of the estate. Therefore, the automatic stay no longer applies with respect to the property. Consensual plan: The debtor is granted a discharge upon confirmation of the plan. § 1141(d)(1)(A). Nonconsensual plan: The debtor is granted a discharge upon completion of all payments due under the plan. § 1192. Termination of Subchapter Trustee’s Service There is a split of authority whether, based on the language of § 1192(2), the § 523(a) exceptions to discharge apply to a subchapter V debtor that is not an individual. Consensual plan: The services of the subchapter V trustee are terminated upon substantial consummation of the plan except the UST may reappoint the subchapter V trustee for limited purposes. § 1183(c). Nonconsensual plan: The subchapter V trustee continues to serve during the life the plan. -4-
=== Procedures for Chapter 13 Hearings on Confirmation of Plans and Motions to Dismiss ===
PROCEDURES FOR CHAPTER 13 HEARINGS ON PLAN CONFIRMATION AND MOTIONS TO DISMISS Until further notice, the following procedures generally will apply to hearings in chapter 13 cases on confirmation of plans and motions to dismiss. The Court may make exceptions to these procedures in individual cases. Preliminary Hearings on Plan Confirmation. The initial hearing on confirmation of a chapter 13 plan will be a preliminary hearing. Generally, preliminary hearings will be scheduled at 9:00 a.m. on a trailing docket. Preliminary hearings will be held in Albuquerque, typically in the Court’s hearing room. At the preliminary hearing, any party in interest or counsel for a party in interest may appear by telephone if arrangements are made with Chambers staff in accordance with the policy on requesting telephonic appearance. The Court typically will first call those matters for which an attorney or pro se party appears in person before calling those matters for which all counsel and parties (other than parties in interest appearing at all or a substantial portion of the hearings, such as the Chapter 13 trustee) appear by telephone. The Court will also endeavor to group hearings together by debtor’s counsel. Hearings on Motions to Dismiss. Unless the Court directs otherwise, all hearings on motions to dismiss will be final hearings. Appearances at Final Hearings. The Debtors and counsel for the Debtors are required to appear in person at all final hearings in Chapter 13 cases unless the Court directs otherwise. If permission is sought for a waiver of the requirement, such a request should be made to Chambers staff at least one business day before the hearing date. The request will not be routinely granted. Other counsel and parties in interest wishing to appear at final hearings must appear in person, except when the Court grants a request by out-of-town counsel or parties to appear by telephone. Out-of-town parties or counsel permitted to appear at a final hearing by telephone will be allowed to make argument but not to proffer any evidence or question any witnesses. Any party may appear at a final hearing set in Las Cruces or Roswell by video at the United States Courthouse in Las Cruces or Roswell, as applicable, or in person in Albuquerque. Scheduling Final Hearings in Albuquerque. Generally, final hearings in Albuquerque on plan confirmation and motions to dismiss will be set in the Courtroom at 1:30 p.m. on a trailing docket. Scheduling Final Hearings in Las Cruces. Generally, final hearings in Las Cruces on plans and motions to dismiss will be conducted by video conference and set on an ad hoc basis. Scheduling Final Hearings in Roswell. Final hearings in Roswell on plan confirmation and motions to dismiss will be will be conducted by video conference and set on an ad hoc basis. Exhibits in Final Hearings Conducted by Video. Any exhibits to be used by any party at the final hearing on confirmation must be exchanged at least by noon one business day before the hearing date, with a copy provided to Chambers, either in hard copy or by e-mail. Failure to timely provide exhibits may result in the exclusion of the exhibit at the final hearing on confirmation. -2-
=== Procedures For Stay Relief Motions ===
PROCEDURES FOR STAY RELIEF MOTIONS The following procedures apply to motions for relief from stay. For Agreed orders relating to stay relief or adequate protection, see the link entitled “Stipulated Stay Relief/Adequate Protection Orders.” 1. Chapter 7, 12 and 13 Cases (a) If Movant Knows the Motion is Opposed or Cannot Ascertain that it is Unopposed. If the movant has contacted the debtor and the case trustee, and either of them opposes the motion, or if movant is unable to ascertain whether the debtor and the case trustee oppose the motion, despite reasonable efforts, the movant may file the stay motion and (i) prepare a notice specifying an objection period (usually 21 days, unless shortened by the Court), and serve the motion and notice as required by Bankruptcy Rule 7004, or (ii) contact chambers staff when the motion is filed, request a preliminary hearing, and serve the motion and notice of hearing as required by Bankruptcy Rule 7004. If a notice specifying an objection deadline is served and no objection is filed, the movant should submit an order granting the motion. The relief granted in the default order should not differ from the relief sought in the motion. Forms of default orders applicable to enforcement of liens against real property, vehicles and mobile homes are available on this web page. Ordinarily, submitted default orders granting such relief should be substantially in those forms. (b) If Movant Knows the Motion is Unopposed. If the movant is aware that the debtor and case trustee do not oppose the relief requested by the motion, it may submit to the Court for entry a stipulated order granting such relief approved by the debtor and case trustee. Ordinarily, no additional notice or hearing would be required. 