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Reprinted from the July/August 2004 ABI JournalAugust 1, 2004

Web posted and Copyright © August 1, 2004, American Bankruptcy Institute.

he Federal Courts Improvement Act of 2004 (S. 2396) would amend both Title 28 and Title 11 of the U.S. Code.Section 1412 of Title 28, dealing with venue changes applicable to both cases and proceedings in bankruptcy, nowclarifies that the district court, "on its own motion or on timely motion of a party in interest," may transfer a case ora proceeding "in the interest of justice or for the convenience of the parties." This emphasizes the courts' inherentability to transfer cases where the interest of justice or convenience for the parties warrants such actions.

Section 107 of Title 11, which sets forth the ability of the bankruptcy court to fashion and enter appropriateorders dealing with the need to protect an entity's interest in legally recognized confidential matters such astrade secrets and to protect against matters that are "scandalous or defamatory," would be expanded to deal withthe recognized right of privacy in the computer age, where the detailed information in the debtor's file(schedules, financial statement of affairs and related pleadings) are readily available to anyone with access to acomputer. A new subsection (c) would enable the bankruptcy court, for cause, to fashion and enter anappropriate order in order to protect any person (which by §101 definition excludes "governmental units") from:

  1. any "means of identification" as defined under §1028 (d) (IV) of Title 18.
  2. information that could cause undue annoyance, embarrassment, oppression or risk of injury to persons or property.

Essentially, these new provisions are designed to cope with the inevitable problems arising from identity theft.While these new provisions provide the bankruptcy court with a legal basis for dealing with this type of problem,there still remains the dilemma of what information should be made available. In providing legitimate parties ininterest with information that can be utilized to discover property of the estate, or to uncover fraud or otherwrongdoing, there will be necessarily a tension between providing access to such personal and financialinformation, which might be used to injure the person or property of the honest debtor. It is inevitable, as thesematters progress, and in view of the expanded use of computers in providing such information to the public at large,that bankruptcy courts will be called upon to enter protective orders to limit the disclosure of personal and financialinformation contained in the bankruptcy schedules and related pleadings to only identifiable parties in interest.

Finally, in keeping with this protective approach to personal identification in connection with a filed bankruptcycase, §342(c) of Title 11 would be further amended to require that all notices to creditors contain only the last fourdigits of the taxpayer's identification number.

Hon. Roger M. Whelan



 

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