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.
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