As confirmed cases of the Covid-19 virus climbed across the country, bankruptcy courts and the U.S. Trustee's office have been seeking ways to adapt to the new normal. This post will look at how the court system has rolled out its disaster preparedness through the lens of the Bankruptcy Courts for the Western District of Texas, Southern District of Texas and District of Delaware.
Here is a timeline of announcements from the Courts with a few random anecdotes thrown in. All of the standing orders and announcements can be found on the respective websites of their courts.
A Covid-19 Timeline
March 9, 2020:
The Southern District of Texas, issued the first of several orders addressing the pandemic. Prior to a public health emergency being announced, the Court adopted General Order 2020-4 which announced Hearing Protocols That May Be Implemented Under Certain Public Health or Safety Concerns. This order set out nine principles to be followed if the protocols were to be implemented, including respecting due process, avoiding in-person hearings, minimizing hearings required only by procedural rules and using technology where possible. The order then contained ten pages of specific protocols covering everything from how to handle chapter 13 hearings to how witnesses will appear electronically.
The Southern District has made it possible attorneys to monitor hearings by both phone and www.join.me. Witnesses would be required to appear both by video and telephonically.
March 11, 2020:
The Western District of Texas announced basic safety rules to avoid coming in contact with Covid-19. These were similar to the guidance given by the CDC.
March 13, 2020:
President Trump declared a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak.
The U.S. Trustee began announcing that all 341 meetings scheduled through April 10 would be continued and that
any meetings which did take place would not involve in person
attendance.
March 16, 2020:
The District of Delaware issued a short general order providing that all hearings that were not time sensitive would be rescheduled until after April 15. It also provided that all hearings prior to April 15 would be conducted telephonically or by video. The Court provided that the chapter 13 confirmation hearings scheduled for March 23 would go forward but that clients represented by counsel were encouraged not to appear.
The Southern District of Texas issued an order regarding chapter 13 proceedings stating that debtors were encouraged to participate by telephone and that counsel and trustees should appear in accordance with the presiding judge's normal procedures. All confirmation hearings were continued until after April 30.
The Southern District of Texas also issued an order continuing 341 meetings until after April 10 unless scheduled telephonically.
March 17, 2020:
The District of Delaware eliminated counter service at the Clerk's office and provided a link for pro se debtors to file petitions electronically. It also stated that filing fees for pro se parties would be deferred.
The Western District of Texas announced that beginning on March 23 and going forward, all hearings would be conducted by teleconference.
March 19, 2020:
The Southern District of Texas adopted a procedure for chapter 13 debtors to request a reduction in their plan payments for the period from March 1 to May 31 with arrearages to be cured by a plan modification to be filed in June.
The Southern District of Texas announced that it would allow digital signatures which complied with the federal ESIGN Act and that the Court intended to consider this practice for long-term adoption.
March 23, 2020:
The Western District of Texas announced that it would allow digital signatures which complied with the federal ESIGN Act.
The Western District of Texas also announced that pro se parties could file their petitions by U.S. mail, email or fax.
Finally, the Western District of Texas extended the time to obtain confirmation of chapter 13 plans from 45 days to 60 days after completion of the 341 meeting.
March 24, 2020:
The Southern District of Texas invoked its emergency protocols (see March 9) for the Brownsville, Galveston and Houston divisions.
The Southern District of Texas issued an order temporarily amending its requirement for attorney declarations in connection with flat fee contracts. Under the amended declaration, an attorney must certify that he spent at least one hour with the debtor in person, by video or by phone with video being preferred.
March 26, 2020:
The District of Delaware entered an order temporarily suspending the requirement that attorneys obtain a debtor's physical signature so long as the debtor signed electronically or otherwise approved the document, which could be done by email.
The Southern District of Texas invoked its emergency protocols for all divisions.
Some Stories
Here are two stories about hearings taking place in the new reality. Please feel free to share your own.
March 24, 2020:
Judge David Jones held a hearing in Newsco International Energy Services USA, Inc. In the middle of a brief and uncontroversial hearing, the judge asked counsel for the Debtor and the Committee if they were in front of their computers. He encouraged them to log in to join.me so they could get comfortable with it. It was then revealed that Committee Counsel was wearing a tshirt and a baseball cap. The attorneys received an impromptu demonstration of join.me and Judge Jones seemed pleased to show off his technology.
March 30, 2020:
A hearing in Craftworks Parent, LLC in the District of Delaware illustrated the challenges that attorneys are facing adapting to technology and remote officing. Judge Brendan Shannon arranged for attorneys to appear by telephone and skype. One attorney was unable to get skype to work but was able to appear telephonically. Another attorney mastered skype but apologized to the court for not having a tie available at his current location. (The court was very gracious). Another attorney was called upon and accidentally hit the hang up button instead of unmute. Notwithstanding the technological challenges, the hearing was both civil and substantive.
Take-Aways
This sampling of general orders shows courts being proactive in addressing a public health emergency. Given the emergency protocols issued by the Southern District of Texas, I suspect that this is something they were preparing for well before the current crisis. The standing orders cover similar territory with local variations. First, the courts have been going out of their way to implement social distancing. This has taken the form of eliminating in person hearings and 341 meetings as well as in person meetings between counsel and client. The courts have also looked for way to accomodate pro se filers without having them visit the clerk's office. Finally, the crisis has encouraged the courts to adopt technologies which will change the practice of law once this challenge has past.
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