2. Chapter 11 Cases. In chapter 11 cases, the movant should serve the motion and notice of objection deadline and preliminary hearing on the debtor (or trustee) and any entity claiming an interest in the collateral, as required by Bankruptcy Rule 7004, and serve notice of the objection deadline on counsel for each official committee appointed pursuant to 11 U.S.C. § 1102 or each committee member if the committee has not retained counsel, if there is no such committee appointed by the Court. Before serving the notice, the movant should contact Chamber’s staff to obtain a preliminary hearing on the motion. The notice should include notice of the date and time of the preliminary hearing to be held if a timely objection to the motion is filed. 3. Preliminary Hearing/Final Hearings. Generally, a preliminary hearing will be held on any opposed stay motion, and the final hearing will be scheduled during the preliminary hearing. Counsel and pro se parties may appear by telephone at preliminary hearings on stay motions. To appear by telephone, see the link entitled “Telephone Appearances” on this web page. 5. Method of Service of the Motion and Notice. Service should be by first class United States mail, or by use of the Court’s case management and electronic filing system for the transmission of notices, as authorized by Fed.R.Civ.P. 5(b)(3) and NM LBR 9036-1, unless any special rules apply for service of certain entity creditors under Bankruptcy Rule 7004 (such as the United States or its agencies or federally insured depository institutions).
=== Computation of Objection Period ===
COMPUTATION OF OBJECTION DEADLINES UNDER RULE 9006(a) and (f) Rule 9006(f). As of December 1, 2016, the 3-day extension to time periods is eliminated 1. when service is made electronically. 2. Rule 9006(f) Applies Only to Rule 9006(a) “Prescribed Period” Deadlines. Rule 9006(f) applies only to “prescribed period” deadlines computed under Rule 9006(a) (e.g. 14 days after service of notice). An objection deadline is not a “prescribed period” under Rule 9006(a) if it ends on a fixed date and/or time, without reference to a number of days after service (e.g., “the last day to file and serve objections is December 21, 2012 at 4:00 p.m.”). Note too that under Rule 9006(a), if an objection deadline is a date certain (e.g., December 25, 2016), the deadline is not extended to the next business day if the stated date is a weekend or legal holiday.1 3. When and how to add three days under 9006(f). If service is made by mail, Rule 9006(f) provides that “three days are added after the prescribed period would otherwise expire under Rule 9006(a).” a. When the Last Day of the Prescribed Period Falls on a Weekday and Service is Made by Mail. If the prescribed period ends on a weekday, add three days (e.g. a Tuesday deadline becomes a Friday deadline). If the third additional day falls on a weekend or legal holiday, the prescribed period, as extended, end on the next business day. Example: The objection deadline is 21 days after service of notice. Notice was served by mail on Wednesday, December 2. The 21-day period ends on Wednesday, December 23. Because service was made by mail, under Rule 9006(f) three days are added to December 23, resulting in an objection deadline of Saturday, December 26. However, since the 26th is a weekend, the deadline becomes the next business day, Monday, December 28. When the Last Day of the Prescribed Period Falls on a Weekend or Legal Holiday b. and Service is Made by Mail. If the prescribed period ends on a weekend or legal holiday, the period is extended until the next business day, and three additional three days are added thereafter. Example: The objection deadline is 21 days after service of notice. Notice was served by mail on Friday, December 4. The 21-day prescribed period falls on Friday, December 25, a legal holiday. The 21-day deadline therefore is extended to Monday, December 28, the next business day. Then, because service was made by mail, under Rule 9006(f) three days are added to December 28, resulting in an objection deadline of Thursday, December 31. 1 “Legal holiday” is defined in Rule 9006(a). The Potential for Different Deadlines. If one or more parties are served by mail and one 4. or more parties are served electronically, application of Rule 9006(f) will result in different deadlines for the same motion. Remember, however, that if the deadline is a date certain, Rule 9006(f) does not apply. The fixed date and/or time is the deadline for all parties regardless of the method of service. If Rule 9006(f) applies because at least one party was served by mail and the deadline is not a fixed date and/or time, the moving party will need to wait for the 3-day extended period to expire before submitting an order to the Court granting relief by default.
