The official bankruptcy forms have also been revised to reflect these new dollar amounts.
The updated forms include the official Proof of Claim form (the link has a copy of the revised form), as well as a number of other commonly used bankruptcy forms.
An official notice from the Judicial Conference of the United States was just published announcing that certain dollar amounts in the Bankruptcy Code will be adjusted upward by 13.2004%, perhaps the largest increase to date. Inflation adjustments are made to certain Bankruptcy Code dollar amounts every three years, and these new amounts will apply to cases filed on or after April 1, 2025.
The employee compensation and employee benefit plan contribution priorities under Sections 507(a)(4) and 507(a)(5) both increase to $17,150 from $15,150;
The consumer deposit priority under Section 507(a)(7) rises to $3,800 from $3,350;
The total amount of claims required to file an involuntary petition rises to $21,050 from $18,600;
The dollar amount in the bankruptcy venue provision, 28 U.S.C. Section 1409(b), which requires that actions to recover for non-consumer, non-insider debt be brought against defendants in the district in which they reside, has increased to $31,425 from $27,750;
The minimum amount required to bring a preference claim against a defendant in a non-consumer debtor case, specified in Section 547(c)(9), rises to $8,575 from $7,575; and
The total debt amount in the definition of small business debtor in Section 101(51D) will rise to $3,424,000 from $3,024,725.
Other adjustments will affect consumers more than business debtors. For example, the debt limit for an individual to qualify for a Chapter 13 bankruptcy case will rise to $1,580,125 of secured debt, and certain exemption amounts will also increase.
These new dollar amounts, on top of the 10.973% increase made in 2022, are now approximately 25% higher than the amounts in effect in 2019. Be sure to keep the new, higher amounts in mind when assessing cases filed after April 1, 2025. Official bankruptcy forms will likely be updated as the April 1, 2025 effective date draws near.
I recently had the honor of talking with the American Bankruptcy Institute’s Editor-at-Large Bill Rochelle about the intersection of intellectual property and bankruptcy, as part of ABI’s Industry Viewpoints video series.
ABI Panel. Last month I had the honor of speaking on a panel at the American Bankruptcy Institute’s 2022 Annual Spring Meeting in Washington, D.C. The topic of our panel was the Monetization of Intellectual Property in Bankruptcy and Restructuring.
I was joined by four distinguished panelists, Leslie Zmugg, General Counsel of Gordon Brothers (who was our moderator); Arthur Daemmrich, the Jerome and Dorothy Lemelson Director at the Lemelson Center for the Study of Invention and Innovation at the Smithsonian Institution; Bradley Limpert at Limpert & Associates; and Joshua Pichinson, Managing Director at Sherwood Partners, Inc./agencyIP.
The panel covered a range of issues, including an historical perspective on intellectual property and the way business failures impacted technological development, the impact of licenses on IP sales in bankruptcy, due diligence issues in distressed IP sale transactions, and cross-border implications in certain intellectual property transactions.
Video Available. The American Bankruptcy Institute has now made the the video of the panel discussion available for your viewing pleasure — just follow the link in this sentence to watch it.
The official bankruptcy forms have also been revised to reflect these new dollar amounts.
The updated forms include the official Proof of Claim form (the link has a copy of the revised form), as well as a number of other commonly used bankruptcy forms.
Separately, the temporary change in the 2020 CARES Act as subsequently extended, boosting the aggregate non-contingent liquidated debt limit to $7,500,000 for filing a Subchapter V case, expired on March 27, 2022. Although Congress may raise the debt limit later, these new official forms reflect the April 1, 2022 inflation-adjusted cap of $3,024,725 for Subchapter V cases.
Remember, the increased dollar amounts, now reflected on these forms, apply only to cases filed on or after April 1, 2022.
The employee compensation and employee benefit plan contribution priorities under Sections 507(a)(4) and 507(a)(5) both increase to $15,150 from $13,650;
The consumer deposit priority under Section 507(a)(7) rises to $3,350 from $3,025;
The total amount of claims required to file an involuntary petition rises to $18,600 from $16,750;
The dollar amount in the bankruptcy venue provision, 28 U.S.C. Section 1409(b), which requires that actions to recover for non-consumer, non-insider debt be brought against defendants in the district in which they reside, has increased to to $27,750 from $25,000;
The minimum amount required to bring a preference claim against a defendant in a non-consumer debtor case, specified in Section 547(c)(9), rises to $7,575 from $6,825; and
The total debt amount in the definition of small business debtor in Section 101(51D) will rise to $3,024,725 from $2,725,625.
Other adjustments will affect consumers more than business debtors. For example, the debt limit for an individual to qualify for a Chapter 13 bankruptcy case will rise to $1,395,875 of secured debt, and certain exemption amounts will also increase.
Given recent inflation, these increases are larger than usual. Be sure to keep them in mind when assessing cases filed after April 1, 2022. Official bankruptcy forms will likely be updated as April 1st draws near.
Each year amendments are made to the Federal Rules of Bankruptcy Procedure, which govern how bankruptcy cases are managed. The amendments address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. The rule amendments are ultimately adopted by the U.S. Supreme Court and technically subject to Congressional disapproval.
Just A Handful Of Rule Amendments This Year. This year there are only four bankruptcy rule amendments expected to take effect on December 1, 2021. They are all relatively minor technical or administrative revisions. That means you don’t have to worry about major bankruptcy rule changes this year — good to know.
Here are the amendments:
Rule 2005, addressing release conditions for a debtor taken into custody, was amended to refer to the correct section of Title 18.
Rule 3007, governing service of claim objections, was amended to make clear that an insured depository institution, now identified only as one “defined in section 3 of the Federal Deposit Insurance Act,” also has to be served pursuant to Rule 7004(h) and its more rigorous service requirements (including certified mail in some situations). Although a minor change, it’s a good reminder of the special service rules that apply to FDIC insured depository institutions. The Committee Note clarifies that this provision does not apply to credit unions because they’re covered by National Credit Union Administration insurance instead of FDIC insurance.
Rule 7007.1, involving corporate ownership disclosures, was amended to align with similar disclosure rules in the Federal Rules of Appellate Procedure and the Federal Rules of Civil Procedure. It has been revised to apply only to nongovernmental corporations, although including when such corporations intervene in bankruptcy cases and adversary proceedings.
Rule 9036, governing notice and service, was amended to address high-volume paper-notice recipients and to specify procedures for such recipients related to the Bankruptcy Noticing Center (BNC).
Although not a Bankruptcy Rule, Federal Rule of Appellate Procedure 6, which governs bankruptcy appeals, was also revised slightly but only to change the reference to a form given amendments made to Federal Rule of Appellate Procedure Rule 3 (which, in turn, split former Form 1 into Form 1A and Form 1B).
December Is Almost Here. These rule amendments are slated to take effect on December 1, 2021, which will be here before you know it (and so will 2022).
