morning your honor my name is miles come on i represent used in blue bonnet the appellant in this case i'd like to start by addressing the jurisdiction question that the court has asked us to take and that involves the finality of the bankruptcy court orders was in particular like to make two points if i'm one is that no claim objection was filed with so called informal claims filing of a claim objection initiate a contested matter of its own that didn't happen here in the distinct the importance of that distinction can be seen in comparing the two cases the court asked us the giles case in the first circuit involved an actual proof a claim filed there was then an objection filed that it was late and the claimant responded that well wait a minute earlier we filed something that we're going to call an informal claim so the informal claim issue was tied up in the actual claims process that's not what happened here i think this case is more like the greyhound decision which this court made which involved a ruling of the bankruptcy court that allowed late claims to be filed there wasn't actually a claim objection filed that wasn't before the court the issues the discreet question of whether like claims could be filed by i think it was twenty four claimants and this court said that that was a discrete issue that could be appealed and i think this is more like that and a second point i would make your honor on jurisdiction it is a point that this court has made in cases in the past including the asarco decision and the delta produce decision which is that finality in bankruptcy orders is to be looked at in a more flexible light and a more practical like that one might take ordinary district court decisions and that's really because when you've got these massive bankruptcies with you know numerous adversary proceedings one hundred sometimes more calls than that claimants and so it's saying you should have to wait for the whole bankruptcy is wrapped up if you have this one discrete dispute that's decided years earlier so the question here is is this discrete dispute wrapped up and i guess going back to your first point i mean seems to me you're definitely contesting that whether this claim has to be paid i mean even if it's a lot of mean there's there's underlying litigation about who has an interest in so loyal certainly the amount of the claim hasn't been fixed yet so it seems to me what isn't there a lot more for the bankruptcy court to do if we affirmed here well that that's where i might point out the practical aspect of this we prepared a plan of reorganization and a disclosure statement based on what we understood to be a conscious decision by these claimants not to file a claim in the case or claims in that and we prepared our plan we prepare our disclosure statement we were prepared weeks away or less from the hearing on the disclosure statement and they changed their mind or woke up or whatever and filed first a motion to like claims based on excusable neglect which was denied and then they said well then we filed some things that we like to claim are informal claims the practical issue is these claims are so many and so large if they're allowed our plan doesn't work so it's not like the greyhound case where the question is how much should they be paid out of a pot of money set aside the question is what do we do with the case if these people have a claim these claimants have a claim our plan won't work we either thread i think that the courts below about the bankruptcy court in the district court made several fundamental misconceptions one of them is that conflated a claim against the death or with a claim against the debtors bankruptcy esta in this case illustrates the difference because there is state court litigation and two lawsuits one of them removed and remain but involving title their title issues and one could logically say we're going to we want to litigate those tidal issues in state court or in a different proceeding but we don't want to file a claim for monetary relief against the limited funds in the estate why because we don't want to submit ourselves to the jurisdiction of the court for other purposes so there could be a logical reason why you may want to go litigate title but yet not file a claim and in the opinions of both the bankruptcy court the district court they repeatedly talk about well the title issue they might say that they were you're going to collect their money at a future revenues from the oil and gas well it issue and not file it's a conscious decision one makes to file a proof of claim to participate in the cash that's in the bankruptcy estate and we thought they had not made that election and based a plan on that so there can be logical reasons why you want to have the litigation to decide a title issue and you might want to resolve those even the monetary issues against the the race the s and not the money in the bankruptcy is so at the end to have an informal proof a claim the claim has to be against the estate and part of that also is the second misconception that has to be filed by the creditor and this is why obviously when we list on our on our schedules you know so and so has a claim against the estate it's disputed that's not a claim because we the debtor filed that creditor and filed now part of what they're arguing that an informal claim is that we remove the state court litigation to bankruptcy court will all that shows is that there was a title dispute and some money was claimed not that a conscious decision was made to file a claim against well you're actually leading into my third point your honor which is that i think the bankruptcy court made a mistake here in allowing as an informal claim something that doesn't meet the substance roof of klein the cases across the country of set for many years that the whole idea