ations must be carefully evaluated by the bankruptcy judge. The policy underlying subdivision (b) is essentially the same as the policy embodied in the Code of Judicial Conduct. Canon 2 of the Code of Judicial Conduct instructs a judge to avoid impropriety and the appearance of impropriety, and Canon 3(b)(4) provides that the judge "should exercise his power of appointment only on the basis of merit, avoiding nepotism and favoritism." Subdivision (b) alerts the potential appointee or employee and party seeking approval of employment to consider the possible relevance or impact of subdivision (b) and indicates to them that appropriate disclosure must be made to the bankruptcy court before accepting appointment or employment. The information required may be made a part of the application for approval of employment. See Rule 2014(a). Subdivision (b) departs from the former rule in an important respect: a firm or business association is not prohibited from appointment or employment merely because an individual member or employee of the firm or business association is ineligible under subdivision (b). The emphasis given to the bankruptcy court's judicial discretion in applying subdivision (b) and the absence of a per se extension of ineligibility to the firm or business association or any ineligible individual complement the amendments to subdivision (a). The change is intended to moderate the prior limitation on the employment opportunities of attorneys, accountants and other professional persons who are or who have been connected in some way with the bankruptcy judge. For example, in all but the most unusual situations service as a law clerk to a bankruptcy judge is not the type of connection which alone precludes appointment or employment. Even if a bankruptcy judge determines that it is improper to appoint or approve the employment of a former law clerk in the period immediately after completion of the former law clerk's service with the judge, the firm which employes the former law clerk will, absent other circumstances, be eligible for employment. In each instance all the facts must be considered by the bankruptcy judge. Subdivision (b) applies to persons connected with a bankruptcy judge. "Person" is defined in § 101 of the Bankruptcy Code to include an “individual, partnership and corporation". A partnership or corporation may be appointed or employed to serve in a bankruptcy case. If a bankruptcy judge is connected in some way with a partnership or corporation, it is necessary for the court to determine whether the appointment or employment of that partnership or corporation is proper. The amended rule does not regulate professional relationships which do not require approval of a bankruptcy judge. Disqualification of the bankruptcy judge pursuant to 28 U.S.C. § 455 may, however, be appropriate. Under Rule 5004(a), a bankruptcy judge may find that disqualification from only some aspect of the case, rather than the entire case, is necessary. A situation may also arise in which the disqualifying circumstance only comes to light after services have been performed. Rule 5004(b) provides that if compensation from the estate is sought for these services, the bankruptcy judge is disqualified from awarding compensation. Rule 5003. Records Kept by the Clerk (a) Bankruptcy Dockets The clerk shall keep a docket in each case under the Code and shall enter thereon each judgment, order, and activity in that case as prescribed by the Director of the Administrative Office of the United States Courts. The entry of a judgment or order in a docket shall show the date the entry is made. (b) Claims Register The clerk shall keep in a claims register a list of claims filed in a case when it appears that there will be a distribution to unsecured creditors. (c) Judgments The clerk shall keep, in the form and manner as the Director of the Administrative Office of the United States Courts may prescribe, a correct copy of every final judgment or order affecting title to or lien on real propety or for the recovery of money or property, and any other order which the court may direct to be kept. On request of the prevailing party, a correct copy of every judgment or order affecting title to or lien upon real or personal property or for the recovery of money or property shall be kept and indexed with the civil judgments of the district court. (d) Index of Cases; Certificate of Search The clerk shall keep indices of all cases and adversary proceedings as prescribed by the Director of the Administrative Office of the United States Courts. On request, the clerk shall make a search of any index and papers in the clerk's custody and certify whether a case or proceeding has been filed in or transferred to the court or if a discharge has been entered in its records. (e) Other Books and Records of the Clerk The clerk shall also keep such other books and records as may be required by the Director of the Administrative Office of the United States Courts. (As amended Mar. 30, 1987, eff. Aug. 1, 1987.) NOTES OF ADVISORY Committee on RULES This rule consolidates