Navigating Delaware Bankruptcy Court’s New Approach of Telephonic and Videoconference Hearings: Four Key Takeaways
The United States Bankruptcy Court for the District of Delaware (the “Court”) is making significant procedural changes resulting from the COVID-19 pandemic: All hearings with witness testimony will be via videoconference, with all other hearings held telephonically. This alert analyzes these new rule changes, and provides specific recommendations and takeaways.
On March 16, 2020, the Court entered a general order (the “General Order”) (a) continuing all non-time-sensitive matters scheduled for a hearing to a date to be determined after April 15, (b) providing that all hearings scheduled prior to April 15 are to be held telephonically or by videoconference, and (c) providing that the manner of submitting evidence at these hearings will be determined by the presiding judge on a case-by-case basis. Since the General Order, the Court has continued many hearings of routine or administrative matters (e.g., claim objections, pretrial conferences in avoidance actions, professional fee hearings) scheduled for the next few weeks.
Before turning to the other aspects of the General Order, the following are the relevant points of local practice and procedure, as they existed pre-COVID-19:
- The first hearing in any contested matter before the Court is presumed to be evidentiary. See Del. Bankr. L.R. 9013-1(d) (“All hearings on a contested matter will be an evidentiary hearing at which witnesses will be required to testify in person in Court with respect to any factual issue in dispute unless these Rules, the parties or the Court provides otherwise.”).
- In Delaware, it is common to file supporting declarations along with motions, but it is not specifically required by the local rules, subject to certain exceptions.
- In most instances, direct testimony in the Court proceeds by proffer. At the conclusion of the proffer, the witness must be available to take the stand for cross-examination, if necessary.
- For many years, the Court has liberally permitted parties to telephonically participate in hearings. While the applicable local rule only permits telephonic participation in “extenuating circumstances,” see Del. Bankr. L.R. 9013-1(d), in practice the Court typically permitted telephonic participation as a matter of course, see, e.g., Instructions for Telephonic Appearances Effective January 5, 2005, provided, however, that the examination and cross-examination of witnesses telephonically was rarely permitted.
- Up to this point, videoconference hearings only rarely have been used by the Court. Two notable instances were (1) the 2013 cross-border trial in In re Nortel Networks Inc., Case No. 09-10138-KG, and (2) Judge Walrath serving double duty as bankruptcy judge of the Virgin Islands (holding such hearings via videoconference in Delaware, broadcast remotely to the Virgin Islands).
Turning to the present: The Court has started to implement the General Order. On March 18, 2020, the Court issued a notice regarding videoconferencing, and related procedures. The notice provides that the Court will use Skype for Business for evidentiary hearings.
These new videoconference hearings are just beginning to be used by the Court. In several cases with videoconference hearings in the offing, the Court filed a letter in advance of the hearing, imposing protocol for submission of testimony. See, for example, the letter filed In re Valeritas Holdings, Inc., Case No. 20-10290-LSS. Among other things, in those cases the Court required the proponent to file on the docket the name of the witness, the location of the witness, whether anyone will be in the same room as the witness, and whether the witness will have documents with him or her. The Court also required parties intending to cross-examine the witnesses to circulate any exhibits to be used on cross-examination.
Conclusions and Takeaways:
Parties in a Delaware bankruptcy case should expect remote hearing to be standard operating procedure for the near future. Here are four takeaways in this new era:
1) Prepare, Prepare, Prepare: Planning and strategy for evidentiary hearings in this new regime are more critical than ever. Know where the burden of proof lies. Prepare the witnesses. Make sure the witnesses have reviewed and can access key documents and exhibits. Stipulate to factual issues, where appropriate and feasible. Test videoconferencing equipment, and consider a “dry run” of the hearing. With these new procedures, preparation is paramount.
2) Consider Declarations and Proffers for Direct Testimony: When planning to offer witness testimony in a contested matter, litigants should consider filing written declarations prior to the hearing and/or offering direct testimony by proffer. Having a witness testify on direct from the virtual podium might be more compelling, in a perfect world. But in this new era of videoconferencing (and possible technical difficulties during such hearings), this potential benefit might be outweighed by the relative certainty of presenting the Court clear direct testimony through written declarations or proffer. Declarations should be filed prior to any hearing with enough time for the Court to review them.
3) Communicate and Collaborate: In February 2020, the local rules were amended to require the hearing agenda to note whether the hearing is anticipated to be evidentiary. See Del. Bankr. L. R. 9029-3(b)(3). Even in normal times, the Court expects the parties to confer regarding potential evidentiary hearings. This is all the more critical now. The parties should be conferring regarding potential evidentiary hearings—well in advance of the hearing—and apprising the Court.
4) Stay Up to Date on Court Procedures: As videoconferencing goes into practice, there will likely be kinks to iron out. The Court could enter new general orders or notices, as time goes on. The prehearing procedures used in Valeritas could be adopted in other cases, or the judges could diverge in their approaches. It is therefore important to stay current on the Court’s procedures regarding remote hearings. The Court has created a devoted webpage for COVID-19 related updates, which should be consulted regularly.