Monday, January 28, 2013

On the Importance of Retaining Original
Signed Documents Filed by ECF


“A policy is a temporary creed liable to be changed, but while it holds good it has got to be pursued with apostolic zeal.” – Mahatma Gandhi

A recent opinion out of the Southern District of Texas reminds attorneys that bankruptcy is not a strictly paperless practice, by highlighting the importance of maintaining the original signed version of electronic documents filed with the Court. In re Stomberg, Bankr. S.D.Tex., January 10, 2013 (No. 10-41603) (sanctioning Debtor’s counsel due to failure to be able to produce signed copies of schedules and statement of affairs).

What originals do you need to retain?  It depends on the jurisdiction. The Bankruptcy Courts typically have administrative procedures which govern the requirements dealing with electronic documents, document retention period, and scope of documents that need to be retained.  Below is a cursory review of some of the administrative procedures for Bankruptcy Courts in different jurisdictions.  You will also want to look at local rules to confirm there are not added requirements in the local rules.

Texas

The Texas Bankruptcy Courts have adopted uniform administrative procedures, entitled Administrative Procedures for the Filing, Signing and Verifying of Documents by Electronic Means in Texas Bankruptcy Courts (“Texas Admin Rules”).

Texas Admin Rule III (B)(4) provides:
[D]ocuments which contain the signature of any party other than the Electronic Filer, other than a Declaration for Electronic Filing as referenced above, shall be retained by the Electronic Filer for a period of not less than five (5) years after the case or adversary proceeding is closed and, upon request, such original document must be provided to the Court or other parties for review.

Emphasis added.

This rule seems pretty simple, but could really be quite problematic.  Some attorneys may not have looked closely enough at the breadth of the Rule.

The rule states the Electronic Filer is to retain the record for five years.   Attorneys seem to move between law firms more frequently now than in the past.

If an attorney changes jobs, will they need to make sure all records filed with his or her ECF password, which included the signatures of other people, be transferred with them to their new firm or office?

Should each bankruptcy file an attorney sets up have a file folder for original records signed by the attorney which were ECF filed, and a separate file for original records signed by others which were ECF filed?

Should departing attorneys get their prior employers to execute written agreements in which the former firm agrees to serve as the custodian of records for the originally filed ECF records, and maintain the records for no less than five years?

Should departing attorneys include in any motions to withdraw a request to be excused from the requirement to maintain records for the five-year period?

Should Trustees file a request to be excused of the retention period, or to shorten the retention period, especially in large cases where there may be thousands of docketed entries, or in cases where the Trustee may be retiring?

A close look at the rule, and thinking of the “what ifs,” raises a lot of questions.

A comparison of the Texas administrative rules with the Delaware and New York Bankruptcy Courts’ administrative rules show a wide variation from District to District on the rules governing retention of original signed records.

Delaware

In Delaware, the Court has adopted the Administrative Procedures for Electronically Filed Cases (“Delaware Admin Rules”).

Delaware Admin Rule II (C)(2) provides:
Any document containing original signatures shall indicate on the electronically filed document a signature by noting – “/s/ Jane Doe.”  The originally executed document shall be maintained by the filer.

Delaware Admin Rule II (H) provides:
The attorney or other user electronically filing a document shall retain the paper document containing the original signature(s) for the longer period of one year after the case is closed or all appeals are finalized unless the Court orders a different period.  . . .  If the original document is returned to the client, the attorney shall advise the client of the requirement to retain the document as stated above.

Delaware’s one-year requirement is far less onerous than the five-year requirement in other jurisdictions.  Further, Delaware’s administrative rules also allow for the return of the record to the client, which is a nuance that is not included in the administrative rules for many of the other jurisdictions.

Southern District of New York

The United States Bankruptcy Court Southern District of New York “Revised Administrative Procedures” were promulgated in 2001 (“SDNY Admin Rules”).

SDNY Admin Rule II (C)(2) provides, in part:
The hard copy of the originally executed document shall be maintained by the filer for the later of two years or the entry of a final order terminating the case or proceeding to which the document relates.

Emphasis added.

Northern District of New York

On January 1, 2012, the United States Bankruptcy Court for the Northern District of New York updated its Administrative Procedures for the Filing, Signing and Verifying of Pleadings and Papers by Electronic Means (“NDNY Admin Rules”).

The NDNY Admin Rules have an interesting rule requiring the Debtor to bring the original signed copy of the petition, schedules, lists and statement of financial affairs to the 341(a) meeting. See, NDNY Admin Rules, II (C).

NDNY Admin Rule III (D) requires:
A copy containing an original signature must be retained by the filer for a minimum of two (2) years after the closing of the case and all time periods for appeals have expired unless the court orders a different period.  In adversary proceedings, the parties shall maintain the original documents for a minimum of two (2) years after the proceeding ends and all time periods for appeals have expired unless the court orders a different period.  . . .

Western District of New York

The United States Bankruptcy Court for the Western District of New York amended its procedures on October 1, 2010, and the procedures are entitled Amended Administrative Procedures for Filing, Signing and Verifying Pleadings and Papers Electronically (“WDNY Admin Rules”).

The Western District, like the Northern District, requires the attorney for the Debtor to bring the original signed petition, schedules, lists and statement of affairs to the 341(a) meeting. See, WDNY Admin Rule, Section 3 (C)(1).

WDNY Admin Rule, Section 4 (A) provides, in part:
THE ELECTRONIC FILING OF ANY DOCUMENT REQUIRING AN INK SIGNATURE CONSTITUTES A REPRESENTATION BY THE ECF REGISTERED PARTICIPANT THAT THE ORIGINAL SIGNATURE(S) WERE OBTAINED AND AFFIXED TO SUCH DOCUMENT(S) PRIOR TO THE ELECTRONIC FILING. VIOLATIONS OF THIS REQUIREMENT WILL BE SUBJECT TO DISCIPLINARY ACTION AGAINST THE ECF REGISTERED PARTICIPANT.  . . .

WDNY Admin Rule, Section 4 (b) provides, in part:
For a period of not less than five (5) years after the closing of the bankruptcy case, the ECF Registered Participant that made the filing of each pleading, paper or other document must retain the original paper version of such pleading, paper or other document bearing original ink signatures . . . .

Eastern District of New York

On April 23, 2010, the United States Bankruptcy Court for the Eastern District of New York adopted the Revised Administrative Procedures for Electronically Filed Cases (“EDNY Admin Rules”).

EDNY Admin Rule II (C)(2) provides, in part:
The hard copy of the originally executed document, and/or original exhibits, shall be maintained by the filer for two years after the entry of a final order terminating the case or proceeding to which the document related.  . . .

See also, E.D.N.Y. LBR 9011-1(b).

As shown above, there is a wide variation in the administrative rules in the different New York Districts.  It is interesting to note that the Northern District of New York and the Western District of New York specifically require the original schedules, lists and statement of affairs to be presented at the 341(a) meeting.

Conclusion

As shown above by a cursory glance at the administrative procedures for the Bankruptcy Courts in Texas, Delaware and New York, the variance in the requirements from District to District can be substantial.   If you are an electronic filer, take heed.  You will need to put appropriate policies in place to make sure originals are being retained for the required retention period.

Deirdre Carey Brown
dbrown@mcginnislaw.com
McGinnis, Lochridge & Kilgore, LLP
Houston, Texas



1 comment:

  1. Yes, bankruptcy is not a paperless practice as there are paperworks to be done when declaring bankruptcy and liquidating assets.

    ReplyDelete