former Bankruptcy Rules 504 and 507. The record-keeping duties of the referee under former Bankruptcy Rule 504 are transferred to the clerk. Subdivisions (a), (c), (d) and (e) are similar to subdivisions (a)-(d) of Rule 79 F.R.Civ.P. Subdivision (b) requires that filed claims be listed on a claims register only when there may be a distribution to unsecured creditors. Compilation of the list for no asset or nominal asset cases would serve no purpose. Rule 2013 requires the clerk to maintain a public record of fees paid from the estate and an annual summary thereof. Former Bankruptcy Rules 507(d) and 508, which made materials in the clerk's office and files available to the public, are not necessary because § 107 of the Code guarantees public access to files and dockets of cases under the Code. NOTES OF ADVISORY COMMITTEE ON RULES-1987 Subdivision (a) has been made more specific. Subdivision (c) is amended to require that on the request of the prevailing party the clerk of the district court shall keep and index bankruptcy judgments and orders affecting title to or lien upon real or personal property or for the recovery of money or property with the civil judgments of the district court. This requirement is derived from former Rule 9021(b). The Director of the Administrative Office will provide guidance to the bankruptcy and district court clerks regarding appropriate paperwork and retention procedures. Rule 5004. Disqualification (a) Disqualification of Judge A bankruptcy judge shall be governed by 28 U.S.C. § 455, and disqualified from presiding over the proceeding or contested matter in which the disqualifying circumstance arises or, if appropriate, shall be disqualified from presiding over the case. (b) Disqualification of Judge from Allowing Compensation A bankruptcy judge shall be disqualified from allowing compensation to a person who is a relative of the bankruptcy judge or with whom the judge is so connected as to render it improper for the judge to authorize such compensation. (As amended Apr. 29, 1985, eff. Aug. 1, 1985; Mar. 30, 1987, eff. Aug. 1, 1987.) NOTES OF ADVISORY COMMITTEE ON RULES Subdivision (a). Disqualification of a bankruptcy judge is governed by 28 U.S.C. § 455. That section provides that the judge "shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned" or under certain other circumstances. In a case under the Code it is possible that the disqualifying circumstance will be isolated to an adversary proceeding or contested matter. The rule makes it clear that when the disqualifying circumstance is limited in that way the judge need only disqualify himself from presiding over that adversary proceeding or contested matter. It is possible, however, that even if the disqualifying circumstance arises in connection with an adversary proceeding, the effect will be so pervasive that disqualification from presiding over the case is appropriate. This distinction is consistent with the definition of "proceeding" in 28 U.S.C. § 455(d)(1). Subdivision (b) precludes a bankruptcy judge from allowing compensation from the estate to a relative or other person closely associated with the judge. The subdivision applies where the judge has not appointed or approved the employment of the person requesting compensation. Perhaps the most frequent application of the subdivision will be in the allowance of administrative expenses under § 503(b)(3)–(5) of the Code. For example, if an attorney or accountant is retained by an indenture trustee who thereafter makes a substantial contribution in a chapter 11 case, the attorney or accountant may seek compensation under § 503(b)(4). If the attorney or accountant is a relative of or associated with the bankruptcy judge, the judge may not allow compensation to the attorney or accountant. Section 101(34) defines relative and Rule 9001 incorporates the definitions of the Code. See the Advisory Committee's Note to Rule 5002. NOTES OF Advisory CommiTTEE ON RULES-1985 AMENDMENT Subdivision (a) was affected by the Bankruptcy Amendments and Federal Judgeship Act of 1984, P.L. 98-353, 98 Stat. 333. The 1978 Bankruptcy Reform Act, P.L. 95-598, included bankruptcy judges in the definition of United States judges in 28 U.S.C. § 451 and they were therefore subject to the provisions of 28 U.S.C. § 455. This was to become effective on April 1, 1984, P.L. 95-598, § 404(b). Section 113 of P.L. 98-353, however, appears to have rendered the amendment to 28 U.S.C. § 451 ineffective. Subdivision (a) of the rule retains the substance and intent of the earlier draft by making bankruptcy judges subject to 28 U.S.C. § 455. The word "associated” in subdivision (b) has been changed to "connected" in order to conform with Rule 5002(b). NOTES OF Advisory Committee on RULES-1987 AMENDMENT The rule is amended to be gender neutral. The bankruptcy judge before whom the matter is pending determines whether disqualification is required. Rule 5005. Filing of Papers (a) Filing The proofs of claim or interest, complaints, motions, applications, objections and other papers required to be filed by these rules, except