Local Rule 2081-2: Chapter 11 – Complex Cases

2081-2 Chapter 11 – Complex Cases

(a) Definition of Complex Case. A case is eligible to be a complex case if (1) it is filed under chapter 11 of the Code; (2) it is not filed by an individual debtor, as a single asset real estate case, or as a small business case as defined in § 101(51C) of the Code; and (3) the debt of the debtor or the aggregate debt of all affiliated debtors is at least $10 million or it involves a debtor with publicly traded debt or equity. In any case where the debtor is not eligible or the debtor has not made an election, the court may apply these rules if, following a hearing on a motion by a party in interest, the court determines just cause for these rules to apply to that case.

(b) Election and Verification. A debtor whose case is eligible to be treated as a complex case may file a notice of election as a complex case. The debtor shall file a notice of election concurrently with the petition. Upon the filing of the notice of election, the case shall be deemed to be a complex case unless and until otherwise ordered.

An involuntary debtor whose case is eligible to be treated as a complex case may file a notice of election as a complex case. The involuntary debtor shall file a notice of election concurrently with the filing of an answer or other responsive pleading to the petition or within 21 days after service of the summons, whichever is earlier. Upon the filing of the notice of election, the involuntary case shall be deemed to be a complex case unless and until otherwise ordered.

If one or more affiliated debtor files a complex case in this district, the cases of all of the affiliated debtors shall be treated as complex cases.

(c) Notice to United States Trustee and Bankruptcy Clerk. Unless there are exigent circumstances, the debtor's attorney shall contact the United States trustee and the clerk at least 2 business days prior to the filing of a petition for a complex case. The debtor's attorney shall identify all matters that require consideration on or near the first day of the case.

(d) Joint Administration. An order of joint administration may be entered without an opportunity for a hearing upon the filing of a motion for joint administration pursuant to FED. R. BANKR. P. 1015 if it is supported by an affidavit, declaration or verification establishing that the joint administration of the cases is warranted and will ease the administrative burden for the court and the parties. The motion and proposed order should be filed in all affiliated cases and the order shall designate the case in which the affiliated debtors will be administered. Notice of the motion shall be served on all affected parties in all cases. An order of joint administration entered in accordance with this procedure may be reconsidered upon motion of any party in interest at any time. An order of joint administration is for procedural purposes only and shall not cause a substantive consolidation of the respective debtors' estates.

If joint administration is sought, the debtor shall file a consolidated list of unsecured creditors of no less than 30 largest unsecured creditors, provided there shall be at least five unsecured creditors included for each debtor. The list shall be filed in the proposed lead case. The debtor shall also provide to the United States trustee emails of the largest 20 unsecured creditors.

(e) Schedules and Statements of Financial Affairs. Notwithstanding the entry of an order for joint administration, schedules and statements of financial affairs and any amendments thereto shall be filed for each debtor and docketed in that debtor's case. The statistical information requested by CM/ECF upon docketing shall be filled out for each separate debtor.

(f) Master Service List. The debtor shall maintain a Master Service List identifying the parties to be served whenever a motion or other document requires notice. Unless otherwise required by the Code, Rules or the court, notices of motions and other matters shall be limited to the parties on the Master Service List. The Master Service List shall initially include:

(1) the debtor;

(2) the debtor's attorney;

(3) the United States trustee;

(4) any pre-petition secured lender;

(5) any post-petition secured lender;

(6) the debtor's 20 largest unsecured creditors or the consolidated list required herein in the case of a joint administration;

(7) any committee appointed under the Code and its attorney;

(8) any party who specifically requested notice;

(9) any applicable government agencies to the extent required by the Rules;

(10) any indenture trustee; and

(11) any petitioning creditors.

The initial Master Service List shall be filed with the petition. The debtor shall file an updated Master Service List at least every 7 days during the first 30 days of the case and at least every 30 days thereafter throughout the case; provided, if there are no changes to the list, an updated Master Service List need not be filed. The court may require an adjustment to the Master Service List at any time.

(g) Claims and Noticing Agents. Claims agents and noticing agents are not required. Any such request should be by motion.

(h) Case Management Order. A case management order shall be proposed by the debtor at the First Day Hearing and shall be entered in every complex case. The case management order shall include, but is not limited to, the following:

(1) acknowledgment of verification of the case as a complex case;

(2) approval of the "Master Service List" procedure as set forth herein;

(3) approval of the "Hearing Procedures" and "Hearing Agenda" procedures as set forth herein;

(4) instructions for arranging telephonic appearances at hearings;

(5) claims and noticing agent contact information;

(6) approval of the "Professional Compensation and Reimbursement of Expenses" procedures as set forth herein; and

(7) approval of the "Certificates of Service" procedure as set forth herein.

(i) First Day Hearing. If the debtor files motions or other documents that require consideration on or near the first day of the case (the "First Day Matters"), including the motions listed in LBR 2081-1(a), the debtor shall file a motion for consideration pursuant to LBR 9075-1. Unless the debtor requests otherwise, First Day Matters shall be heard within two business days of the request.

Upon the entry of an order granting the request for expedited consideration of certain First Day Matters (the "First Day Order and Notice"), the debtor's attorney shall promptly serve a copy of the First Day Order and Notice by the most expeditious means available, including hand delivery, facsimile, electronic mail, or overnight mail, or courier on the parties on the Master Service List and any other party asserting a security interest in the assets of the debtor that are the subject of a First Day Matter. LBR 9013-3 shall apply to first-day motions except that the responsible party shall file the certificate of service at or before the commencement of the hearing.

