# Exhibit I-3. Judicial Conference Guidelines for Implementing 28 U.S.C. § 156(c)

Guidelines on Use of Outside Facilities and Services

Generally

**1. Authority.** Section 156(c) of Title 28 authorizes bankruptcy
courts to use outside facilities or services to provide notices,
dockets, calendars, and other administrative information to parties in
bankruptcy cases where the cost of such facilities or services are paid
for out of the assets of the estate and are not charged to the United
States. The statute provides that the use of such facilities and
services is subject to any conditions and limitations imposed by the
pertinent circuit council.

**Comments:** Section 156(c) was enacted in recognition that the
day-to-day activities and administrative requirements in some large
bankruptcy cases are too onerous to be performed efficiently by the
bankruptcy clerk's office. Services such as noticing, providing copies
of case papers, and processing proofs of claims and interest can
sometimes be performed more efficiently outside the bankruptcy clerk's
office. The statute authorizes the bankruptcy court to permit third
parties to perform these services at the estate's expense.

The need for such outside services is most prevalent in so-called
"mega-cases," which are extremely large bankruptcy cases with hundreds
or thousands of creditors. The staffing levels of bankruptcy clerks'
offices sometimes cannot absorb such dramatic increases in workloads.

Records

**2. Custodian.** Pursuant to 28 U.S.C. § 156(e), the bankruptcy clerk
of court is the official custodian of the records and dockets of the
bankruptcy court. As custodian of the records and dockets of the
bankruptcy court, the bankruptcy clerk is responsible for the security
and integrity of all the bankruptcy court's records and dockets,
including those maintained by the debtor or a third party.

**Comments:** The bankruptcy clerk is responsible for the security and
integrity of all the bankruptcy court's records and dockets, including
dockets, claims registers, mailing matrices, and other case papers
maintained by the debtor or a third party.

How the bankruptcy clerk assures the security and integrity of the
records and dockets depends on the procedures utilized in a particular
case.

If the estate has hired personnel to work in the bankruptcy clerk's
office, the bankruptcy clerk should supervise their work. If the debtor
or a third party maintains claims registers, mailing matrices, or other
case papers outside the bankruptcy clerk's office, the bankruptcy clerk
should institute a system to monitor and check its work.

The bankruptcy clerk should institute safeguards to be included in the
procedures used by others.

For example, if the debtor or a third party is to process proofs of
claims and produce the claims register, it may be required to issue an
acknowledgment when a proof of claim is filed. The notice of the meeting
of creditors could state that acknowledgments are to be issued for
proofs of claims and that if a creditor does not receive one within a
week after filing a proof of claim, the creditor should contact the
bankruptcy clerk.

Another example of a safeguard would be to require that the third party
submit updated copies of the claims register or mailing matrix to the
bankruptcy court on a weekly basis.

**3. Filing.** Proofs of claim or interest, complaints, motions,
applications, objections, and other case papers shall be filed with the
bankruptcy clerk's office, which, after noting receipt, upon order of
the court, may transmit case papers to an outside entity for
maintenance.

**Comments:** Bankruptcy Rules 3002(b) and 5005(a) require that proofs
of claim or interest, complaints, motions, applications, objections, and
other case papers be filed with the bankruptcy clerk of court in the
district where the case is pending, except as specified by section 1409
of Title 28 and except as a judge permits papers to be filed with the
judge.

The bankruptcy court should assure itself of the integrity of the
procedures before directing that proofs of claim or interest, or other
case papers be transmitted to a third party.

If all case papers are filed in the bankruptcy clerk's office and
stamped with the date received, the papers can be picked up by the
debtor or a third party for processing at another location. The
bankruptcy clerk can copy some papers to make spot checks of their
processing by the debtor or a third party.

The bankruptcy clerk can obtain a special post office box for the
receipt of proofs of claim in mega-cases. This separates the proofs of
claim from other mail and speeds processing.

**4. Disposition.** The bankruptcy clerk remains responsible for the
disposition of case papers after the conclusion of a case in which the
bankruptcy court has directed the debtor or a third party to maintain
the records.

**Comments:** Although the order which directs the debtor or a third
party to maintain records does not necessarily have to provide for their
disposition, the bankruptcy clerk should begin planning for records
disposition early in the case.

**5. Claims.** If debtors or third parties are directed to process
proofs of claim and maintain the claims register, they should be
directed to perform related functions, such as recording transfers of
claims and giving notices of transfer.

**Comments:** Bankruptcy Rule 3001(e)(2),(3),(4) requires notices of
certain transfers of claims. The party which processes proofs of claim
and maintains the claims register is best able to give the notices.
Bankruptcy Rule 3001 requires that the court enter an order on many
transfers. The original notices and orders should be placed in the case
files.