=== Service in Contested Matters ===
SERVICE OF MOTIONS AND NOTICES IN CONTESTED MATTERS Federal Rule of Bankruptcy Procedure (herein, “Rule”) 9014 provides that Rule 7004 applies in contested matters. Generally, contested matters involve litigation to resolve a dispute in a bankruptcy case that is not required to be resolved by adversary proceeding. Contested matters typically involve filing a motion in the bankruptcy case. Contested matters include stay relief motions, §522(f) lien avoidance motions, claim objections, and motions to value collateral. 1. Service by First Class Mail. With a few exceptions, service may be made by first class United States mail. Rule 7004(b). 2. Default Orders; Review of Notice Address. The Court does not review the adequacy of the address used to serve a motion and notice in a contested matter prior to entry of a default order, when no objection is timely filed. Counsel for the movant should exercise care to make sure that all addresses are proper and complete. 3. Service on a Particular Individual or Entity Affected. Where relief is sought affecting a particular individual or entity, service of the motion and notice generally should be made on the individual or entity. For example, in the case of a stay relief motion filed by a creditor, the motion and notice should be served on the debtor,1 counsel of record for the debtor (if any),2 and the chapter 7 trustee. If there is a co-debtor, the motion and notice should also be served on the co-debtor and the co-debtor’s counsel of record (if any). This Court typically will not enter a default or other order granting a motion seeking relief particular to an individual or entity unless service was made on that entity in accordance with Rule 7004. 4. Service on Corporations and Other Entities.3 Under Rule 7004(b), service on corporations, limited liability companies, and other artificial entities must be made to the attention of an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the entity. Typically, to comply with this requirement, service is made by first class United States mail. The envelope could be addressed: XYZ Corporation Attention: Officer, Managing Agent or General Agent [address] or 1 Rule 7004(b)(9) provides that service may be made “on the debtor, after a petition has been filed by or served upon the debtor and until the case is dismissed or closed, by mailing a copy of the summons and complaint to the debtor at the address shown in the petition or to such other address as the debtor may designate in a filed writing.” 2 Rule 7004(g) requires that if the debtor is represented by an attorney, whenever service is made upon the debtor under this Rule, service shall also be made upon the debtor’s attorney by any means authorized under Fed. R. Civ. P. 5(b). 3 Service on FDIC-insured institutions is discussed in paragraph 5 below. Service on governmental agencies and organizations is not discussed; counsel should review and comply with Rule 7004(b)(4)-(6) for such service. XYZ Corporation Attention: [insert name of Officer, Managing Agent or General Agent] [address] There is a split of authority whether addressing the envelope “Attention: Officer, Managing Agent or General Agent,” without naming a specific individual who is an officer, managing agent or general agent, is adequate service.4 This Court regards such service to be adequate. 5. Service on Banks and Credit Unions. Service in accordance with Bankruptcy Rule 7004(h) on an insured depository institution, such as a bank or credit union,5 must be made by certified mail addressed to an officer of the institution unless one of the exceptions to this requirement set forth in Rule 7004(h) applies. One of those exceptions is that if the institution has appeared by its attorney, the attorney shall be served by first class mail. See Rule 7004(h)(1). Typically, to comply with this requirement, service is made addressed as follows: Certified Mail XYZ Bank Attention: Officer6 [address] or Certified Mail XYZ Bank Attention: [insert name of Officer] [address] 6. When a General Notice Procedure May be Used. While a motion seeking relief particular to an entity may require service on that entity in accordance with Rules 7004 and 9014, service of notice of the motion on parties in interest generally may be sufficient without compliance with those rules. For example, it may be necessary to serve a motion to reject a 4 Compare Fleet Credit Card Servs., L.P. v. Tudor (In re Tudor), 282 B.R. 546, 549-50 (Bankr. S.D. Ga. 2002) (service of objection to proof of claim on “Managing Agent” is sufficient); Schwab v. Associates Commercial Corp. (In re C.V.H. Transport, Inc.), 254 B.R. 331, 332 (Bankr. M.D. Pa. 2000) (notice