as provided in 28 U.S.C. § 1409, shall be filed with the clerk in the district where the case under the Code is pending. The judge of that court may permit the papers to be filed with the judge, in which event the filing date shall be noted thereon, and they shall be forthwith transmitted to the clerk. (b) Error in Filing A paper intended to be filed but erroneously delivered to the trustee, the attorney for the trustee, a bankruptcy judge, a district judge, or the clerk of the district court shall, after the date of its receipt has been noted thereon, be transmitted forthwith to the clerk of the bankruptcy court. In the interest of justice, the court may order that the paper shall be deemed filed as of the date of its original delivery. (As amended Mar. 30, 1987, eff. Aug. 1, 1987.) NOTES OF ADVISORY Committee on RULES Subdivision (a) is an adaptation of Rule 5(e) F.R.Civ.P. Sections 301-304 of the Code and Rules 1002 and 1003 require that cases under the Code be commenced by filing a petition "with the bankruptcy court." Other sections of the Code and other rules refer to or contemplate filing but there is no specific reference to filing with the bankruptcy court. For example, § 501 of the Code requires filing of proofs of claim and Rule 3016(c) requires the filing of a disclosure statement. This subdivision applies to all situations in which filing is required. Except when filing in another district is authorized by 28 U.S.C. § 1473, all papers, including complaints commencing adversary proceedings, must be filed in the court where the case under the Code is pending. Subdivision (b) is the same as former Bankruptcy Rule 509(c). NOTES OF ADVISORY Committee on RuLES-1987 AMENDMENT Subdivision (a) is amended to conform with the 1984 amendments. Rule 5006. Certification of Copies of Papers The clerk shall issue a certified copy of the record of any proceeding in a case under the Code or of any paper filed with the court on payment of any prescribed fee. NOTES OF ADVISORY Committee on RuLES Fees for certification and copying are fixed by the Judicial Conference under 28 U.S.C. § 1930(b). Rule 1101 F. R. Evid. makes the Federal Rules of Evidence applicable to cases under the Code. Rule 1005 F. R. Evid. allows the contents of an official record or of a paper filed with the court to be proved by a duly certified copy. A copy certified and issued in accordance with Rule 5006 is accorded authenticity by Rule 902(4) F. R. Evid. Rule 5007. Record of Proceedings and Transcripts (a) Filing of Record or Transcript The reporter or operator of a recording device shall certify the original notes of testimony, tape recording, or other original record of the proceeding and promptly file them with the clerk. The person preparing any transcript shall promptly file a certified copy with the clerk. (b) Transcript Fees The fees for copies of transcripts shall be charged at rates prescribed by the Judicial Conference of the United States. No fee may be charged for the certified copy filed with the clerk. (c) Admissibility of Record in Evidence A certified sound recording or a transcript of a proceeding shall be admissible as prima facie evidence to establish the record. (As amended Mar. 30, 1987, eff. Aug. 1, 1987.) NOTES OF ADVISORY COMMITTEE ON RULES This rule supplements 28 U.S.C. § 773. A record of proceedings before the bankruptcy judge is to be made whenever practicable. By whatever means the record is made, subdivision (a) requires that the preparer of the record certify and file the original notes, tape recording, or other form of sound recording of the proceedings. Similarly, if a transcript is requested, the preparer is to file a certified copy with the clerk. Subdivision (b) is derived from 28 U.S.C. § 753(f). Subdivision (c) is derived from former Bankruptcy Rule 511(c). This subdivision extends to a sound recording the same evidentiary status as a transcript under 28 U.S.C. § 773(b). Rule 5008. Funds of the Estate (a) Court Approval Required A deposit or investment for which a bond or deposit of securities is required under § 345(b) of the Code shall not be made until the court, on motion with such notice as the court directs, approves the bond or the deposit of securities. (b) Report of Deposit or Investment Promptly after making the initial deposit or investment of the estate's funds and thereafter as the court may direct, the trustee shall file a report which identifies the depository or describes the investment and states the amount of any deposit or investment and whether any portion is insured or guaranteed by the United States or a department, agency, or instrumentality of the United States, or backed by the full faith and credit of the United States. (c) Deposit of Securities; Agreement Securities accepted for deposit in lieu of a surety on a depository bond shall be deposited in the custody of the Federal Reserve Bank or branch thereof designated by the court or in the custody of such other person as the court may direct. The securities shall be deposited conditioned on proper accounting for all money deposited or invested and for any return on any such money, prompt repayment of such money and return thereon, and faithful performance of the duties as a depository or entity with whom an investment is made. The entity depositing securities shall execute an agreement for the deposit of securities in favor of the United States which incorporates the foregoing conditions. Securities subject to such an agreement shall be subject to the order of the court. (d) Action on Bond or Agreement for Deposit of Securities Proceedings on a bond given pursuant to § 345(b) of the Code or on an agreement for deposit of securities required by subdivision (c) of this rule shall be in the name of the United States for the use of the estate or any entity injured by a breach of the condition. (e) Prohibition of Deposits When Adequacy of Security Doubtful No trustee or other person shall deposit or invest funds received or held as a fiduciary under the Code if there is reasonable cause to believe that the bond or the security therefor or the deposited securities are or may be inadequate in view of existing and expected deposits or investments. (f) Reports Required Depositories and entities with whom deposits or investments are made shall file reports as prescribed by regulations of the Director of the Administrative Office of the United States Courts. (g) Deficiency in Amount of Bond or Deposited Securities Whenever the bond and any deposited securities do not or will not constitute adequate security because of exisiting and expected deposits or investments, the court shall require the depository or entity with whom an investment is made to increase the amount of the bond or the deposited securities within a fixed time. If within the time fixed the depository or entity with whom an investment is made fails to increase the amount of the bond or the deposited securities to an amount adequate for existing and expected deposits or investments, the court shall order immediate payment of all money on deposit or invested with it, with all interest payable thereon. (h) Relief From Liability on Bond A surety on a bond may move to be relieved from liability with respect to any subsequent default. If after hearing on notice to the depository or entity with whom the investment is made, to other sureties, to trustees and to other representatives of estates having money of the estate protected by the bond, the court determines that the motion may be granted without injury to any party in interest, the surety shall be relieved after a new bond or other appropriate security is submitted and approved. (i) Combining of Funds for Deposit The court may authorize the deposit or investment of funds from more than one estate in a single account or investment instrument. The trustee shall maintain records identifying separately the money of each estate. The court shall require that a statement of account be filed at least quarterly. (As amended Mar. 30, 1987, eff. Aug. 1, 1987.) NOTES OF ADVISORY COMMittee on RuLES Subdivision (a). Section 345 of the Code permits the trustee to deposit or invest money of the estate without prior approval of the court. The trustee may select any kind of financial institution as a depository and any form of investment instrument. Except when the deposit or investment is backed by the United States, the depository must either post a bond or deposit securities. Section 345(b)(1)(B) requires court approval of the bond. Subdivision (a) requires that the court's approval of the bond be obtained before funds of the estate are deposited or invested. The same requirement of prior court approval is also made applicable to the deposit of securities. Subdivision (b) requires that the initial deposit or investment of the estate's funds be reported to the court. A local rule or order may require the filing of additional reports concerning the management of the estate's funds. If the deposit or investment is not backed by the United States, the report should identify the order of the court approving the bond or the deposit of securities. The court may direct that the report of initial deposits or investments or other reports be provided to creditors or other parties in interest. Subdivision (c) is an adaptation of former Bankruptcy Rule 512(b). This subdivision makes the conditions of the bond specified in § 345(b)(1) of the Code applicable to a deposit of securities under § 345(b)(2) and also requires the execution of an agreement for deposit of securities which incorporates these conditions. The first sentence of the subdivision goes beyond the comparable provision in former Bankruptcy Rule 512(b) by specifically authorizing the court to permit the securities to be held by an entity other than the Federal Reserve Bank. Subdivisions (d)-(h) are derived from former Bankruptcy Rule 512. Subdivision (i) authorizes the court to permit a trustee to combine money of more than one estate for the purposes of deposit or investment. Combined deposits or investments may be particularly beneficial when a standing chapter 13 trustee has a large number of plans to administer. The subdivision requires that at least quarterly statements of account be filed, but leaves to the court the form of the account and whether more frequent reports should be filed. Rule 5009. Closing Cases When an estate has been fully administered and the court has discharged the trustee, the case shall be closed. NOTES OF ADVisory CommitTEE ON RULES This rule is the same as § 350(a) of the Code. An estate may be closed even though the period allowed by Rule 3002(c) for filing claims has not expired. The closing of a case may be expedited when a notice of no dividends is given under Rule 2002(e). Dismissal of a case for want of prosecution or failure to pay filing fees is governed by Rule 1017. Rule 5010. Reopening Cases A case may be reopened on motion of the debtor or other party in interest pursuant to § 350(b) of the Code. In a chapter 7 or 13 case a trustee shall be appointed unless the court determines that a trustee is not necessary to protect the interests of creditors and the debtor or to insure efficient administration of the case. (As amended Mar. 30, 1987, eff. Aug. 1, 1987.) NOTES OF ADVISORY COMMITTEE ON RULES Section 350(b) of the Code provides: "A case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause." Rule 9024, which incorporates Rule 60 F.R.Civ.P., exempts motions to reopen cases under the Code from the one year limitation of Rule 60(b). Although a case has been closed the court may sometimes act without reopening the case. Under Rule 9024, clerical errors in judgments, orders, or other parts of the record or errors therein caused by oversight or omission may be corrected. A judgment determined to be non-dischargeable pursuant to Rule 4007 may be enforced after a case is closed by a writ of execution obtained pursuant to Rule 7069. NOTES OF ADVISORY Committee on RuleS-1987 In order to avoid unnecessary cost and delay, the rule is amended to permit reopening of a case without the appointment of a trustee when the services of a trustee are not needed. Rule 5011. Withdrawal and Abstention from Hearing a Proceeding (a) Withdrawal A motion for withdrawal of a case or proceeding shall be heard by a district judge. (b) Abstention From Hearing a Proceeding Unless a district judge orders otherwise, a motion for abstention pursuant to 28 U.S.C. § 1334(c) shall be heard by the bankruptcy judge, who shall file a report and recommendation for disposition of the motion. The clerk shall serve forthwith a copy of the report and recommendation on the parties to the proceeding. Within 10 days of being served with a copy of the report and recommendation a party may serve and file with the clerk objections prepared in the manner provided in Rule 9033(b). Review of the report and recommendation by the district court shall be governed by Rule 9033. (c) Effect of Filing of Motion for Withdrawal or Abstention The filing of a motion for withdrawal of a case or proceeding or for abstention pursuant to 28 U.S.C. § 1334(c) shall not stay the administration of the case or any proceeding therein before the bankruptcy judge except that the bankruptcy judge may stay, on such terms and conditions as are proper, proceedings pending disposition of the motion. A motion for a stay ordinarily shall be presented first to the bankruptcy judge. A motion for a stay or relief from a stay filed in the district court shall state why it has not been presented to or obtained from the bankruptcy judge. Relief granted by the district judge shall be on such terms and conditions as the judge deems proper. (Added Mar. 30, 1987, eff. Aug. 1, 1987.) NOTES OF ADvisory CommITTEE ON RULES Motions for withdrawal pursuant to 28 U.S.C. § 157(d) or abstention pursuant to 28 U.S.C. § 1334(c), like all other motions, are to be filed with the clerk as required by Rule 5005(a). If a bankruptcy clerk has been appointed for the district, all motions are filed with the bankruptcy clerk. The method for forwarding withdrawal motions to the district court will be established by administrative procedures. Subdivision (a). Section 157(d) permits the district court to order withdrawal on its own motion or the motion of a party. Subdivision (a) of this rule makes it clear that the bankruptcy judge will not conduct hear ings on a withdrawal motion. The withdrawal decision is committed exclusively to the district court. Subdivision (b). A decision to abstain under 28 U.S.C. § 1334(c) is not appealable. The district court is vested originally with jurisdiction and the decision to relinquish that jurisdiction must ultimately be a matter for the district court. The bankruptcy judge ordinarily will be in the best position to evaluate the grounds asserted for abstention. This subdivision (b) provides that the initial hearing on the motion is before the bankruptcy judge. The procedure for review of the report and recommendation are governed by Rule 9033. This rule does not apply to motions under § 305 of the Code for abstention from hearing a case. Judicial decisions will determine the scope of the bankruptcy judge's authority under § 305. Subdivision (c). Unless the court so