Local Rule 1015-1: Consolidation of Estates in Joint Case; Consolidation or Deconsolidation of Estates; Joint Administration.

Rule 1015-1. Consolidation of Estates in Joint Case; Consolidation or Deconsolidation of Estates; Joint Administration.

(a) Joint case. Unless otherwise ordered, the estates in a joint case filed under 11 U.S.C. § 302(a) are substantively consolidated for all purposes pursuant to 11 U.S.C. § 302(b).

(b) Motion to substantively consolidate or to deconsolidate. A motion to substantively consolidate two or more estates under Fed.R.Bankr.P. 1015(b) or a motion to deconsolidate the estates of joint debtors or other estates previously consolidated shall state the cause for such relief and shall be served with a notice of motion on all creditors and other parties in interest not electronically served. The notice shall conform to Bankr. D.S.D. R. 2002-1(a) and shall set forth a last date (month, day, year) for filing an objection or other response that is 21 days after service of the motion and the notice of motion.

(c) Motion regarding joint administration. A motion to jointly administer two or more cases or a motion to discontinue the joint administration of two or more cases previously joined shall state the cause for such relief and shall be served with a notice of motion on all creditors and other parties in interest not electronically served. The notice shall conform to Bankr. D.S.D. R. 2002-1(a) and shall set forth a last date (month, day, year) for filing an objection or other response that is 21 days after service of the motion and the notice of motion.

REFERENCES: 11 U.S.C. § 302; Fed.Rs.Bankr.P. 1015 and 2009.

Practice Pointers: Substantive consolidation and joint administration are distinct legal procedures. Under joint administration, the estates are not combined, but the separate cases are handled under one docket for convenience and efficiency. Separate accounts are kept, and a separate distribution of nonexempt assets is made to creditors. Fed.R.Bankr.P. 2009(e). When cases involving different debtors are substantively consolidated, the bankruptcy estates are combined into one, and only a single distribution to all the creditors from all the consolidated cases is made from all the consolidated assets. Although no Bankruptcy Code section or federal rule specifically governs substantive consolidation, some courts rely on 11 U.S.C. § 105(a) for authority. See In re Glen J. Brinkman, Bankr. No. 94-30004, slip op. (Bankr. D.S.D. June 20, 1994).

When either substantive consolidation or joint administration is sought, a motion needs to be filed in each affected case and all creditors and other parties in interest in each case shall be served.

If any party is served by mail or under the provisions of Fed.R.Civ.P. 5(b)(2)(D) [leave with clerk] or (F) [other means consented to], the notice periods stated above shall be increased three days pursuant to Fed.R.Bankr.P. 9006(f).