Following is an explanation of the procedures to be followed in cases and proceedings assigned to the Honorable Leslie Tchaikovsky, United States Bankruptcy Judge for the Northern District of California, Oakland Division. These instructions are intended to supplement the Federal Rules of Bankruptcy Procedure and the Local Rules for the Northern District of California and not to supersede them. Those rules should be consulted first to determine the correct procedures to follow.

Checking on the Status of an Order: To check on the status of an order (i.e., to see whether it has been signed by the judge), contact the case administrator, not the judge's chambers. To identify the appropriate case administrator, call the Clerk's Office (510-879-3600) and provide the receptionist with the case number.

Calendar Format: Following is a description of the typical calendar structure. However, this structure may vary to accomodate holidays, vacations, and other nonrecurring events. Practitioners may not calendar matters themselves. They must confirm a calendar date with the judge's calendar clerk, Hanka Boudreau, (510-879-3541) before noticing a hearing. As a general rule, trial weeks alternate with motion weeks.

Trials: During a trial week, Monday through Thursday are available for trial. In a month with five weeks, the extra week will be a trial week. Trials are set for assignment on Friday mornings at 9:00 a.m. during the week preceding the trial week. No one appears at that time. Instead, counsel receive a phone call from Hanka Boudreau to advise them what day of the following week the parties shall appear for trial. The parties must keep Monday through Thursday of the following week available until advised which day the trial will occur.

Motions: The week containing the third Tuesday of the month is generally a motion week.
Chapter 11 Motions: On motion weeks, chapter 11 motions are heard on Monday afternoon at 2:00 p.m.
Adversary Proceeding Motions and Status Conferences: On Thursdays of a motion week, status conferences in adversary proceedings are heard at 11:00 a.m. and the adversary proceeding law and motion calendar is heard at 2:00 p.m.
Chapter 7 Motions: Once a month, on the Thursday of the first motion week of the month, there is a 3:00 p.m. chapter 7 calendar.
Chapter 13 Motions and Confirmations: Once a month, on the third Friday of the month, at 9:00 a.m., all chapter 13 confirmation hearings and other matters that require the presence of the chapter 13 trustee are heard. Chapter 13 matters not requiring the presence of the trustee, other than motions for relief from the automatic stay (see below), are heard on the first Friday of the month at 9:00 a.m.

Motions for Relief From the Automatic Stay: Regardless of whether the week is a motion week or a trial week, motions for relief from stay are normally heard on alternate Fridays. Preliminary hearings are normally heard at 11:00 a.m. and final hearings at 1:00 p.m.

Obtaining Continuances:

Trials: Continuances of trials are granted only for good cause regardless of whether the parties stipulate to the continuance or the request for a continuance is contested. Good cause does not include ongoing settlement negotiations. A request for a continuance must be made by a noticed motion or by written stipulation stating the cause for the continuance. The earlier the request is made, the more likely it is to be granted.

Motions: A request by the moving party to continue a hearing on a motion must be made at least 48 hours before the calendar time except for motions for relief from stay. Otherwise, the moving party must appear at the time scheduled to make the request. A party moving for relief from the automatic stay may continue the hearing by calling Hanka Boudreau at any time prior to the hearing provided notice of the continuance is given to the responding party. If the responding party does not receive notice of the continuance and appears at the hearing, the moving party may be required to reimburse the responding party for the cost of the appearance.

Setting Matters on Shortened Time: If there is an identifiable responding party or parties to a proposed motion, a party applying for an order shortening time should first ask the responding party to stipulate to the shortened time. If the party or parties decline to stipulate, the moving party should call Hanka Boudreau to arrange a telephone conference on the application for the order shortening time. No order shortening time is required on motions for relief from stay. A party who believes that cause exists for setting a motion for relief from the automatic stay on less than 15 days notice may call Hanka Boudreau and state the alleged cause to her. If the judge agrees, the matter may be put on the calendar indicated by the judge. The judge will routinely permit motions for relief from the automatic stay to be calendared in the case of successive filings or where an unlawful detainer judgment has been entered before the case was filed.

Appearing Telephonically: If you wish to appear at a hearing telephonically, call the judge's calendar clerk, Hanka Boudreau, (510-879-3541) and request permission. Permission to appear telephonically is granted on a case-by-case basis. It will virtually never be permitted on a relief from stay calendar.