The debtor may post the First Day Matters on the noticing agent's website. Such a posting, together with service of the First Day Order and Notice, shall be sufficient notice of the First Day Matters and the hearing to consider those matters, provided the First Day Order and Notice includes a website URL to the documents on the website and the contact information, including the name, telephone number and email address of the person or persons whom a party may contact to obtain a copy of the First Day Matters in another format, including paper, at the expense of the debtor. If service is not made as set forth in this paragraph, service shall be made in the same manner as set forth in the previous paragraph.

LBR 2081-1(f) shall apply to any motion, proposed order or agreed order for use of cash collateral or post-petition financing.

(j) Omnibus Hearings. The debtor may request that the court establish weekly, bi-monthly or monthly dates and times for omnibus hearings (the "Omnibus Hearings"). This may be a first day motion. The court shall accommodate this request if it appears justified. The court shall adjust the frequency of the dates as necessary based on the progress of the case.

After the Omnibus Hearing dates are established and unless otherwise ordered by the court, any matter in the case whether initiated by the debtor or another party, shall be set on an Omnibus Hearing date. Any matter filed at least 21 days before the next Omnibus Hearing date shall be heard on the next Omnibus Hearing date. Objections, if any, shall be filed at least 7 days before the Omnibus Hearing date. Replies, if any, shall be filed at least two business days before the Omnibus Hearing date. The motion or other initiating document shall include the Omnibus Hearing date and time, the deadline for objections and the deadline for replies.

(k) Emergency Hearings. If a party files a motion or other document that such party contends requires consideration on less than 21 days' notice, any relief requested must comply with LBR 9075-1. Each form of relief should be requested by separate motion. Motions for emergency hearings shall only be granted for cause shown. If the court grants the motion for an emergency hearing, the underlying motion or document will be set on the next Omnibus Hearing date or other date as determined by chambers. The agenda shall clearly denote any matter that is scheduled to be heard on an emergency basis.

(l) Hearing Agendas. The attorney for the debtor or trustee shall file an agenda and serve it on the Master Service List at least two business days before the hearing.

Uncontested matters shall be listed before contested matters.

For each matter, the agenda shall indicate the following:

(1) moving party's name;

(2) docket number of the initiating document; and

(3) status, e.g., settled, going forward, continuance requested, continuance opposed, continued by consent.

For each matter going forward or where a request for continuance is opposed, the agenda shall also include the following:

(4) docket number of any objections, responses, replies and documents in support; and

(5) filing party's name.

Chambers shall be promptly notified of a settlement.

The agenda may list responses continued by consent collectively.

The agenda shall clearly denote any emergency hearings and evidentiary hearings.

Amended agendas shall be filed and highlighted to show the changes.

(m) Professional Compensation. To streamline the professional compensation process and more effectively enable the court and all parties to monitor the professional fees incurred, the following procedures shall apply, unless otherwise ordered.

After the end of a month for which compensation is sought, each professional seeking compensation may serve a monthly statement (the "Monthly Statement") on (1) the debtor's attorney, (2) the United States trustee, (3) any pre-petition secured lender, (4) any post-petition secured lender, (5) the attorney for any committee appointed under the Code and (6) any other party the court designates (collectively, the "Professional Fee Notice Parties").

The Monthly Statement shall contain a list of individuals and their job titles who provided the services during the statement period, their billing rates, the aggregate hours spent by each individual, contemporaneously maintained time entries for each individual in increments of tenths of an hour and a reasonably detailed breakdown of expenses incurred. The Monthly Statement shall include a notice that any objections shall be filed within 14 days of service of the Monthly Statement. After the expiration of the 14 day period, the debtor shall be authorized to pay 80% of the undisputed fees and expenses identified in the Monthly Statement.

If a Monthly Statement is served, a summary of the total fees and expenses requested shall be filed.

Any objection to a Monthly Statement shall be served on the affected professional and the other Professional Fee Notice Parties. The objection shall state the nature of the objection and the amount of fees or expenses at issue. After expiration of the 14 day period, the debtor shall be authorized to pay the remainder of the fees and expenses identified in the Monthly Statement.

If any objecting party resolves a dispute with a professional, the objecting party or the debtor with the consent of the objecting party, shall serve a notice on the Professional Fee Notice Parties that the objection is withdrawn. The notice shall describe the terms of the resolution. The debtor shall be authorized to pay the portion of the fees and expenses identified in the Monthly Statement that is no longer subject to an objection.

Any objection that is not resolved shall be preserved and presented to the court at the next interim or final fee application hearing.

Whether a party objects to a Monthly Statement or not, any party may object to any fee application filed with the court in accordance with the Code. The failure to object to a Monthly Statement shall not be a waiver of any kind or prejudice that party's right to object to any subsequently filed fee application.

Each professional shall file an application for interim or final approval of allowance of compensation and reimbursement of expenses pursuant to §§ 330 and 331 of the Code, including compensation previously paid by the debtor on the basis of a Monthly Statement, every 120 days, unless the court orders a different frequency.

Neither the payment of nor the failure to pay, in whole or in part, monthly compensation and reimbursement of expenses shall have any effect on the court's interim or final allowance of compensation or reimbursement of expenses. All fees and expenses, whether or not paid or objected to in connection with a Monthly Statement, remain subject to review and approval by the court in connection with interim and final fee applications. All fees and expenses are subject to disgorgement or offset if not approved by the court on a final basis.

These procedures may be used for reimbursement of expenses for members of a committee appointed under the Code. The attorney for the committee shall collect and submit statements of expenses, with supporting vouchers, from the committee members.