addressed to “Manager” was sufficient; relying in part on Advisory Committee on Bankruptcy Rules, Minutes of 9/28/99, 1999 WL 1845725, *14 (J.C.U.S.); with In re Faulknor, 2005 WL 102970, at *1-*2 (Bankr. N.D. Ga. 2005) (service on a bank pursuant to Rule 7004(h) to the attention of President is inadequate, relying on cases applying Rule 7004(d)(3); Addison v. Gibson Equipment Co., Inc. (In re Pittman Mechanical Contractors, Inc.), 180 B.R. 453, 454, 456 (Bankr. E.D. Va. 1995) (notice addressed to “President or Corporate Officer” does not meet requirements of Rule 7004(b)(3) because no individual was named); In re Schoon, 153 B.R. 48, 49 (Bankr. N.D. Cal. 1993) (service by addressing an envelope “Attn: President” was found to be inadequate). 5 Under § 101(35)(B), the term “insured depository institution” includes FDIC-insured banks and insured credit unions unless certain limited exceptions apply. That definition applies in Rule 7004(h). See Rule 9001(a) (“The definitions of words and phrases in §§ 101, 902, 1101, and 1502 of the Code, and the rules of construction in §102, govern their use in” the Bankruptcy Rules.). 6 Please see the discussion in footnote 3 and accompanying text. -2- contract and notice thereof on the other party to the contract in accordance with Rules 7004 and 9014, but sufficient to serve other general parties in interest only with notice of an objection deadline without compliance with Rule 7004. This guide is not intended to cover when compliance with a less exacting general notice procedure is adequate. 7. Caveat Regarding 11 U.S.C. §342. 11 U.S.C. §342 contains certain notice requirements applicable to specific situations. The §342 notice requirements are outside the scope of this discussion. Note, however, that if, pursuant to 11 U.S.C. §342(f)(1), an entity files a preferred notice of address to be used in bankruptcy cases that includes bankruptcy cases in New Mexico, the creditor mailing matrix generated by CM/ECF will automatically substitute the preferred mailing address for the one used by the Debtor, if different. Such substitutions are summarized at the end of the CM/ECF generated 3-column mailing matrix. That mailing matrix may be found in CM/EFC at Query/Creditor Mailing List or Reports/Creditor List (but not at Query/Creditor, which will produce a mailing list in a one column format). -3-
=== Supporting Motions for Summary Judgment and Responses Thereto With Admissible Evidence ===
SUPPORTING MOTIONS FOR SUMMARY JUDGMENT AND RESPONSES THERETO WITH ADMISSIBLE EVIDENCE Many motions for summary judgment are denied because the movant failed to properly support the motion with admissible evidence. Further, a motion for summary judgment may be granted even though the responding party controverts various facts if the response is not supported by evidence that would be admissible at trial. When drafting or responding to a motion for summary judgment, it is important to bear in mind what is necessary to properly support the motion or the response. A. Summary Judgment Standard. Fed.R.Civ.P 56, made applicable in adversary proceedings by Bankruptcy Rules 7056 and 9014, governs motions for summary judgment. The following is typical language used in opinions articulating the standard, under current law, for testing the sufficiency of a motion summary judgment. It is appropriate for the Court to grant summary judgment if the pleadings, discovery materials, and any affidavits before the Court show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a) made applicable to the adversary proceeding by Fed. R. Bankr.P. 7056. “[A] party seeking summary judgment always bears the initial responsibility of informing the . . . court of the basis for its motion, and . . . [must] demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Courts must review the evidentiary materials submitted in support of a motion for summary judgment to ensure that the motion is supported by evidence. If the evidence submitted in support of the summary judgment motion does not meet the movant’s burden, then summary judgment must be denied. New Mexico Local Bankruptcy Rule 7056-1 provides that the movant’s statement of material facts as to which the movant contends no genuine fact exists must “refer with particularity to those portions of the record upon which the movant relies.” NM LBR 7056-1. Rule 56, Fed.R.Civ.P, was amended effective December 1, 2010. The 2010 amendments to Rule 56, among other things, provide that: (i) The Court may consider only materials cited by the parties in support of or opposition to the motion, or in the Court’s discretion may also consider other materials cited in the record; (ii) In its discretion, the Court may give a party an additional opportunity to support an assertion of fact or an objection to an assertion of fact; or (iii) In its discretion, the Court may consider a fact as undisputed for purposes of the motion if a party fails to object that the material cited does not properly support the fact, even if the fact is not properly supported. B. The Requirement that the Motion Must Be Supported by Admissible Evidence. The above standard includes the following requirements for submission of materials in support of the motion. 