MDK Client Alert: What Secured Creditors Need to Know About the BNC Outage

A disruption to the Bankruptcy Noticing Center’s operations has affected the delivery of bankruptcy notices, creating an immediate challenge for secured creditors. Bankruptcy cases and deadlines may continue even when customary notices do not arrive. Lenders and servicers should review their bankruptcy-monitoring procedures, track applicable court directives, and promptly route information about new filings to the teams responsible for collection and enforcement activity.

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Understanding the BNC Outage

Around October 7, 2026, the Bankruptcy Noticing Center (BNC) was subject to a cybersecurity incident that resulted in a full shutdown of its operational systems. The BNC was responsible for automatically serving notices of bankruptcy filings and other court actions to registered parties. Parties registered with the BNC provided preferred mailing or electronic noticing addresses, and parties served at their designated addresses generally could not later argue lack of service.

For creditors registered with the BNC, notices were directed to the preferred mailing or electronic address on file, rather than a payment address or an address from a credit report supplied by the debtor. When a registered creditor was listed in a bankruptcy filing, the BNC automatically directed notices to that creditor’s designated address.

As a result of this cybersecurity attack and subsequent shutdown of the BNC, notices of any filings in bankruptcy court since approximately October 7, 2026 that were subject to automatic service by the court have not been served.

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Court Responses to the Outage

Courts, clerks' offices, trustees and U.S. Trustees across the country are scrambling to issue general orders and directives to advise bankruptcy participants on how to proceed considering the disruption to service and notice. Of particular importance are notifications of new bankruptcy filings and the issuance of Section 341 meeting dates and times.

Unfortunately, it appears the largest burden resulting from this situation is falling on debtors' counsel who, in many jurisdictions, are becoming the responsible party to serve notice of the bankruptcy filing and the 341 meeting dates to the creditors.  

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What This Means for Secured Creditors

Many secured creditors do not rely on the service and notice of pleadings filed with the court. Rather, large lending institutions have systems set up that “scrape” or pull the data from ECF/PACER systems directly rather than wait for the information to be provided by noticing services. Although this could result in additional costs to creditors as they may now be required to provide notice and service on any motions or actions taken within the bankruptcy court, the information about filings and pleadings by other parties remains accessible, and the data can be retrieved using existing methods.

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Potential Implications and Recommended Actions

In the future it is anticipated that judges and courts may increasingly hold lenders to a slightly higher standard to prove lack of notice if their only argument for a late-filed claim stems from a failure to receive notice and service at their “preferred notice address.” MDK recommends that lenders continue using data scraping to obtain information as quickly and efficiently as possible rather than relying solely on service from debtors' counsel. Counsel may face difficulties providing timely notice when relying on ordinary U.S. Mail, which has become progressively less reliable.

It is imperative that a secured lender, or really any creditor, takes immediate action necessary to cease collection, foreclosure, or repossession efforts as soon as they are notified of a pending bankruptcy matter (subject to applicable exceptions). A genuine lack of notice may provide grounds for seeking permission to file a late claim. However, it would be inappropriate to rely solely on technical deficiencies in notice to justify a late filing during this disruption. This argument makes sense when the system is functioning and no effective notice is served, but it is anticipated that many judges will be altering their perspective on technicalities of service versus constructive or actual knowledge.  

Throughout this disruption, the goal remains to prevent unintentional violations of the automatic stay. MDK encourages lenders to monitor all their public addresses closely, as notices being served directly by debtors' counsel may result in notice at payment addresses rather than noticing addresses if those are the only addresses available. If you have questions about your noticing procedures or the impact of the BNC outage, contact MDK Senior Counsel Molly Simons at MBSimons@mdklegal.com.