Local Rule 6004-1: Sale of Estate Property

Rule 6004-1 Sale of Estate Property

(a) Notice of Sale.

(1) Other than a sale free and clear of interests, a sale under § 363(b) of the Code is initiated by notice under Rules 2002(a)(2) and 6004(a), Federal Rules of Bankruptcy Procedure.

(2) The notice must include: [A] the terms of the sale; [B] name of the purchaser; [C] relationship, if any, of the purchaser to the debtor or trustee; [D] the fair market value of the property; [E] the anticipated professional fees and expenses related to the sale; [F] indicate whether the sale includes personally identifying data; and [G] in a chapter 11 case, whether or not the assets proposed to be sold comprise a major part of debtor's estate or if their sale will affect debtor's ability to continue operating as a going concern.

(b) Sale Free and Clear of Interests.

(1) A motion for authority to sell property free and clear of liens or other interests is governed by Rule 9014, Federal Rules of Bankruptcy Procedure and must be served on the parties who have liens or other interests in the property to be sold.

(2) Unless waived by the court, a hearing must be held before a sale free and clear of liens or encumbrances is granted, even if no objections are filed in response to the notice.

(3) In addition to the information required under subdivision (a), the notice must include: [A] the date of the hearing on the motion; [B] the time within which objections may be filed; [C] notice that the property is to be sold free and clear of liens or encumbrances; [D] the amount of each lien or encumbrance claimed against the property; [E] the sub-paragraph of § 363(f) of the Code under which the sale is authorized; and [F] if the proceeds of the sale appear to be insufficient to pay all the liens and encumbrances claimed against the property, then the notice must further state— (i) the liens and encumbrances that may not be paid from the sale proceeds, and (ii) the necessity for the sale.

(4) Unless otherwise provided in the notice, all interests in property sold free and clear of liens and encumbrances attach to the proceeds of sale.

(c) Mandatory Discovery Exchange. Not later than fourteen (14) days after service of any objection to the sale of property, the parties must comply with the requirements of Rule 26(a), Federal Rules of Civil Procedure.

(d) Handling Proceeds.

(1) Unless the liquidation proceeds are remitted to the case trustee, if one is appointed, at the time of the sale, the auctioneer must deposit all liquidation proceeds in a trust account at a depository approved by the United States trustee.

(2) All liquidation proceeds must be remitted to the case trustee within fourteen (14) days after the sale.

(e) Report of Sale. Within thirty (30) days after a sale, auctioneers must submit to the trustee a report of sale required by Rule 6004(f), Federal Rules of Bankruptcy Procedure. The report of sale must include: (1) the date of the sale; (2) the price obtained for each item sold together with: [A] the name and address of each purchaser in the case of an auction; or [B] cash register tapes or appropriate documentation in the case of other types of sales; (3) the total amount of funds received and the amount transferred to the trustee; (4) the compensation and expenses sought by the auctioneer [expense requests must be documented by appropriate receipts or explanation]; (5) a statement that the auctioneer or insider did not directly or indirectly acquire an interest in any of the estate property sold; and (6) an explanation and sample of advertising efforts.

(f) Bond. An auctioneer must file a bond with the United States trustee that meets the requirements of the United States trustee. (g) 11 U.S.C. § 506(b) Claims.

(1) Unless the claim was previously noticed to the parties in interest in connection with the notice of the proposed sale of the property, a creditor having or claiming to have an interest in the property to be sold who claims post-petition fees, costs or charges under §506(b) of the Code, must, not later than thirty (30) days after the order approving the sale is entered: [A] file with the court an application for allowance of the claim, setting forth the amount of post-petition fees, costs, and charges claimed to be due; [B] transmit the application to the United States trustee, and [C] serve it on— (i) the debtor or trustee, if one has been appointed, (ii) any committee appointed in the case or, if no committee has been appointed, the five (5) largest unsecured creditors, and (iii) any party having or claiming to have an interest in the property being sold.

(2) A party objecting to the application for allowance of post-petition fees, costs and charges may serve and file an objection, in writing, not later than fourteen (14) days after service of the application.

(3) If no objection is filed as specified in paragraph (g)(2), the application for allowance will be deemed allowed or approved without further order of the court.