Pursuant to the New Jersey Bankruptcy Court’s (the “Court”) annual rule making cycle, the Court implemented various changes to the New Jersey Local Rules and Local Forms, which became effective on August 1, 2024.[1] 

            Of particular note, the Court has released an entirely new set of Chapter 11 Complex Case Procedures.  The release of these new Complex Case Procedures is well-timed given the increase in large chapter 11 filings in New Jersey over the last few years.  The full new Chapter 11 Complex Case Procedures can be viewed at this link.

D.N.J. LBR 1002-2. Chapter 11 Complex Case Eligibility and Procedures

            LBR 1002-2 is a newly added Local Rule which provides that a chapter 11 debtor is eligible for a “Complex Case” designation if “the debtor has $50 million or more in assets or $50 million or more in liabilities, aggregated for jointly administered cases; 1,000 or more creditors, or may be considered a case of high public interest.” 

            To designate a chapter 11 case as a “Complex Case,” a debtor must file Local Form Application for Designation as a Complex Case and proposed Local Form Order Granting Designation as a Complex Case.  Additionally, the newly created proposed Local Form Case Management Order must be attached as an exhibit to the General Order, and any revision to the Case Management Order must be highlighted for the Court’s review.

            LBR 1002-2 incorporates the General Order Governing Chapter 11 Complex Case Procedures, which was originally issued on January 3, 2024. With the amendments to LBR 1002-2, the New Jersey Bankruptcy Court also updated the (i) General Order Governing Chapter 11 Complex Case Procedures and (ii) Chapter 11 Complex Case Procedures.

D.N.J. LBR 1016-1. Death or Finding of Incompetency of a Debtor

            The amendment to LBR 1016-1 added a requirement whereby debtor’s counsel must “separately file the certificate of death or the court order pertaining to incompetency or guardianship.”  This is in addition to filing the newly revised Local Form Notice of Death or Finding of Incompetency of a Debtor “[w]ithin 30 days of learning of (i) the death, or (ii) a finding of incompetency of a debtor through appropriate legal process.”

D.N.J. LBR 3011-1. Unclaimed Funds in Cases Under Chapter 7, Subchapter V of Chapter 11, Chapter 12, or Chapter 13

            LBR 3011-1 was amended to assist the Bankruptcy Court in preventing fraud.  The Local Rule expressly permits the Court to request additional information from a claimant and to require appearances at a hearing on any application.  Now, all claimants must use the revised Local Form Application for Payment of Unclaimed Funds.  Specifically, the application must include the supporting documentation, and “[t]he court may, in its discretion, request supplemental documentation or additional information from a claimant and conduct a hearing to verify entitlement to the funds.” 

D.N.J. LBR 9013-4. Motions: Proposed Order

            The amendment to LBR 9013-4(d) was made to coincide with the new Local Form Certification Concerning Proposed Order, which comports with the new LBR 9019-4 (see below).  Parties who seek immediate entry of the proposed order must inform the court via email that the new Certification Concerning Proposed Order was filed.  The Certification Concerning Proposed Order provides options for “Orders to be submitted” following a hearing or if a pending matter has been resolved and there is no need to hold the order for 7 days under D.N.J. LBR 9013-4(d).  The Certification Concerning Proposed Order also provides options for parties submitting a consent order.  Parties filing the Certification Concerning Proposed Order must include the name of parties who received a copy of the proposed order prior to its filing.

D.N.J. LBR 9019-3. Compromise or Settlement of Controversy

            LBR 9019-3 was amended to clarify the procedures for approval of a proposed compromise or settlement.  If a party seeks an order approving a proposed compromise or settlement, a motion and Local Form Notice of Proposed Compromise or Settlement of Controversy must be filed, unless an application to shorten time is also being filed.

D.N.J. LBR 9019-4. Consent Order

            The newly added LBR 9019-4 supersedes LBR 9021-1, and its primarily intended for use when all parties are signatories to a consent order.  Local Form Certification Concerning Proposed Order must be filed and emailed to Chambers with a copy of the consent order resolving a motion or adversary proceeding.  LBR 9019-4 specifies the procedures for submitting consent orders in lieu of a motion or adversary proceeding.  Namely, “if a proposed consent order is not related to a pending matter, the proponent must file an application that includes the facts and law supporting entry of the proposed consent order.  Objections must be filed not later than 7 days after the filing of the application.”  LBR 9019-4 notes that it “is intended to override compliance with Bankruptcy Rule 9019 where appropriate.”

[1] Fox Rothschild restructuring partner, Michael Herz, is a member of the Lawyers’ Advisory Committee for the New Jersey Bankruptcy Court and the New Jersey Bankruptcy Chapter 11 Local Rules Committee, both of which assisted in drafting the new Chapter 11 Complex Case Procedures and in recommending changes to the existing Local Rules.

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