“In re Hollingsworth”: Even Late-Filed Claims May Be Entitled to Distributions

Late-filed claims are not automatically disallowed under the Bankruptcy Code, and under Section 502(b)(9), such late-filed, general unsecured claims are not invalidated to the extent excess funds remain after payment of timely filed claims. As stated by the Bankruptcy Appellate Court for the Eighth Circuit Court of Appeals: “The net effect of the foregoing is to subordinate the payment of late unsecured nonpriority claims to the payment of nonpriority unsecured claims for which proofs were timely filed.” “In re Hollingsworth,” 331 B.R. 399 (8th Cir. BAP 2005).

Written by: Mette Kurth