of an informal of the informal proof of claim doctrine which of course is not in the statute is that somebody filed something with the bankruptcy court that didn't use the official form but included the substance of a claim which begins with who are all the claimants and how much are they claiming these documents were title establish a title dispute and they said were owed revenues from these wells but it never said person a is so this much person b is  exact information but at least you put down a claim for each person on the proof of claim form and i think that one thing i noticed and re reading the bankruptcy court's decision just getting ready is the way he cut it's an awkward position that judge's career took where he said well these claims are invalid they're there insufficient but we're going to call them informal claims and they have to be redone well how do you do that and he cited some cases that deal with situations where someone uses the official proof a claim form that they thought they purport to follow what's a proof of claim they fill it out and there's some technical objection like they one of the requirements is you attach all the documents to back up your claim and let's say they don't attach all the documents well if that happens the it's still a proof of klein and it's the debtor's object burden to object to it and the difference is that the burden of proof is with the claimant stead of the debts such as they are to be to be discharged if in fact these are not in formal proofs of claim a portion of them are your honor because the debt that accrues up to the date of bankruptcy the preposition claim would be discharged in effect because your claim was fun i thought you just said something about taking it out a future revenues that we didn't need these claims in this bankruptcy that this upsets the apple cart because if it's considered a title dispute w then they can take out a future revenues whatever is that sounds contrary i think your honor i have to correct myself that there's a certain portion of the rev the revenue claim that would be lost in that is what is accrued up to the date of bankruptcy but everything after that would be adjusted outside bankruptcy if title is achieved there is in this case a limited amount of funds in the bankruptcy estate it's either going to be used to go all to them to pay their preposition claim if they win or it goes to pay administrative costs and other creditors and that's really the issue here you're right it is if you do if they elect there is a downside or a risk or something they lose by electing not to  which is that they do not have a claim for whatever accrued preet the tissue in exchange for that they get something which is it may help them with their argument that they want this decided in state court or not in the claims process and they want to jury which they got you know and that's a decision which we understood these claimants had consciously made that is they would give up their claim against that limited cash in the estate in exchange for some estimate just like they do in their state court pleading how much they think they're entitled to and even if they don't know for sure or you file the claim you estimate if you don't have all the data you can you know you know if they have some data it's not and you estimate what your claim is and and file it but in a case like this where there can be especially this where there can be a logical reason not to file a claim just to avoid the claims process on your title dispute they should be required to file wells that have been continuously producing remarkable since one thousand thirteen and they'll probably be producing in twenty one thirty and so aspects of this case involve a dynamic process which involves continued requirement for the pallet to provide us as you point out the information on net profits this is not like deciding how much is a royalty owner on his lease because all he has been know  is what is the state say the amount of production is what was the price at the time and what's my fractional interest in this case both the japanese and the hammonds are trying to enforce net profits interest which under texas law and  interest in real property but they still require the input from the working interest owners yet can't calculated unless you know and have their records and so at the time this case was filed it wasn't like my hypothetical about the company that sold widgets to the debtor all before the petition we have an ongoing dynamic and we have claims that are not claims that ordinarily can resolved in the claims process and i'll give you an example sure before you do that be that as it may what efforts were made you understand that there's a chapter eleven plan that is going to be presented to the bankruptcy court it's going to have input of creditors and those who have interests you also have claims that you want to litigate in state court what efforts were made by your client to appear in bankruptcy court it would seem to me that you understand that the trains leaving the station that there is there is a plan and guess what you're not your client's interests aren't a part of it was any objection made or any type of putting aside the issue of the proof of claim whether formal or informal was there any effort in bankruptcy court to have your claim accounted for when the plan was put together well the plan was filed after rather long after we had the first thing we did was we sought to remain and the removal of the jacket case and and you might ask why did you do that in the japhet case and not in the hammo i and i have to read this to get the full flavor of this and this is really part of our equitable or it's about the when the plan is presented presumably you or your client got a copy of it and realized that your clients a nowhere mentioned