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The Future of Electronic Legal Noticing

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You are all familiar with Official Form 10—the Proof of Claim. It is a lovely document, although a bit limited on space. Even with the tiny font used, there isn't much room for the creditor information or even the courts' date-stamps. We would like to suggest making it even more crowded—add another box—one that allows a creditor to supply their e-mail address.

According to a U.S. Department of Commerce report titled, A Nation Online: How Americans Are Expanding Their Use of the Internet, as of September 2001 143 million Americans were using the Internet. This growing number represents more than half of the U.S. population, and the growth rate in the United States alone is 2 million Internet users per month. Add those numbers to the ever-increasing cost of postage and the new dangers connected to our U.S. postal system, and there is only one answer. We must start using e-mail for legal notice requirements.

Bankruptcy Rule 9036 permits notice by electronic transmission; however, it is permitted only upon written request of the entity entitled to receive the notice. The Advisory Committee Notes state that this rule was designed for entities that ordinarily receive large volumes of bankruptcy notices, such as credit card companies, banks and taxing authorities. The Advisory Committee Notes point out that "the use of electronic technology instead of mail to send information to creditors and interested parties will be more convenient and less costly for the sender and the receiver." Rule 9036 should be expanded slightly to permit electronic transmission to those creditors who provide their e-mail addresses in the proof of claim form.

E-mail has the potential to offer numerous benefits over U.S. mail. The first, and potentially most cost-effective, is that new proprietary software can actually confirm, and record for the court, that the recipient has opened the e-mail. How many times have you had to argue against a creditor who asserts that they never received notice? The use of notification via e-mail provides some basic security measures not available with regular first-class mailings. First-class mailings are delivered to an addressee's mailbox. Recipients do not sign for the mail, and there is no confirmation that the addressee ever received the correspondence. In the event that material is incorrectly addressed or is incorrectly routed, there is no guarantee that the person who actually received the mailing will take the time to return it to the post office for correction and forwarding.

E-mail notification affords the opportunity to identify if, where and when each notice was "received" by the addressee. Because e-mail is confidential in nature, and because it can only be received when addressees "log on" to their accounts and enter their own secret passwords, it is unlikely that the e-mail will be read by an unintended recipient. Further, if an e-mail is misaddressed and remains unopened for a period of time, the sender can then use another approach in reaching that individual, such as certified mail or a mail delivery service. In the case of a bad e-mail address, most e-mail services provide an immediate notice of delivery failure, allowing plenty of time for using another approach. In addition, if the recipient has difficulty in opening or reading the e-mail, the recipient can immediately reply to the sender to let them know they are experiencing difficulty with the e-mail. The sender can then use alternative means to get the information to the recipient. This can all happen electronically within a matter of hours instead of days or weeks.

Another benefit of e-mail is that it allows easier linking to in-depth case information. Single-image notices could be e-mailed directly to the recipient in a .pdf format, with hypertext links to an existing Internet site. Smaller-sized notices would eliminate potential problems where recipients have difficulty receiving voluminous documents. For example, a single-image notice of sale could be e-mailed to creditors with a hyperlink to the proposed sales agreement. Interested creditors could view the sales agreement with a mouse click—no copies or postage required. The dollar and time savings to the debtor and creditors could be immeasurable.

A relatively new technology called Video Rich Media (VRM) allows video messages to be incorporated with any e-mail correspondence. According to a Jan. 24, 2001, article for RedHerring.com, "rich media is defined as the use (or combination) of video, voice, data and other technologies to create an otherwise unattainable user experience." A video message from an officer of a chapter 11 company accompanying certain notices throughout the case could make a difference in the case. For example, where there are competing plans filed in a case, a message from the CEO urging the creditors to vote could make all the difference. VRM can be especially useful in addressing negative issues that arise about the company during the chapter 11 case. As soon as negative information or rumors begin to spread, company officials can address those concerns immediately and effectively to control the spread of that information. It would be impossible for the company to directly contact each of its creditors by phone or in person; however, a two-minute video explaining the facts could easily be created and e-mailed to the creditors. The article notes that rich media "adds the dimensions of context and personalization to provide relevance that cannot be matched by other communications or broadcast media. For this reason, we expect that rich media will significantly add to the user experience, and, therefore, will be the Internet's next 'killer app.'"

This technology is so finely tuned that virtually anyone able to receive e-mail will be able to view the message—regardless of whether or not they are "logging on to the net." No special software, hardware or programs are required. The process that VRM embraces both compresses and streams a video message of varied duration (anywhere from 15 seconds to 5 minutes) from a central server. More importantly, the success of this type of "mailing" is measurable. Unlike correspondence delivery via the U.S. Postal Service, a VRM message is measured once the recipient has actually "viewed" the video—not just "received" it. Detailed reports can be provided showing the success of the entire mailing campaign or the results to just one recipient.

E-mail and video-rich e-mail could be a powerful and cost-efficient tool for certain chapter 11 proceedings and should be used to supplement and enhance current notice mailings. Because it provides a method of immediate notice, late nights worrying about whether a notice will be mailed timely may be a thing of the past.

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Monday, April 1, 2002

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