1. Admissible Evidence Required. Any materials supporting the motion for summary judgment that would not be admissible in evidence at trial over a proper objection, assuming the presence in the courtroom of all testifying witnesses, will be disregarded, unless the Court in its discretion either (a) gives a party an additional opportunity to support an assertion of fact or an objection to an assertion of fact, or (b) considers a fact as undisputed for purposes of the motion where the other party failed to object that the material cited does not properly support the fact. 2. A Motion Not Property Supported May Be Denied Even in the Absence of a Response. If a summary judgment motion is not properly supported by admissible evidence, the Court may deny the motion even if no response is filed. In general, default orders granting summary judgment will not be entered. 3. Authentication of Documents. Each document offered in support of the motion for summary judgment generally must be authenticated, unless the party opposing the motion proffers the same document in support of that party’s response, or the Court in its discretion decides to consider the document where the other party failed to object on grounds of failure to authenticate the document. The movant must lay a foundation in an affidavit to establish that the affiant has the requisite personal knowledge and competence to authenticate the documents attached to the affidavit. An affidavit by counsel often will not be sufficient to authenticate a document because counsel typically will not have the personal knowledge and competence necessary to authenticate it. A state court pleading may be authenticated by proffering a certified copy or by an affidavit signed by counsel in the state court case certifying that counsel has personal knowledge of the contents of the pleading filed in the state court case, has carefully reviewed the entire proffered pleading, and the proffered pleading is a true and correct copy of the pleading filed of record in the state court case. Unauthenticated loan documents and other documents attached to a summary judgment motion or brief may be disregarded, unless the opposing party has otherwise admitted the contents of the documents. Typically, the documents, if not self-authenticating, should be attached to a proper affidavit. 4. Argument is Not Evidence. Neither argument in a legal memorandum or brief, nor argument in oral argument, is evidence. 5. Information and Belief Statements. Statements in affidavits made on information and belief are not admissible evidence. 6. Conclusory Statements May Be Disregarded. To support a conclusory statement it may be necessary to include sufficient factual information to establish that the conclusion is in fact based on personal knowledge and that the witness is competent to so testify, even when the affiant states that the affidavit is made on personal knowledge. For example, an unsupported statement that it is not practical to partition a parcel of property may be insufficient because it constitutes a conclusory statement of an ultimate fact that is a mixed question of fact and law. -2- 7. Judicial Notice. When considering a motion for summary judgment, the Court may take judicial notice of certain adjudicative facts if requested by a party or sua sponte. If a party believes the Court improperly took judicial notice of a something sua sponte, the party should timely file a motion to alter or amend the judgment or the objection to the judicial notice may be deemed waived on appeal. 8. Citations to the Record. If a party relies on a portion of the record to support a fact, the party must cite specifically to the portion of the record upon which the party relies. The Court is not required to scour the record to find support for the fact in question, but is not precluded from doing so. 9. All Material Facts Must be Supported by Admissible Evidence. The Court may find that the movant has not established there is no genuine issue as to a fact if the fact is not supported by admissible evidence. If that fact is sufficiently material it could result in denial of summary judgment. Before filing a motion for summary judgment, review the supporting materials against the statement of undisputed facts to make sure each and every fact identified as an undisputed fact is supported by admissible evidence. C. Responses to Motions for Summary Judgment Must Be Supported by Admissible Evidence to Controvert a Fact Established by Movant’s Evidence. A party opposing summary judgment should bear in mind the same principles set forth above to support the response to the motion for summary judgment. If the movant properly supports the motion for summary judgment with admissible evidence, the burden shifts to the other party to (i) identify each of the movant’s facts as to which the responding party contends there remains a genuine issue, (ii) to submit admissible evidence to establish that there exists a genuine issue as to each such fact, (iii) to set forth a concise statement of any additional facts the responding party asserts are material and should be considered, and (iv) to submit admissible evidence in support of each such fact. A non-movant may not rely on its complaint or to materials not in the record to controvert a fact proposed by the movant, and unsupported statements such as “denied” or “disputed” are insufficient. D. Effect of Savings Clauses in Rule 56(e). Although the Court may give a party a further opportunity to submit evidence in admissible form in support of or in opposition to a motion for summary judgment, and may consider as evidence otherwise inadmissible materials to which no objection is made, parties should not count on the Court doing so. -3-
=== Top Twenty Reasons Orders are Returned ===
TOP TWENTY REASONS THAT ORDERS ARE RETURNED These are common reasons orders are returned for revision instead of being entered. 1. Notice List for Order. The order fails to specify who is entitled to receive notice of the order, fails to specify, when applicable, such party’s role in the case, or fails to give the notice address of the person entitled to notice. Example. A default stay order in a chapter 7 case where the Debtor is represented by counsel should show that notice was served on (i) the Chapter 7 Trustee, (ii) counsel for the Debtor, and (iii) the Debtor. A default stay order in a chapter 7 case should recite that all of those parties were served, and also at the end of the order list those parties as entitled to notice, indicating each party’s role in the case, e.g.: Copy of Order to: [Name] [Address] Chapter 7 Trustee [Name] [Address] Attorney for Debtor [Name] [Address] Debtor By listing the parties entitled to notice, and their role in the case, it allows the Court to confirm that the proper parties were given notice of the motion and will receive a copy of the order. 2. Order Deviates From Required or Suggested Form of Order. Required and suggested forms of orders are posted in the Chambers Page of the Court’s web site. If a required form of order is not used, counsel ordinarily will be asked to resubmit the order in the required form or instead may be asked to justify the form of the submitted order. If a suggested form of order is not used or is changed, counsel may be asked to justify the form of the submitted order. 3. Motion Filed In Adversary Proceeding Instead of the Bankruptcy Case. A motion and notice of a contested matter in the bankruptcy case is filed in an adversary proceeding instead of in the underlying bankruptcy case. 4. Orders Continuing Hearings. An order continuing a hearing simply recites that the parties agree to continue the hearing and reset it for a particular date, without including a provision that the Court orders the continuation. The order instead should state something like: “Upon the stipulation of the parties, the Court vacates a hearing or continues a hearing to a certain date.” -1- 5. Approval of Stipulated Orders. An order recites that certain parties have stipulated or agreed to the order, but not all of those parties are shown as having approved the order. 6. Findings of Fact in Stipulated Orders. A stipulated order not supported by admitted evidence that recites facts should recite that the parties stipulate to various facts. The order should not present the facts as findings by the Court. The stipulated order can include relief granted by the Court based on the stipulation of the parties. 7. Default and Stipulated Order. An order based in part on the stipulation of one or more parties and in part on the failure to object by one or more other parties is termed a Stipulated Order instead of a Default and Stipulated Order, and/or fails to provide information about service on the party who failed to respond and the response deadline for that party. 