By Keri P. Ebeck
Partner, Bernstein-Burkley, P.C.
The Bankruptcy Court for the Western District of Pennsylvania is a conduit jurisdiction and is known for having a local procedure known as “interim confirmation.” This concept is foreign to most other bankruptcy jurisdictions. Typically after a 341 meeting of creditors is held, the standing Chapter 13 Trustee will issue an “interim confirmation order” to allow the Trustee to disburse funds to creditors. This has been the practice for years, and it is not until recently that the Court has made the distinction between interim confirmation and final confirmation. The issue recently has surfaced due to the CARES Act provision allowing for the extension of a 60-month plan to an 84-month plan if the bankruptcy case was confirmed at the time of the enactment of the CARES Act on March 27, 2020. The Court, Trustee, debtors and creditors were grappling with what that meant in conjunction with the local practice of interim confirmation— was that enough under the CARES Act to extend the plan from 60 months to 84 months?
In a recent decision in the case of In Re: David A. Roebuck, WDPA Case No. 19-23044, Judge Gregory L. Taddonio ruled that for purposes of the CARES Act, the local practice of interim confirmation was not confirmation under 11 U.S.C. 1325, and therefore only those cases that had a final confirmation order as of March 27, 2020, were eligible for the extension to 84 months. Judge Taddonio stated that “An Interim confirmation order is not a creature of the Code. Instead, it is a unique local practice employed to provide adequate protection to secured and priority creditors pending ‘final’ plan confirmation.” [1] The Court went on to say that “interim confirmation in this district is simply not confirmation under section 1325…..Not only does the Court not review the plan or make any findings before entering an interim confirmation order; the Trustee concedes that many plans confirmed on an interim basis do not yet satisfy section 1325.” [2]
As of October 1, 2020, Bankruptcy Judge Thomas P. Agresti of the Western District has revised his procedures that interim confirmation orders will no longer apply in his Chapter 13 cases. It has yet to be known if the other bankruptcy judges will follow.
If you are a creditor and would like more information on interim confirmation and how the recent decision and revisions to local procedures may affect your borrowers, please reach out to Bernstein-Burkley, P.C. to discuss.
