§ 43.6 — Option Not to Convene Meeting of Creditors?
Revised: July 3, 2007
Section 341(a) of the Bankruptcy Code mandates that the U.S. trustee convene and preside at a meeting of creditors.1 When a Chapter 13 debtor is not able to attend the meeting of creditors in person, it is difficult or impossible in some districts to go forward with the case.2 There may be some help with this problem in BAPCPA, though perhaps help in Chapter 13 cases was unintended.
BAPCPA added a new § 341(e):
Notwithstanding subsections (a) and (b), the court, on the request of a party in interest and after notice and a hearing, for cause may order that the United States trustee not convene a meeting of creditors or equity security holders if the debtor has filed a plan as to which the debtor solicited acceptances prior to the commencement of the case.3
The disjunctive reference to “equity security holders” and to “solicited” acceptances will suggest to some that this new section was targeted at Chapter 11 cases. But there is nothing in new § 341(e) that conclusively limits to any particular chapter the possibility that the bankruptcy court would order the U.S. trustee not to convene a meeting of creditors.
The conditions in § 341(e) for not convening a meeting of creditors are possible in a Chapter 13 case. The new section requires the request of a “party in interest.” The debtor would be a party in interest, as would the Chapter 13 trustee. A creditor would be a party in interest, though it is not obvious when or why a creditor would want to eliminate the meeting of creditors in a Chapter 13 case.
The condition that the debtor “has filed a plan” is easily met in a Chapter 13 case—in fact, it is mandated that the debtor do so.4 The final condition that the debtor solicited acceptances prior to the commencement of the case could also be true in a Chapter 13 case. Acceptance by creditors has statutory importance in Chapter 13 cases at least with respect to priority claim holders5 and secured claim holders.6 Although “solicitation” appears as a term of art only in Chapter 11,7 it is not unreasonable to characterize a Chapter 13 debtor’s prepetition negotiation of the terms for payment through a contemplated plan as soliciting acceptance.
There are many circumstances in which Chapter 13 debtors are not able to physically appear at the meeting of creditors. It happens regularly for debtors in active military service and debtors who are physically or mentally challenged. Often the terms of the plan are not in dispute and objections to confirmation are not likely. There is just the problem that the debtor can’t physically appear at the meeting of creditors.
New § 341(e) offers the possibility of not convening the meeting of creditors. To get there, debtor’s counsel should make sure that the debtor solicited acceptance of a plan prior to filing the Chapter 13 petition. With the petition, counsel should file the plan and a motion that the U.S. trustee not convene a meeting of creditors. On the right facts, § 341(e) is a new statutory exception to the meeting of creditors requirement in Chapter 13 cases.
Unresolved by § 341(e) is how to count the many other Code provisions that use the meeting of creditors as a starting or ending point when the U.S. trustee has been ordered not to convene a meeting. For example, new § 1324(b) states that a hearing on confirmation in Chapter 13 cases may be held not earlier than 20 days or later than 45 days “after the date of the meeting of creditors under section 341(a).”8 What would be the date of the meeting of creditors under § 341(a) if the bankruptcy court orders that the U.S. trustee not convene a meeting of creditors? Perhaps it would be the date on which the meeting of creditors was scheduled but not convened? There would be similar counting problems with respect to the many new statutory duties to file or provide tax returns that are counted from the first date set for the meeting of creditors or from the date of the meeting of creditors.9 These counting problems can all probably be resolved by scheduling a § 341 meeting but not convening that meeting.
It is at least interesting that new § 341(e) is the first concrete statutory exception to the rule that the U.S. trustee controls the scheduling of meetings of creditors in Chapter 13 cases.10 Section 341(e) contemplates that the bankruptcy court will order the U.S. trustee not to convene a meeting of creditors.
Interim Rule 2003 contains this opening sentence: “Except as provided in § 341(e) of the Code, in a chapter 7 liquidation or a chapter 11 reorganization case, the United States trustee shall call a meeting of creditors[.]”11 It is not obvious why the rules drafters put the cross-reference to new § 341(e) at the beginning of this particular sentence. By negative implication, other sentences in Bankruptcy Rule 2003 that regulate the scheduling of meetings of creditors in Chapter 12 and Chapter 13 cases may be misread as not subject to the new exception in § 341(e). The reference to Chapter 7 liquidation in the quoted sentence makes no sense at all because the condition in § 341(e) that the debtor has filed a plan and solicited acceptances prior to commencement of the case is not possible in a Chapter 7 case. Interim Bankruptcy Rule 2003(a) should be reconstructed to place the § 341(e) exception correctly as a possibility in Chapter 13 (and Chapter 12) cases.
3 11 U.S.C. § 341(e).
4 See 11 U.S.C. § 1321, discussed in § 55.1 [ Debtor Must File a Plan ] § 51.2 Debtor Must File a Plan.
5 See 11 U.S.C. § 1322(a)(2) (“provide for the full payment . . . of all claims entitled to priority . . . unless the holder . . . agrees to a different treatment”), discussed in § 98.1 [ Plan Must Provide Full Payment ] § 73.1 Plan Must Provide Full Payment.
6 See 11 U.S.C. § 1325(a)(5)(A) (“the holder of such claim has accepted the plan”), discussed in § 101.2 [ Acceptance of Plan ] § 74.3 Acceptance of Plan before BAPCPA.
7 See 11 U.S.C. § 1125.
8 11 U.S.C. § 1324(b), discussed in § 502.1 [ Timing of Hearing on Confirmation ] § 115.2 Timing of Hearing on Confirmation after BAPCPA.
9 See 11 U.S.C. § 521(e) and 1308(a) and (b), discussed in § 42.4 Tax Return Duties—In General, § 42.5 Tax Return Duties Seven Days before First Scheduled Meeting of Creditors, § 42.6 Tax Return Duties One Day before First Scheduled Meeting of Creditors and § 42.7 Tax Return Duties—On Request.
10 See also 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 and 398.1 [ Holding Open the Meeting of Creditors ] § 43.7 Holding Open the Meeting of Creditors, which authorizes the Chapter 13 trustee to “hold open” a meeting of creditors.
11 Interim Bankr. R. 2003(a).