8. Information on Service of the Order and Notice. A default order (a) does not state both when notice was served and when the objection period expired; (b) contains an incorrect calculation of the date the objection period expired; or (c) fails to include an additional three days in the specified expiration date. 9. the order. Order is Premature. The objection deadline has not expired prior to submission of 10. Service on a Corporation or Partnership. The certificate of service of a motion or notice, where service is made on a corporation or partnership, fails to state that service by United States first class mail, postage prepaid, was addressed to an officer, or managing or general agent, or other agent upon whom service may be made. See Fed.R.Bankr.P. 7004(b)(3) (made applicable to contested matters by Fed.R. Bankr. P. 9014(b . 11. Service on an Insured Depository Institution. The certificate of service of a motion or notice, where service is made on an insured depository institution, fails to state that service was made by certified mail addressed to an officer of the institution (unless one of the exceptions to such requirement is satisfied). See Fed.R.Bankr.P. 7004(h). Alternatively, service was made on an attorney who was counsel for the insured depository institution in a state court action but not in the bankruptcy case. 12. Affidavit of Nonmilitary Service. An order granting relief by default against an individual fails either to (a) be preceded by an affidavit of nonmilitary service on file in the case, or (b) include in the order a statement as follows: The undersigned counsel for ______ states under penalty of perjury, pursuant to 50 USCA Appx § 521 (2004), that [I/our office] conducted a search of the data banks of the Department of Defense Manpower Data Center (DMDC) and found that the DMDC does not possess any information indicating that ___ is currently on active military duty.” The DMDC may be accessed at: https://scra.dmdc.osd.mil/scra/#/login -2- 13. Default Order Includes Relief Not Sought in the Motion and/or Included in the Notice. A default order includes relief not sought in the motion, or not included in a notice where the notice specifies the relief sought by the motion. Example #1. A default order will be returned when a motion for relief from stay does not seek abandonment but the proposed order includes abandonment, even if the trustee has issued a report of no distribution (unless the report of no distribution expressly abandons the property). Example #2. A default order will be returned when the motion does not seek abandonment and does not seek the right not to name the chapter 7 trustee in state court foreclosure action, but the proposed order states that the movant need not name the chapter 7 trustee in state court foreclosure action. 14. Default Stay Order Containing Findings Regarding Loan Terms or Lien Position in a Default Stay Order. A default stay relief order includes a finding or determination (i) that certain loan documents have been executed; (ii) of the amount owed to the creditor; (iii) that the creditor has a valid lien against collateral; (iv) that the lien is of a specified priority; and/or (v) that the lien is perfected. If the creditor believes the default stay order should recite such specifics, it should recite what the creditor claims. 15. Default Stay Order Requiring Surrender of Collateral. A default stay relief order includes a requirement that the debtor surrender collateral, such a house or a car. 16. Default Stay Order Modifying the Co-Debtor Stay-Notice. A default order in a chapter 7 case containing stay relief as to both the debtor and a co-debtor fails to state that notice was given to the debtor, co-debtor and chapter 7 trustee, and that none of those parties timely objected. 17. Default Stay Order Modifying the Co-Debtor Stay-Collateral. A default stay order on a motion seeking relief from the stay only against a co-debtor (not against the debtor) includes stay relief as to certain collateral and not just the co-debtor’s interest in the collateral. 18. Default Stay Order-Subsequent Cases. A default stay order includes relief from the stay in a subsequently filed bankruptcy case. 19. Default Order Annulling the Stay. A default stay order provides that the stay is annulled (i.e. that stay relief is granted as of a time prior to entry of the stay relief order) without the motion requesting annulment of the stay and/or without the notice specifically stating that the movant seeks to annul the stay. 20. No Objection Filed versus No Objection Received. A default order states that the movant did not “receive” an objection, rather than stating that no objection was timely “filed.” -3-
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