Thursday, July 30, 2009
Rule Amendment Proposes to Allow Objections to Exemptions After Conversion
The Committee on Rules and Practice has recommended that the Judicial Conference approve a series of changes to the Federal Rules of Bankruptcy Procedure. One proposal is to amend Rule 1019 to allow a new period of time to object to exemptions when a case is converted from chapters 11, 12 or 13 to chapter 7. Currently, if creditors fail to object to an exemption in a reorganization case and the case is later converted to chapter 7, the chapter 7 trustee does not have an opportunity to object unless the debtor amends their exemptions. However, the rule would not apply if: (i) the case was originally filed as a chapter 7 and the period for objecting to exemptions expired or (ii) a plan was confirmed more than one year prior to conversion. If approved by the Judicial Conference, the rule will be transmitted to the Supreme Court for adoption.