Thursday, March 29, 2012

Extending Deadlines and Section 108 of the Bankruptcy Code

How many times in life have we wished that we could extend a deadline? Section 108 of the Bankruptcy Code, under certain circumstances, allows us to do just that.

Section 108(a) extends any statute of limitation to commence an action that the debtor could have taken before the filing of the bankruptcy petition for two years after the date of the bankruptcy filing, unless it would expire later under applicable non-bankruptcy law. 

Section 108(b) is applicable when there is a time limit set for taking certain actions, such as the filing of pleadings or claims, and that period has not expired before the date a bankruptcy petition was filed.  Under § 108(b), a bankruptcy trustee is given 60 days to take actions not covered under § 108(a), such as filing a pleading, a demand notice, or proof of claim or loss (such as an insurance claim).  Section 108(b) also extends the time to commence an administrative proceeding or file a notice of appeal.

Section 108(b) does not apply to time periods in actions against a debtor.  Such actions are stayed by § 362 of the Bankruptcy Code and may proceed only when the stay under the applicable sections of the Bankruptcy Code terminates.  Therefore, in a Chapter 11 bankruptcy case, deadlines that have not expired prior to the bankruptcy filing may be extended for an additional 60 day period. 

In Canney v. Merchants Bank (In re Canney), 284 F.3d 362 (2002), the Second Circuit (which includes New York) held that when there is a foreclosure sale and the debtor has a certain amount of time by law to redeem the property, the debtor’s rights to the property are controlled by § 108(b), and extend the redemption period for a maximum of 60 days.

Section 108(c) provides that if a non-bankruptcy claim against the debtor is stayed due to bankruptcy, any deadline for commencing or continuing the action is extended to 30 days after notice of the termination of the stay, if the deadline would have occurred on an earlier date (if a party does not receive notice of the termination of the stay, the 30 days never begins to run).
For more information about how bankruptcy affects deadlines in legal actions, please contact Jim Shenwick.

No comments: