Opinion
No. 11-85-01786 ML.
August 14, 1997
Robert E. Poulson, Attorney for Debtor, Albuquerque, NM.
Norman E. Todd, Attorney for UCC, Las Cruces, NM.
Marcia B. Driggers, Attorney for Sunwest, Rawson and Drum's. Las Cruces, NM.
William J. Arland, III, Attorney for Dona Ana Savings Loan Association, Albuquerque, NM.
MEMORANDUM OPINION
This matter came before the Court on July 31, 1986, for hearing on the motion of Sunwest Bank of Las Cruces ("Sunwest"), Rawson, Inc., d/b/a Las Cruces Door ("Rawson") and Drum's Cabinets, Inc. ("Drum's") for an extension of time in which to file proofs of claim. Debtors filed this chapter 11 bankruptcy proceeding on December 27, 1985. Subsequently, on March 14, 1986, creditors with claims disputed by the debtors, including Sunwest, Rawson and Drum's (collectively "Creditors") were given notice of the dispute and required to file a proof of claim "on or before April 18, 1986, or your claim may be forever barred." Creditors filed their proofs of claim on April 24, 1986, six days beyond the deadline. On April 28, 1986, Creditors moved the Court to grant an extension of time to file their proofs of claim, stating that the late filing (1) was due to the mistake of Creditors' attorney and not to the Creditors themselves, (2) would not prejudice debtors as their plan for reorganization or liquidation had not been filed and was not due to be filed until April 28, 1986, and (3) that "exceptional circumstances exist to justify the extension of time. . . ." Debtors objected to Creditors' proofs of claim as untimely on July 23, 1986.
Debtors argue that Creditors have filed untimely proofs of claim and have presented no evidence of excusable neglect which would justify the allowance of the filing of their claims beyond the deadline set forth in the March 14 Notice. Creditors do not dispute receipt of the notice. Nor do creditors contend that receipt of the notice did not allow sufficient time to file their proofs of claim. In fact, Creditors state that their proofs of claim were "duly prepared on March 21, 1986." See Creditors' Motion for Extension of Time 3, filed
April 28, 1986. Further, at the July 31, 1986 hearing on creditors' motion for an extension of time in which to file, counsel for creditors stated that the only reason for the untimely filing was the failure of her office to mail them out on time. Rather than attempting to justify the late filing, Creditors maintain that the equitable doctrine of informal proofs of claim is applicable. Thus, the question before the Court is twofold: (1) whether circumstances exist which justify an extension of time in which creditors may file proofs of claim, and (2) if such circumstances do not exist, whether creditors' late proofs of claim constitute amendments to earlier filed informal proofs of claim.
The notice sent to creditors regarding their disputed claim set forth a deadline of April 18, 1986, for filing proofs of claim. Unless Local Bankruptcy Rule 11-107(b)(3) is applicable, this deadline was absolute. Local Rule 11-107(b)(3) states that: . . . Any request for an extension of time for filing proof of claim must be made prior to the deadline for the extension of time or there must be shown exceptional circumstances which would justify such an extension.
Pursuant to this rule, Creditors must be denied an extension of time in which to file their proofs of claim. First, leave for such an extension was not sought until after the deadline. Second, creditors have not proffered any exceptional circumstances as would justify such an extension.
However, this does not resolve the matter at hand The Court must address Creditors' contention that their activity in the bankruptcy proceeding prior to the deadline for claims constitutes an informal proof of claim. If this doctrine is applicable, then the formal proofs of claim filed by Creditors on April 28, 1986, would constitute amendments to their original informal proofs of claim and would relate back in time to the date of the original filings. In re Casterline, 51. B.R. 219 (Bankr. D. Colo. 1985). Consequently, if such amendment were permitted, Creditors' proofs of claim would not be untimely filed. See LeaseAmerica Corporation v. Eckel, 710 F.2d 1470 (10th Cir. 1983).
The allowance of informal proofs of claim is an application of the Court's equity powers. See In re Sherret, 58 B.R. 750 (Bankr. W.D. La. 1986); In re Fred Dent, Inc., 57 B.R. 219 (Bankr. M.D. La. 1986). In making such allowances, courts have scrutinized carefully the circumstances of each case to ensure that application of the informal proofs of claim doctrine is appropriate. E.g., Sherret, 58 B.R. 750; Fred Dent, 57 B.R. 219; In re W.T. Grant Company, 53 B.R. 417 (Bankr. S.D.N.Y. 1985). Further, an absolute prerequisite to allowance of amendments to informal proofs of claim by means of the later filing of formal proofs of claim is "the existence of something filed in bankruptcy court capable of being amended." Grant, 53 B.R. at 420. As noted by the Grant court, "not every filing constitutes an informal claim subject to such an amendment." Id. at 421.
The requirements for an informal proof of claim are as follows:
(1) the informal proof of claim must be in writing;
(2) the informal proof of claim must be part of the record in the bankruptcy proceeding;
(3) the writing must establish a claim against the debtor, apprising the court of the existence, nature and amount of the claim against the debtor; and
(4) the writing must evidence, implicitly or explicitly, an intent to hold the debtor liable for the debt.
In re Rite Autotronics Corporation, 27 B.R. 599 (9th Cir. BAP 1982); Sherret, 58 B.R. 750; Fred Dent, 57 B.R. 219; In re Basche-Sage Hardware Company, 56 B.R. 3 (Bankr. D. Ore. 1985); Grant, 53 B.R. 417; Casterline, 51 B.R. 219; In re Thornlimb, 37 B.R. 874 (Bankr. D.R.I. 1984). Neither knowledge by debtor of the creditors' claim nor inclusion of the claim in the debtor's schedule is sufficient, without more, to constitute an informal proof of claim. Grant, 53 B.R. at 422; Thornlimb, 37 B.R. at 876.
SUNWEST
Sunwest maintains that its participation in this bankruptcy action, taken as a whole, constitutes its informal proof of claim and that amendment by its late-filed formal proof of claim should thus be allowed. Sunwest notes the following relevant activities:
(1) active participation at the 341(a) meeting of creditors; (2) a request for and taking of a Rule 2004 examination of debtors, at which time debtors acknowledged Sunwest's previously filed lawsuit against debtor Paul Horstmann; (3) participation in informal settlement discussions with debtors followed by a letter to debtors' attorney, dated March 26, 1986, rejecting debtors' offer, and (4) correspondence to the Court, dated March 17, 1986, regarding its appointment to serve on the Creditor's Committee. All of this activity occurred prior to the April 18, 1986, deadline for filing claims. The only writings cited to by Sunwest are the March 26 letter from Sunwest to debtors' attorney rejecting debtors' settlement offer and the March 17 letter to the Court regarding the appointment of Sunwest to serve on the Creditors' Committee. Although the March 17 letter does express the intent of Sunwest to pursue its claim against debtors, neither the March 17 nor the March 26 letter is part of the judicial record in the bankruptcy proceeding. Further, neither letter apprises the court of the existence, nature and amount of Sunwest's claim against debtors. Thus, Sunwest's activity in this bankruptcy proceeding does not fulfill the requirements for an informal proof of claim. Therefore, since Sunwest asserts no exceptional circumstances justifying its late filing, the proof of claim filed by Sunwest on April 24, 1986, will be deemed untimely and will not be allowed.
RAWSON
Rawson presents no excuse for its untimely filing of a proof of claim. Further, Rawson presents no evidence that its participation in this bankruptcy constitutes an informal proof of claim. Therefore, the proof of claim filed by Rawson on April 24, 1986, will be deemed untimely and will not be allowed.
DRUM'S
Drum's sets forth no excuse for its untimely filing of a proof of claim. However, Drum's maintains that its participation as chairman on the Creditors Committee together with its request as chairman that the Court appoint a trustee or examiner in this case constitutes an informal proof of claim. However, the requirements of a writing which evidences the existence, nature and amount of Drum's claim and expresses Drum's intent to pursue its claim against debtors are not fulfilled by the request for appointment of a trustee filed by Drum's on behalf of the Creditors' Committee. Therefore, the proof of claim filed by Drum's on April 24, 1986, will be deemed untimely and will not be allowed. This memorandum constitutes the Court's findings of fact and conclusions of law. Bankruptcy Rule 7052.
An appropriate order shall enter.
Done in Albuquerque, New Mexico, on this 18th day of November, 1986.