Bankruptcy Rule 3004 requires notice to the creditor when the debtor or
trustee files a claim in the name of the creditor. The party that
processes proofs of claim and maintains the claims register is best able
to provide the notice.

**6. Public records.** Section 107 of the Bankruptcy Code provides that
the papers filed in bankruptcy cases and the bankruptcy court's dockets
are public records unless the bankruptcy court orders otherwise. Case
papers such as proofs of claim remain public records even if the debtor
or a third party is directed to process and maintain those records. The
bankruptcy clerk should ensure that those records are open to
examination at reasonable times without charge.

**Comments:** Case papers processed and maintained by the debtor or a
third party at a location outside the bankruptcy clerk's office should
be available for review at that location during normal business hours.

Because it may often be impractical for parties to review case papers
where the papers are processed and maintained, the bankruptcy clerk
should attempt to make as much information available as is possible.

As an example, if a third party or the debtor processes proofs of claim
and interest and generates the claims register, the third party or the
debtor should furnish copies of the updated claims register to the
bankruptcy court at least weekly.

Personnel

**7. Waivers.** Personnel employed by the estate to assist the
bankruptcy clerk's office are not government employees. They should not
be administered oaths of office although they may be asked to sign a
waiver of any right to compensation by the government. Because such
personnel are not government employees, the bankruptcy clerk may not
fire them.

**Comments:** There is no need to administer an oath of office to
personnel paid by the estate to assist the bankruptcy clerk's office in
processing a case. Administering an oath to such personnel fosters the
false impression that they are government employees.

Administering an oath to a new government employee impresses the
employee with the obligations of office and triggers certain
restrictions on the employee's activities. A written waiver including a
statement of the obligations of personnel employed by the estate to
assist the bankruptcy clerk's office is less suggestive of government
employment.

The bankruptcy clerk should request that special employees sign a
written waiver of any right to receive compensation from the government,
civil service retirement credit, or other benefits of government
employment. The waiver should also include an acknowledgment that the
special employee is to be paid by the estate, is directly accountable to
the bankruptcy clerk, and will not receive instructions, directions, or
orders from the debtor or the trustee.

The waiver should also specify that the special employees will refrain
from discussing pending or impending cases, will not disclose
confidential information received during the course of their employment,
and will not profit from such confidential information. These
obligations are included in the code of conduct for clerks, which
require that the clerks impose these specific obligations on their
staffs.

**8. Supervision.** The bankruptcy clerk is responsible for supervising
the work of personnel employed by the estate to assist the bankruptcy
clerk's office.

**Comments:** The bankruptcy clerk of court may select personnel to be
employed by the estate to work in the bankruptcy clerk's office pursuant
to section 156(c). If authorized by the order directing the estate to
employ the personnel, the bankruptcy clerk may specify the terms of
their employment. Due to the nature of such special employees' work, the
bankruptcy clerk or a designated deputy clerk should supervise their
work.

For the ease of supervision, it is desirable that the special employees
work in the bankruptcy clerk's office if sufficient space is available.
This also makes it easier to maintain security for the case papers
processed by special employees.

**9. Favoritism.** Personnel employed by the estate to assist the
bankruptcy clerk's office may not provide special services for the
debtor or the trustee. The bankruptcy clerk should strive to avoid any
appearance that these personnel favor the debtor or any other party
while performing official duties.

**Comments:** While they are assisting the bankruptcy clerk's office,
special employees should not be in contact with the debtor, except on
official business or to receive their paychecks. They should not receive
instructions, directions, or orders from the debtor or the trustee.

The bankruptcy clerk should strive to avoid any impression that the
special employees favor the debtor or any other party in their work for
the bankruptcy clerk's office. For this reason, the special employees
should not work in the debtor's business and assist the bankruptcy
clerk's office at the same time. It is desirable that the special
employees not be former employees of the debtor.

Facilities

**10. Equipment.** Any equipment, furniture, or other facilities leased
or purchased at the estate's expense for the court's use in a bankruptcy
case is property of the estate and will be returned to the estate after
its use by the bankruptcy court.

**Comments:** Because section 156(c) prohibits charging the cost of such
equipment, furniture, or other facilities to the United States, the
bankruptcy clerk should explain to the seller or lessor that the
estate---not the bankruptcy court---is responsible for payment.

