§ 115.2     Timing of Hearing on Confirmation after BAPCPA
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 115.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

In a section titled “Adequate Time to Prepare for Hearing on Confirmation of the Plan,”1 BAPCPA amended § 1324 to schedule the hearing on confirmation of a Chapter 13 plan as follows:

§ 1324. Confirmation hearing
(a) Except as provided in subsection (b) and after notice, the court shall hold a hearing on confirmation of the plan. A party in interest may object to confirmation of the plan.
(b) The hearing on confirmation of the plan may be held not earlier than 20 days and not later than 45 days after the date of the meeting of creditors under section 341(a), unless the court determines that it would be in the best interests of the creditors and the estate to hold such hearing at an earlier date and there is no objection to such earlier date.2
[2]

Understanding amended § 1324 won’t begin with subsection (a). The introductory “except as provided in subsection (b)” signals that the drafters intended to include in subsection (b) an exception to the requirement in subsection (a) that the court “shall hold a hearing on confirmation of the plan.” There is no such exception in subsection (b).

[3]

Instead, new § 1324(b) mandates the scheduling of the hearing on confirmation. Before BAPCPA, there was no Code provision addressing the scheduling of the hearing on confirmation in Chapter 13 cases. Many different approaches developed, including the “extremes” that some courts accelerated the hearing to confirm Chapter 13 plans immediately after the meeting of creditors while other courts delayed confirmation for months until after the claims bar date in § 502(b)(9).3

[4]

The amendments to § 1324(b) force the hearing on confirmation in Chapter 13 cases into a range of days after the meeting of creditors under § 341(a). More careful draftsmanship would have furthered this effort.

[5]

The obvious first question is whether “may be held” in § 1324(b) is mandatory or permissive. The rest of the sentence suggests that it is mandatory. The rules of construction in § 102 tell us that “may not” is prohibitive. Is “may be held not . . .” also a prohibitive phrase? House Report No. 109-31 states that § 1324 was amended “to require the Chapter 13 confirmation hearing to be held not earlier than 20 days following the first date set for the meeting of creditors and not later than 45 days from this date.”4

[6]

Whatever influence the House Report might have on the proper interpretation of “may be held” is at least diminished by the fact that the quoted portion of the House Report is not consistent with new § 1324(b) itself. As amended, § 1324(b) counts the confirmation hearing from the “date of the meeting of creditors.” The House Report counts the confirmation hearing from a different date—the “first date set for the meeting of creditors.” This is not a benign mistake. It is quite common for meetings of creditors in Chapter 13 cases to actually convene on a date different from the “first date” set for the meeting of creditors.

[7]

Measuring as the statute directs from the date of the meeting of creditors probably means measuring from the date the meeting of creditors is actually held. New § 1324(b) could have gone further to tell us whether the date of the meeting of creditors under § 341(a) means the date the meeting of creditors is concluded or the date it begins. This issue has added importance after BAPCPA because of the new provision for holding open the meeting of creditors for the filing of tax returns under § 1308(b).5 Some further judicial interpretation of § 1324(b) may be needed to clarify the date from which the 20 days and 40 days in § 1324(b) will be counted when a meeting of creditors is held open or otherwise adjourned in a Chapter 13 case.

[8]

The issue of when to start the counting in § 1324(b) may be particularly important to taxing authorities. BAPCPA amended § 502(b)(9) to permit governmental units in Chapter 13 cases to file timely claims up to 60 days after the date on which a tax return is filed under § 1308.6 In the same section of BAPCPA that amended § 502(b)(9), there is a “sense of Congress” that the Judicial Conference of the United States should amend the Federal Rules of Bankruptcy Procedure to permit governmental units to file objections to confirmation up to 60 days after the date on which the debtor files all tax returns required under § 1308 in a Chapter 13 case.7 When a meeting of creditors is held open by the trustee for the filing of tax returns under § 1308, there could be problems counting the 20-day and 45-day periods in new § 1324(b) in a manner that would respect the sense of Congress that a taxing authority should have 60 days from the filing of a tax return under § 1308 in which to file an objection to confirmation in a Chapter 13 case. There is currently no mechanism in place to bring coherence to these conflicting time periods.

[9]

Under Bankruptcy Rule 2003(a), the U.S. trustee is required to call a meeting of creditors in Chapter 13 cases “no fewer than 20 and no more than 50 days” after the petition.8 Under new § 1324(b), the range of possible dates for the hearing on confirmation of a Chapter 13 plan would be no earlier than 40 days after the petition and no later than 95 days after the petition, unless the court fixes an earlier date.

[10]

Section 1324(b) permits the court to determine that it would be in the best interests of creditors and the estate to hold the confirmation hearing “at an earlier date.” This authority is hedged that “there is no objection to such earlier date.” Read literally, any objection to an earlier date would preclude a court determination that it would be in the best interests of creditors and the estate to convene an earlier hearing on confirmation. This is unusual in bankruptcy practice. Typically, an objection triggers a hearing in a bankruptcy case, but not a veto. Section 1324(b) seems to give any party in interest the power to veto the holding of a confirmation hearing any earlier than 20 days after the date of the meeting of creditors under § 341(a).

[11]

New § 1324(b) could create problems in courts that confirm Chapter 13 plans immediately after the meeting of creditors when there are no objections to confirmation. Confirmation immediately after the meeting of creditors would be “earlier than 20 days” for § 1324(b) purposes, and the new section would require a court determination that the earlier date is in the best interests of creditors and the estate. Determining whether there is any objection to the earlier date would require some notice and opportunity for objection. This sounds like a cumbersome process just to determine when to hold the hearing on confirmation in Chapter 13 cases. Perhaps the original notice of filing of the Chapter 13 case could contain an additional notice that confirmation will occur earlier than 20 days after the date of the meeting of creditors absent timely objection. Some mechanism of this sort is probably necessary in districts that accelerate the hearing on confirmation in Chapter 13 cases to a time less than 20 days after the date of the § 341(a) meeting of creditors.

[12]

Left unresolved by § 1324(b) is whether the bankruptcy court can schedule a hearing on confirmation later than 45 days after the § 341(a) meeting. As amended, § 1324(b) is silent on the issue. That the new section directly addresses settings earlier than the range of dates given will suggest to some that settings later than 45 days after the § 341(a) meeting are not contemplated. If a later date is permitted, there is no clue in the statute what facts or determination by the court would be necessary to support a later date.

[13]

There could be problems counting the 20-day and 45-day periods in new § 1324(b) in Chapter 13 cases in which no meeting of creditors is convened. As amended by BAPCPA, on request of a party in interest and for cause, § 341(e) permits the bankruptcy court to order that the U.S. trustee not convene a meeting of creditors if the debtor has filed a plan with respect to which acceptances have been solicited prior to commencement of the case.9 New § 1324(b) counts the scheduling of the hearing on confirmation from “the date of the meeting of creditors under section 341(a).” If the bankruptcy court orders the U.S. trustee not to convene a meeting of creditors in a Chapter 13 case, what will be the “date of the meeting of creditors” from which to count the mandatory scheduling of the hearing on confirmation? In that situation, perhaps the bankruptcy court should both set the date of the § 341 meeting of creditors and order the U.S. trustee not to convene a meeting on that date. As silly as that sounds, it would eliminate scheduling confusion in the Chapter 13 case.


 

1  Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, § 317, 119 Stat. 23 (2005).

 

2  11 U.S.C. § 1324.

 

3  See § 216.1 [ Timing of Hearing on Confirmation ] § 115.1  Timing of Hearing on Confirmation before BAPCPA.

 

4  H.R. Rep. No. 109-31, at 90 (emphasis added).

 

5  See 11 U.S.C. § 1308(b), discussed in §§ 391.1 [ Tax Return Duties One Day before First Scheduled Meeting of Creditors ] § 42.6  Tax Return Duties One Day before First Scheduled Meeting of Creditors, 393.1 [ Consequences of Failure to File or Provide Tax Returns ] § 42.8  Consequences of Failure to File or Provide Tax Returns and 398.1 [ Holding Open the Meeting of Creditors ] § 43.7  Holding Open the Meeting of Creditors.

 

6  See § 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA.

 

7  See Pub. L. No. 109-8, § 716(e), 119 Stat. 23 (2005). See also H.R. Rep. No. 109-31, at 112.

 

8  Fed. R. Bankr. P. 2003(a). If the U.S. trustee designates a place for the meeting of creditors which is “not regularly staffed by the U.S. Trustee,” the meeting may be held “not more than 60 days after the order for relief.”

 

9  11 U.S.C. § 341(e), discussed in § 397.1 [ Option Not to Convene Meeting of Creditors? ] § 43.6  Option Not to Convene Meeting of Creditors?.