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Informal Proof of Claim From Claim Filed in Debtors Parent Company’s Bankruptcy

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In re Rowe Furniture; Case No. 06-11143-SSM; March 4th, 2008

This matter was before the court on the motion by Riverside Claims, LLC (“Riverside”) to allow a total of thirteen claims it filed after the claims bar date as amendments of claims that were timely-filed in the related case of the debtor’s parent holding company.  Riverside had filed claims in the parent companies case, but after the claims bar date for this case had run, and on the last day to object to the claims in the parent companies case, the parent company objected to the claims on the grounds that liability for those claims lie with the Debtor in this case.  Upon realizing its error, Riverside re-filed its claims in the present case and brought this motion to have them allowed as amendments to claims filed in the case of the parent company.

Except in Chapter 11 cases—in which certain claims are deemed filed if listed on the debtor’s schedules—a creditor desiring to receive distribution in a bankruptcy case must file a proof of claim.  11 USC §501(a), FRBP 3002(a).  The conversion of a chapter 1 case to a chapter 7 gives rise to a new time period for filing claims. FRBP 1019(2).  In a chapter 7 case, claims must normally be filed within 90 days of the first date set for the meeting of creditors.  FRBP 3002(c).

Bankruptcy courts have long exercised their equitable powers to allow creditors who have filed some other pleading in the case within the claims bar date that clearly sets forth the creditor’s claim, to have such pleading treated as an “informal” proof of claim that can be “amended,” after the claims bar date, by filing a formal proof of claim.  Fyne v. Atlas Supply Co., 245 F.2d 107 (4th Cir. 1957); see also Davis v. Columbia Constr. Co. (In re Davis), 936 F.2d 771 (4th Cir. 1991)(“For an amended claim to be allowed in the absence of a prior written informal claim, the creditor in question must undertake some affirmative action to constitute sufficient notice that he has a claim against the estate.”).  The District Court, in Dabney v. Addison, 65 B.R. 348 (E.D. Va. 1985) sets forth the following list of representative, but not exhaustive, activities of the creditor that would be considered sufficient notice of the creditor’s claim against the estate:

1.         sending bills to a trustee demanding to be paid;

2.         filing an objection to a trustee’s motion to sell property containing evidence of the creditor’s security interest in the property to be sold;

3.         attending and being an active party at the meeting of creditors; and

4.         an exchange of letters between the trustee and the creditor seeking payment from the estate.

However, notice of the creditor’s claim would not be found merely by proving knowledge on  the part of the trustee of the asserted claim or a mere listing of the claim by the debtor in the debtor’s schedules.  Rather, the essence of being able to find an informal proof of claim is some evidence that the creditor has made a demand in the case which “manifests the creditor’s intention to hold the debtor liable.” In re A.H. Robins Company, Inc., 118 B.R. 436, 439 (Bankr. E.D. Va. 1990).

In this case, Riverside did, prior to the claims bar date, file a pleading in which it identified itself as “the transferee of claims against the Debtors in the amount of approximately $300,000.00.”  The court then decided that, given the Fourth Circuit’s liberal view with respect to informal proof of claim, this court will find that the objections to the sale of the debtor’s assets was sufficient to constitute notice of a claim against the estate.

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