In Re Preston
MEMORANDUM OPINION AND ORDER
Bеfore the Court, at the request of the Clerk of this Court and certain counsel practicing before the Court, is a procedural matter relating to the United States Trustee and the newly created office thereof in this District. The procedural issue involves
An analysis of the proposed form reflects improprieties in two primary respects: (1) the form seeks to circumvent the intent and purpose of
The Congress of the United States enacting the United States Trustee Statutory
*30
System,
If an objection to the proposed action is not made, then the trustee may proceed with the same authority as if he had obtained a court order authorizing the action. If an objection is made, the court will hear the dispute generated by the trustee’s proposed action and the objection to it, and make the appropriate orders, either authorizing or prohibiting the trustee’s proposed action. The United States trustee will exercise his supervisory rolе in part by consulting with trustees in advance of proposed action, and by raising an objection to the proposed action with the court when the action would be improper.
A simple reading of
Rule 6007(b) provides that a party in interest may file and serve a motion requiring the trustee or debtor in possession to abandon property. Rule 6007(b) contemplates that a secured creditor or other party in interest has requested the trustee to voluntarily abandon property pursuant to 6007(a) and that the trustee, for such reason that the trustee deems appropriate, has declined to do so. The motion under 6007(b) necessarily takes on the posture of Bankruptcy Rule 9014, thereupon creating a contested matter requiring notice and opportunity for hearing, presentation of evidence and the invocation of adversarial proceedings Rules 7021, 7025, 7026, 7028-7031, 7041, 7042, 7052, 7054-7056, 7062, 7064, 7069 and 7071 set forth therein relating to discovery and other matters. An entity that is not an individual and not represented by counsel seeking relief under Rule 9014 constitutes the practice of law under the rules of the Supreme Court of Virginia.
Norton Bankruptcy Law and Practice, Bankruptcy Rules pamphlet edition, at page 354, sets out an analysis of Rule 6007 as following the approach under Rule 6006(b) where a party in interest seeks to compel a trustee to act to assume, reject or аssign an executory contract or unexpired lease stating that such entity must follow the motion practice outlined under Rule 9014. Further, that a party in interest who seeks to compel a trustee or debtor in possession to abandon property must also do this by motion in order to obtain a court order directing such abandonment. A motion under Rule 9014 is subject to Unauthorized Practice of Law Rules.
Rule 6007(c) provides for a hearing upon the contested matter brought on pursuant to Bankruptcy Rule 9014. In that event where a timely objection is made pursuant to 6007(a) or a motion prescribed by Subdivision (b), the court shall set a hearing on notice to the entities аs the court may direct. In Norton, supra, page 355, the treatise states as follows:
Rule 6007 differs from former Rule 608 in that the Court may not, on its own initiative, direct or approve the abandonment of any property under the Code. The Court is not charged with administrative duties and enters the picture only for judicial functions at a proper request of a party in interest. Additionally, Rule 6007 is silent with rеspect to the principle expressed in former Rule *31 608 that the closing of an estate without administration of scheduled assets is tantamount to an approval of an abandonment. This point is now covered in Code § 554(c) (emphasis added).
A simple analysis of Bankruptcy Rule 6007(a), (b) and (c) reflects a system designed to implement
A cursory review of the proposed form, which is designated “Motion by Secured Creditor for Abandonment of Property” reflects that the “Motion” is directed to the court after first circularizing the trustee’s office, thereafter, theoreticаlly coming before the court for hearing after notice and the entry of a court order by the judge. It contemplates a routine system of abandonment contrary to and in circumvention of
In conclusion, the Court finds that the proposed form contravenes and circumvents
It is, accordingly,
ORDERED
that the United States Trustee in this District forthwith cease and discontinue the use of said form.
APPENDIX
Form 11.1
UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF VIRGINIA
IN RE:
Chapter 7 Case No.
*32 MOTION BY SECURED CREDITOR FOR ABANDONMENT OF PROPERTY
TO: _, Trustee:
The undersigned secured creditor reports that at the time of the entry of the Order for Relief, the above Debtor’s estate included the following property which is covered by a valid security interest:
Name and Address of Secured Creditor: -
Description of Property: _
Estimated Value: $_Balance Due on Account: $_
Wherefore, the undersigned secured creditor respectfully requests that the foregoing property be abandoned as property of the estate in accordance with
NOTE: Evidence of security MUST be attached before the Trustee will act upon this application. This application is not in lieu of the filing of a proof of claim.
This is to certify that a true copy of the foregoing Motion to abandon property and consent by the trustee was mailed by the secured creditor to the Trustee, attorney for the debtor, debtor, and Assistant U. S. Trustee this_day of_, 1987.
Secured Creditor
TRUSTEE’S CONSENT TO ABANDONMENT OF PROPERTY
Upon consideration of the foregoing application and sufficient evidence of a valid security interest having been provided by the applicant, the undersigned Trustee consents to the abandonment of the above-described property as being of inconsequential value to the estate.
Trustee
Absent any written objection by the Debtor, or any other party in interest, filed within fifteen (15) days from the dаte of the above certificate of mailing by the secured creditor, the proposed abandonment shall be deemed final pursuant to
DATED: _
U. S. Bankruptcy Judge
This form is provided as an accomodation to the Secured Creditor; therefore, it will bе the responsibility of the Secured Creditor to follow the instructions listed below.