Services

**11. Copies.** If the bankruptcy clerk selects a commercial copy
service to provide copies of papers in one or more cases, the bankruptcy
clerk must exercise care to avoid the appearance of favoritism in the
selection. The bankruptcy clerk should request written proposals for the
work as part of the clerk's determination of which commercial copy
service is best qualified to provide such a service. If the cost of the
copies is expected to total more than \$25,000, the bankruptcy clerk
should make a formal solicitation of written proposals for the work. If
a very large case is filed without advance notice, the bankruptcy clerk
may not have time to solicit formal written proposals for the copy
services. In such an instance, the clerk may solicit proposals orally
and document the solicitation and responses.

**Comments:** The bankruptcy clerk's office may not be able to
efficiently handle the volume of copy requests in a mega-case. With
planning and the bankruptcy clerk's assistance, a private copy service
may be able to provide copies of case papers at a lower price than the
bankruptcy clerk's office. This saves time for the bankruptcy clerk's
office and saves money for the parties. The time savings is particularly
important in mega-cases, in which copy requests could otherwise require
much of the bankruptcy clerk's office's time.

The bankruptcy clerk must exercise care to avoid the appearance of
favoritism in the selection of a copy service to provide copies in a
mega-case. The bankruptcy clerk should make at least an informal survey
to determine which copy service is best qualified to provide copies on
the basis of reliability, price per copy, and additional services to be
provided, such as maintaining a duplicate file for review by the public.

Advertising is required for most government purchases of more than
\$25,000 by 41 U.S.C. § 5. Although the bankruptcy court's designation
of a copy service is not a government purchase of services, it does
convey a valuable business opportunity.

Basic fairness requires that all qualified copy centers be allowed to
submit proposals if the bankruptcy clerk anticipates that more than
\$25,000 worth of copies will be requested in a year. If time permits,
the bankruptcy clerk should send written requests for proposals to each
of the local copy services, which are capable of performing the work in
a timely manner. If time permits and the bankruptcy clerk anticipates
that more than \$25,000 worth of copies will be requested in a year,
copies of all of the written proposals should be sent for review to the
Contracts Branch of the Contracts and Services Division of the
Administrative Office before a particular proposal is selected.

Proposals for making copies should be solicited on a contingent basis
before a mega-case is filed. If it has not been done, the request for
proposals can be conveyed orally or hand-delivered with instructions
that they be returned within 48 hours.

The order designating the copy service can also require that the parties
file an extra copy of all case papers except proofs of claim. The intake
and docket clerks can process the copies along with the originals, and
the copy service can pick up the copies and an updated docket sheet once
a day. The parties can then order copies by docket numbers or can place
standing orders for copies.

The request for proposals should require the copy center to maintain a
duplicate case file from which copies will be made. The request may also
require that the copy center make the duplicate file available for
review without charge during normal business hours.

Notices

**12. Mailing lists.** A debtor in a voluntary case must file a list
containing the names and addresses of its creditors, even if the debtor
or a third party is ordered to mail all notices in the case. If the
debtor or a third party is directed to maintain the mailing matrix in a
case, it shall make copies of the matrix available as requested by other
parties or the bankruptcy court.

**Comments:** Bankruptcy Rule 1007(a) requires that debtors in voluntary
cases file mailing lists with their petitions unless the petitions are
accompanied by schedules of liabilities or Chapter 13 statements. Other
parties may need to review the list. Another party or the bankruptcy
clerk's office may need the list in order to provide a notice.

In certain circumstances the bankruptcy court may permit the debtor to
file the mailing list in the form of a computer tape. The bankruptcy
clerk shall take steps to ensure that the mailing list is maintained
properly and that it is protected against loss or damage.

**13. Certificates of service.** The bankruptcy court or the bankruptcy
clerk should approve the form and content of any notice not provided by
the clerk's office and should receive from the person providing notice a
certificate of service which includes a copy of the notice and a list of
persons to whom it was mailed.

**Comments:** Pursuant to the Bankruptcy Noticing Guidelines adopted by
the Judicial Conference in March 1986, the parties shall file
certificates of service for the notices which they provide. If counsel
for the party signs a certificate of service, the certificate may
generally state that notice was given to certain parties (such as the
parties on the mailing matrix as of a certain date). If someone else
signs the certificate, the certificate shall be accompanied by a list of
the names and addresses of the parties served.

To ease the burden of reviewing the form and content of notices not
prepared by the bankruptcy clerk's office, the bankruptcy clerk and the
bankruptcy court can develop form notices for various circumstances. The
bankruptcy court can specify the required contents for certain notices
in its local rules.

Miscellaneous

**14. Assistance.** The Bankruptcy Division of the Administrative Office
should be consulted when unusual questions or problems arise concerning
outside facilities or services.

**Comments:** Mega-cases often present unusual questions or problems,
such as the need to hire additional personnel on an expedited basis or
to address unique circumstances in the meeting of creditors notice. The
Bankruptcy Division can either answer the questions or refer them to the
appropriate office.