Chapter 11 Cases: Most chapter 11 cases are set for a status conference between 60 and 90 days after the petition is filed. In preparation for the status conference, the judge checks to see whether schedules and monthly operating reports have been filed and whether an attorney retention order has been obtained. At the status conference, the judge considers any case deficiencies noted by the Office of the United States Trustee, including nonpayment of UST fees and failure to establish a debtor-in-possession bank account. The judge asks the debtor to propose a deadline for filing a plan and disclosure statement and will generally adopt that proposal if it is reasonable. The judge then issues a scheduling order setting forth the deadline. If the debtor fails to comply with the deadline, the judge will schedule an order to show cause hearing. If there are case deficiencies, the judge may also continue the status conference to monitor their cure.

In most chapter 11 cases, the judge orders the plan and disclosure statement to be filed on a fast track basis. In accordance with this procedure, the debtor files the plan and disclosure statement and submits a proposed form of order conditionally approving the disclosure statement and setting a combined hearing on final approval of the disclosure statement and for confirmation of the plan. The order should also contain a deadline for submitting votes and for filing objections to either the plan or the disclosure statement (or both). The plan, disclosure statement, and proposed form of order should be served on the Office of the United States Trustee. No one else need be served unless the judge orders additional parties served. When the judge is satisfied with the form of the plan and disclosure statement, she will sign the order conditionally approving the disclosure statement and setting the combined hearing. At that time, the plan and disclosure statement may be disseminated to creditors for voting purposes.

 

PLAN

1. Administrative and priority tax claims should not be classified. See 11 U.S.C. §1123(a)(1). Additionally, they should not be referred to as impaired or unimpaired. The concept of impairment only applies to classified claims or interests. See 11 U.S.C. §1124. These claims should be discussed separately in a section entitled Unclassified Claims. This is not just a semantic difference. Only impaired classified claims and interests are entitled to vote. Other classes of claims and interests and unclassified claims may only object to the plan. The plan should make it clear that fees and costs of professionals employed by the debtor may not be paid until after they are approved and allowed by the court.

2. The plan must specify that priority tax claims will be paid in full within five years from the order for relief with interest. The interest rate should be specified. The plan should state when the payments will start and at what intervals they will be paid--e.g., monthly, quarterly. The plan should state whether the payments will be equal payments of principal and interest or, if not, the specific amount of each payment. The date of the first payment must not be contingent on the completion of payments to another class or category of claims.

3. The debtor's equity interest should be classified, designated as impaired or unimpaired, and a treatment proposed even when the debtor is an individual. See 11 U.S.C. §1123(a)(1). A debtor's equity interest is not impaired simply because the debtor will not receive any payments until all plan payments are made. If the debtor intends to retain its equity interest and that equity interest is not being diluted by the issuance of additional stock, it is unimpaired. Similarly, if an individual debtor intend to retain his or her assets after confirmation and to make payments from future income, the debtor's equity interest is not being impaired.

4. Each secured claim is considered unique. Only similar claims may be classified together. See 11 U.S.C. §1122(a). Thus, each secured claim must be separately classified. The description of the claim should identify clearly the nature of the collateral and, if there are other encumbrances on the same collateral, identify the priority of the security interest. The proposed treatment should specify whether the claimant will retain its lien after confirmation. Real property tax claims should be set forth in separate secured classes for each parcel of real property. They should not be treated as unclassified priority claims under 11 U.S.C. §507(a)(7). If those taxes are current, or if the debtor is taking advantage of the state's five year payment plan provisions, these claims should be shown as unimpaired.

5. The judge will not confirm a plan that makes the debtor's obligation to commence payments to general unsecured claims dependent on completion of payments to another class or category of claims. Similarly, she will not confirm a plan that simply promises to pay "net profits" or "excess cash" to unsecured claims. The debtor should calculate how much it expects to be able to pay and commit to paying that amount within a specified period. When payment is dependent upon a sale, refinancing, or some other event in the future, the plan should state a definite time or date by which that event must occur, and if it does not occur, that the debtor (or proponent) will be in default, subject to whatever remedies the plan allows affected creditors.

6. The plan must provide that the amounts due to any disputed claim will be reserved pending resolution of the dispute and whether interest earned on such reserved funds will be paid to the creditor when a distribution is made, retained by the debtor, or treated in some other fashion.