1. The Motion must have evidence of security attached.
2. If the Motion is mailed, mail only one original Motion to the trustee. A stamped, self-addressed envelope must be provided for the Motion to be returned to you.
3. If the evidence of security and/or a stamped, self-addressed envelope is not provided, the trustee will not sign the consent or return it to you. The trustee will not sign or return any copies; only the original will be signed and returned to you.
4. Upon receiving the original Motion back from the trustee, it is your responsibility to properly serve and file the Motion as follows:
(a) Sign and date the Motion.
(b) Make four (4) copies of the Motion and evidence of security.
(c) Mail a copy to the trustee, debtor(s), attorney for debtor(s), and the Assistant U. S. Trustee.
(d) Mail the Original to the appropriate Bankruptcy Clerk’s office. *33 The mailing address of the United States Trustee for the Western District of Virginia is as follows:
P.O. Box 2827
Roanoke, Virginia 24001
This abandonment does not give the creditor Relief from the Automatic Stay under § 362 of the Code. Creditors desiring such relief should contact their attorney.
Notes
. UPL Opinion No. 58
Subject: Agent of corporate debtor preparing proposed orders in bankruptcy proceeding.
Inquiry: In proceedings in the United States Bankruptcy Courts in Virginia, may an employee of a corporate debtor who is not an attorney prepare on behalf of the corporate debtor a proposed order to be entered in the bankruptcy proceeding?
Opinion:
Preemption. By virtue of the supremacy clause of the United States Constitution, a state may not regulate the practice of law before a federal tribunal if federal law prescribеs the qualifications for practicing before the tribunal.
Sperry
v.
Florida,
No provision of the Bankruptcy Code (11 U.S.C.) itself addresses the question of qualification to practice before the Bankruptcy Courts. However, by Title 28, § 2075 of the United States Code, Congress delegated to the Supreme Court “the power to prescribe by general rules, the forms of process, writs, pleadings and motions, and the practice and procedure under title 11.” Pursuant to this delegation of authority thе Court promulgated the Rules of Practice and Procedure in Bankruptcy, which became effective August 1, 1983. Rule 9010 of the Bankruptcy Rules provides in pertinent part as follows:
Rule 9010. Representation and Appearances; Powers of Attorney
(a) AUTHORITY TO ACT PERSONALLY OR BY ATTORNEY. A debtor, creditor, equity security holder, indenture trustee, committee or оther party may (1) appear in a case under the Code and act either in his or its own behalf or by an attorney authorized to practice in the cotul:, and (2) perform any act not constituting the practice of law, by an authorized agent, attorney in fact, or proxy.
Rule 9010, by providing that parties to a ban-krupcty рroceeding may "perform any act not constituting the practice of law” by agents, attorneys in fact, or proxies, itself recognizes that certain acts and functions constitute the practice of law and may not be performed by non-lawyers. This reading is supported by the Advisory Committee Note to Rule 9010, which states that the rule “is substantially the same as former Bankruptcy Rule 910 and does not purport to change prior holdings prohibiting a corporation from appearing
pro se.
See
In Re Colinas Development Corp.,
Finally, the committee has examined the local rules of the Bankruptcy Courts for the Eastern District and the Western District of Virginia and finds that the local rules prescribe quаlifications for attorneys who practice before the court, but do not address the question to the extent, if any, to which nonlawyers may practice before the court. Since neither Congress by statute nor the bankruptcy courts by rules have attempted to regulate the activities of nonlawyers in bankruptcy courts, state law is not preempted in this area.
Virginia Law. UPC 1-3,
A corporation (other than a duly registered law corporation) does not have the same right of appearance before a tribunal as an individual and may not be represented before a tribunal by its officers, employees or agents who are not duly authorized or licensed to practice law in Virginia. A corporation can be represented only by a lawyer before a tribunal with respect to matters involving legal conclusions, examination of witnesses or preparation of briefs or pleadings.
A nonlawyer employee of a corporation may represent his employer before a tribunal, including bankruptcy court, so long as his activities before the tribunal are limited to the presentation of facts, figures or factual conclusions, as distinguished from legal conclusions. He may not engage in activities involving the examination of witnesses, the preparation and filing of briefs оr pleadings, or the presenting of legal conclusions.
In the opinion of the committee the preparing of proposed orders, like the preparation of pleadings, requires the exercise of legal skill and judgment. The committee is therefore of the , opinion that it would constitute the unauthorized praсtice of law for a nonlawyer employee of a corporation to prepare on behalf of the corporation proposed orders to be entered in proceedings in the bankruptcy courts in Virginia.
Approved by the Supreme Court of Virginia, May 1, 1984 Effective July 1, 1984.
UPL Opinion No. 65
Appearance Before Bankruptcy Court by a Non-Lawyer
It is not the unauthorized practice of law for non-lawyers to appear before a bankruptcy court and request the abandonment of vehicles. The representation may not, however, present any legal argument on the abandonment of the vehicle nor can the non-lawyer prepare and submit an order or document to be signed by the bankruptcy judge or trustee. [See Also UPL-OP. 58]
Committee Opinion August 28, 1984