Recently, in Reynoso v. United States (In re Reynoso) — a case of first impression for the Ninth Circuit that addressed the intersection of cyberspace and bankruptcy — the court held that a provider of web-based bankruptcy software was a bankruptcy petition preparer (“BPP”) under 11 U.S.C. section 110 and that under California law, the features and functionality of the software went beyond mere typesetting and constituted the unauthorized practice of law. Reynoso v. United States (In re Reynoso), 477 F.3d 1117 (9th Cir. 2007). In re Reynoso is significant because prior to this case, the Ninth Circuit had not considered whether the creatorprovider of a software program could be deemed a BPP within the meaning of section 110. 477 F.3d at 1123.
This article will first explore the purpose and design of section 110 — the statutory backdrop for the Reynoso court’s analysis. Second, this article will discuss the facts and procedural posture surrounding the Reynoso litigation. Third, this article will discuss the court’s rationale in holding that (1) the defendant provider of software was indeed a BPP, and (2) the defendant provider of software had engaged in the unauthorized practice of law. Finally, this article will conclude by discussing the significance and broader implications of the Reynoso decision.
Article to appear in the National Associate of Chapter Thirteen Trustees Quarterly, Volume 22, No. 1, Oct/Nov/Dec 2009 and reprinted with permission from the National Association of Chapter 13 Trustees.