7. The plan should contain a section describing briefly the means of executing the plan. This does not require an extensive discussion of those means. The place for that is the disclosure statement. The means of execution section normally will just describe the proposed source of the payments under the plan--e.g., from future income and cash on hand.

8. The plan should be signed by both the debtor and debtor's counsel.

DISCLOSURE STATEMENT

1. The disclosure statement should briefly, clearly, and accurately describe the purpose of the disclosure statement and the procedure for obtaining confirmation. In particular, it should accurately state the vote required to constitute acceptance of the plan as set forth in 11 U.S.C. §1126. The discussion should not state that no other representations concerning the debtor are authorized. This misstates the law and tends to chill efforts by opponents of the plan to solicit rejections.

2. The disclosure statement should state briefly the reasons the debtor was forced to file the chapter 11 petition and what steps have been or will be taken to remedy those problems.
3. The disclosure statement should disclose all of the debtor's assets and their fair market value, noting how the debtor has arrived at the values indicated (e.g., owner's opinion, appraisal, judicial determination, etc.).

4. The disclosure statement should disclose each class of claims and estimate its amount. In the case of the secured claims, it should identify the collateral for the claim, its value, the other encumbrances on that collateral, and the priority and amount of the secured claim. The holders of the unclassified claims should be identified and the amount of each claim disclosed.

5. The significant events that have occurred during the chapter 11 case should be disclosed. In particular, if the case involves the operation of a business, including a business based on the rental of property, the disclosure statement should disclose the gross income, expenses, and net profit or loss during the chapter 11.

6. The disclosure statement should summarize the plan. This does not mean to simply reiterate the plan. A summary suggests something briefer and more readable that the plan itself.

7. The heart of the disclosure statement is the discussion of the feasibility of the plan. This should be specific and objective as opposed to self-serving. The discussion should clearly identify the amount that will be required to pay claims that must be paid on the effective date of the plan and the proposed source of those funds. Attaching copies of monthly operating reports is not sufficient. The discussion should then clearly identify the amount of plan payments that will be required each month during the plan and the proposed source of those payments. This will normally require projections or forecasts of the operation of the business showing projected gross income, expenses, net profit, and cash flow. The net profit should indicate the ability to make the plan payments. If the debtor is an individual, the disclosure statement must disclose the debtor's personal expenses and the proposed source of payment for those personal expenses. If the debtor is a closely held partnership or corporation, the disclosure statement should disclose whether the expenses include the principal's salary or whether the principal will also be relying on either a "draw" or the net profit for payment of his or her expenses. Finally, the gross income and net profit projected must be related to the debtor's actual operating history during the chapter 11. If the projections are more favorable than past history, the basis for the projections should be disclosed.

8. The disclosure statement should contain a clear and complete liquidation analysis. The statement that in the event of a liquidation, the unsecured creditors would clearly receive little or nothing is generally inadequate. The liquidation analysis should first list each asset, show its estimated liquidation gross sales proceeds, deduct costs of sale, encumbrances, and exemptions, if any, to derive net sale proceeds. These net sale proceeds figures should be totaled. From this total should be deducted first the estimated chapter 7 expenses, then the estimated chapter 11 expenses, then any priority claims. The remainder, if any, should be compared to the total general unsecured claims so that the probable dividend can be calculated. It should then be disclosed that this chapter 7 dividend is likely to be received within one to two years as compared to whatever time frame proposed by the plan. The liquidation analysis should include a statement that the debtor and the debtor's counsel have investigated whether any fraudulent transfers or preferences exist that a Chapter 7 trustee could pursue and the results of such investigation. In a case in which the debtor is a partnership, the disclosure statement should describe the rights of the Chapter 7 trustee under Bankruptcy Code section 723 and should disclose relevant financial information regarding the general partners.

9. If a statement is made in the plan that the debtor retains the right to pursue avoidance actions or other actions after the plan is confirmed, the disclosure statement or the plan should state whether the proceeds of any such action will benefit the debtor or the estate. If the debtor intends to pursue such actions for its own benefit, the disclosure statement should clearly set forth any such actions that the debtor believes to exist.

10. The disclosure statement should be signed by both the debtor and the debtor's counsel.