orders, proceedings are not stayed when motions are filed for withdrawal or for abstention from hearing a proceeding. Because of the district court's authority over cases and proceedings, the subdivision authorizes the district court to order a stay or modify a stay ordered by the bankruptcy judge. PART VI-COLLECTION AND Rule 6001. Burden of Proof As to Validity of Post Petition Transfer Any entity asserting the validity of a transfer under § 549 of the Code shall have the burden of proof. NOTES OF ADVISORY COMMITTEE ON RULES This rule is derived from former Bankruptcy Rule 603. The Act contained, in § 70d, a provision placing the burden of proof on the same person as did Rule 603. The Code does not contain any directive with respect to the burden of proof. This omission, in all probability, resulted from the intention to leave matters affecting evidence to these rules. See H. Rep. No. 95-595, 95th Cong. 1st Sess. (1977) 293. Rule 6002. Accounting by Prior Custodian of Property of the Estate (a) Accounting Required Any custodian required by the Code to deliver property in the custodian's possession or control to the trustee shall promptly file a report and account with the court with respect to the property of the estate and the administration thereof. (b) Examination of Administration On the filing of the report and account required by subdivision (a) of this rule and after an examination has been made into the superseded administration, after hearing on notice the court shall determine the propriety of the administration, including the reasonableness of all disbursements. (As amended Mar. 30, 1987, eff. Aug. 1, 1987.) NOTES OF ADVISORY Committee ON RULES "Custodian" is defined in § 101(10) of the Code. The definition includes a trustee or receiver appointed in proceedings not under the Code, as well as an assignee for the benefit of creditors. This rule prescribes the procedure to be followed by a custodian who under § 543 of the Code is required to deliver property to the trustee and to account for its disposition. The examination under subdivision (b) may be initiated (1) on the motion of the custodian required to account under subdivision (a) for an approv al of his account and discharge thereon, (2) on the motion of, or the filing of an objection to the custodian's account by, the trustee or any other party in interest, or (3) on the court's own initiative. Rule 9014 applies to any contested matter arising under this rule. Section 543(d) is similar to an abstention provision. It grants the bankruptcy court discretion to permit the custodian to remain in possession and control of the property. In that event, the custodian is excused from complying with § 543(a)–(c) and thus would not be required to turn over the property to the trustee. When there is no duty to turn over to the trustee, Rule 6002 would not be applicable. Rule 6003. Disbursement of Money of the Estate Disbursement of estate funds shall be by check unless another method is approved by the court. On motion of a party in interest, the court may require countersignatures except that signature by the judge shall not be permitted. NOTES OF ADVISORY Committee on RULES This rule authorizes the trustee to disburse money of the estate not only by check but by any other method approved by the court. In this latter regard, it continues the flexibility introduced by former Bankruptcy Rule 605(c) to recognize that mechanisms for payments through bank accounts are subject to technological and other changes. Local rule or a court order in a particular case may prescribe record-keeping requirements. The second sentence implements the policy of removing judges from nonjudicial functions. Rule 6004. Use, Sale or Lease of Property (a) Notice of Proposed Use, Sale, or Lease of Property Notice of a proposed use, sale, or lease of property, other than cash collateral, not in the ordinary course of business shall be given pursuant to Rule 2002(a)(2), (c)(1), and (i) and, if applicable, in accordance with § 363(b)(2) of the Code. (b) Objection to Proposal Except as provided in subdivisions (c) and (d) of this rule, an objection to a proposed use, sale, or lease of property shall be filed and served not less than five days before the date set for the proposed action or within the time fixed by the court. An objection to the proposed use, sale, or lease of property is governed by Rule 9014. (c) Sale Free and Clear of Liens and Other Interests A motion for authority to sell property free and clear of liens or other interests shall be made in accordance with Rule 9014 and shall be served on the parties who have liens or other interests in the property to be sold. The notice required by subdivision (a) of this rule shall include the date of the hearing on the motion and the time within which objections may be filed and served on the debtor in possession or trustee. (d) Sale of Property Under $2,500 Notwithstanding subdivision (a) of this rule, when all of the nonexempt property of the estate has an aggregate gross value less than $2,500, it shall be sufficient to give a general |