are nowhere provided for seems like they would have been some reaction to that in the bankruptcy court to say time out we're litigating over here we've got a potential claim quantif unquantifiable but we need to be are we need to be accounted for to the extent the pie is being divided up we need to be accounted for that's what i'm asking is that's what what was done at the time of the plan came up for f hearings and cut all the way the plan has never come up for hearing never come up for confirmation and what happened was i filed a motion which is before the court the motion to regard the jap th as informal proofs of klein that is precisely what kicked over the b have and that is the action that i took and i think in context the court must realize it from judges or standpoint this bankruptcy case really is about these two loves that that is the case in fact he said that he's been bluebonnet has no secured creditors and it's unsecured creditors of compliance entirely of insiders lawyers accountants and various parties to this ever story proceeding the focus of houston bluebonnets bankruptcy is this lawsuit and you can't transmogrify the relationship between the parties merely by up on a bankruptcy petition and then key there is no bona exists you point out that it's not the amount of the claim it's not whether it's an allowed playing it this has to do with the determination of our status as as claimants and then frankly the japhet judgment which is now on appeal in state court and the hammond the ultimate result in the hammock case will fill in the blanks that's all that's left and those could be that you get zero maybe that state court litigation gets reversed could be you don't prevail have no prime aphasia validity right well right but that's that's simply because it doesn't mean we don't have a case it just means you know when you file form be tan the bankruptcy proof a claim form unless they followed objection your your claim we already have a one point three million dollars judgment from brazoria county and i think it judges because mine is certainly in my mind those proceed aims or the place where these claims will be liquidated not through court and the bankruptcy court it's sort of like monopoly do not pass go do not collect two hundred dollars i will not we will not have a claim against no matter what happens in the state court proceeding or the hammock proceeding we won't in but this very important understand will not have an unsecured claim for pre partition a manse since this well is continuously producing on an ongoing basis we will if we need our judgment as a sion and secured claim four dollars but the actual we're not out of court on the substantive issues such as title you know  our net profits interest because those those interests have to do with title to land not a claim for dollars a claim for damage correct that that is my opinion and there's another thing that gets to be kind of a wonky bankruptcy distinction but when i found that motion to approve an informal proof of claim that created what is called a contested matter under rule no one full but there are certain kinds of matters that cannot be adjudicated in a contested matter and they include and in those matters have to be in an adver they'd still have to be an adversary proceeding because you can't decide if he's like tidal and such matters in this proof of claim process which is really designed for determining what claims for dollar amounts for showing of our klein in truth the petitions that the court found constituted an informal claim lewd or a lot more information then one could divine from this official  you've got to have the substance of all those claims for real property recovery for recovery of title and possession in such matters and we allege those matters in spain in great detail and  is is is into shall we say insinuating that i might have had certain motives to do or not do something but if if it were the case that i had such a motive i might i have the greatest respect and always had mr calm he's he's a he's a great guy and we were good colleagues and i do think one thing about our bar and in houston bankruptcy bar we we know each other and we're friends with each other and i think we were wrong all the bells on the substance of our our motion but i do want to address jurisdiction and i really think first of all the johns case is a case that  kind of preceded this flexible finality of cases because you think about it first of all bankruptcy has as we know through the continuum of the bankruptcy case there are a number of discrete events  speeds and this is one of them and i actually think that one of the best analogies to our situation is in in trying to parse out what flexible finality means it's sort of like the collateral order rule and i really think you can can can make that analogy because i collateral order and if one has a collateral or situation it involves claims from and collateral to the rights asserted in the action too important to be denied review into independent and independent of the causes of action itself and that's from cohen versus beneficial insurance industrial loan pork three thirty seven us forty one at forty six and so i think what we're really saying is the this determination of whether we have a quote it is not the claim itself it's sort of like the distinction between the dancer in the dance it's two different things this this motion has to do with whether we have the status as a claimant now and  i'm sure most often it's the same offer but we'd be happy to offer additional briefing but i do think there's another there's another case that i think kind of touches on this in right sharm or four seventy five f second five sixty eight sixty three which is a six circuit case from one thousand nine hundred three holding that an order that determined that movements did not qualify as creditors was final for purposes of appeal you get around evolve the evil boss case which seems to say the normal rule is that allowing a untimely proof of claim to be filed as an informal claim normally would not be subject to appeal and it only was in that the claimants were trying to establish their claims the amount the underlying amount everything else in proceeding in the proof of claim process and here everybody knows judge is going to as mr cohen knows i because again going back to my widget maker the widget maker when he files his claim in the bankruptcy court he's not going to have any jury trial danvers or a county or substantive title issues he just wants the judge to say yep you've got a claim for hundred thousand dollars or whatever it is it seems to me all these moving is more of a reason why we shouldn't exercise touristic i guess that you might not win all these other issues in this this whole issue of whether orderly on that that and so what's going to end up happening there is going to end up being a judgment and it will run up the stairs and that will determine the amount of our client it will determine these title issues and so forth through the texas appellate courts winds its way ultimately we want to lose if we win and judges are going to say well ok here's how much you're claiming this but it's not going to happen through this proof of claim process but here's satisfied we decide that one where the that's a final decision you tell me that it that it is bomb yes with respect to the proof i mean if we reverse then you are out but the other case was dismissed for jurisdiction the adversary proceeding it would have the same thing if we reverse they are that would've said no no interest in the wells right well right but they are you have a more traditional situation where you have a  summary judgment which you held to be in a lock atory because it determined number of substantive legal issues but there was still left the damage ultimate damage finding and i would suggest that that's more like a the high school debate tournament it's been a while if you could address at the start and he emphasized this point judges school made which is in the bankruptcy courts view the whole purpose of filing this bankruptcy was because of claims it's also but that is god's point was that means there was everyone knew these demands on the estate we're out there all thank it's back to the point i made there's a difference between and they're different types of clients you can have a claim to title you can have a claim against the debt or which is a title claim going forward and you can have a claim against the estate and the limited cash in the state there are different things you do have to file a proof of claim if you want to participate in the distribution of cash that's in the estate from preposition operations a fit well here and he didn't know all the numbers i've had these situations before you file a claim and you attach your lawsuit that is the you know the support for your claim and you list your claimants and you estimate your claims it's not like the proof of claim is due the day after the filing of the case you do have some time and there are procedures in the bankruptcy court rule two thousand and four examination for example if you if there is data you need to estimate your claim you have a period of time to get that data and as i lawsuit out there which may affect title which may affect other things doesn't mean that we know they're going to make the conscious procedural decision to file a proof of claim in the case that is something you have to do and i think that when we start getting into well correct and it also goes back i could finally get my hearing on my disclosure statement and plan which you know as they often do we will not resolve all of the title issues but it will say here's the cash that the estate has  claims that exist as of this date and there are some who would be they would be out and other creditors we get paid to the extent cash is is either in the estate or contributing from the plant and then litigation may still go forward it just and you know i took the time to draft a plan and draft a disclosure statement and assuming that that was their conscious decision and the question is do they you know as i mentioned earlier first they filed a motion to file a lie claim based on excusable neglect so they didn't think they  filed a claim and i can't recall how it came up it might even been judges to suggestion that well maybe this is all an informal and but by his own findings judge it's yours is your said they didn't meet the substantive requirements of a proof of claim it's not like they just filed something else they filed something they did akkad they wanted a claim against the cash in the estate that satisfied this kind of substantive information it's not hard to do it either you can use the form you fill it out as best you can and you attach your last if you want to file a claim and there is a bar date there was not a motion to extend the time and it wasn't a claim and it does have some consequences doesn't mean they don't have any rights going forward which they will it aga n and with respect to the jurisdiction issue finally i'll just notice us certainly agree mr skelton on that and the point that your honor just made which is that the ham in case it was reversed was an adversary proceed contested matters they treated differently and again if you go back to the courts you know explanation other cases about the practicality of finality in the bankruptcy case it makes sense to treat the decision on the informal proof a claim i think is a discrete matter there hadn't been a claim objection yet if that happens that's it thank you all right the case is submitted thanks to both sides for the argument