Source: https://fightforeclosure.net/2014/07/16/how-homeowners-and-commercial-property-investors-can-effectively-bring-defend-proof-of-claim-objections-in-bankruptcy-proceeding/
Timestamp: 2019-04-18 13:39:16+00:00

Document:
Once a proof of claim has been filed,(1) the claim is deemed allowed unless a party in interest objects.(2) The best preparation for defending against a claim objection is to pay careful attention to the proper filing of the claim in the first instance, including timely filing, the claim form and necessary attachments, and the legal effect of filing. Whether bringing or defending an objection to claim, the practitioner should be cognizant of applicable procedures governing the filing and service of claims objections, the content of omnibus objections and requested relief requiring the filing of an adversary proceeding. These issues, as well as determining the burden of proof in the disposition of claims objections, the effect of a transferred or assigned claim on the claim objection process, the resolution of administrative expense claims, and reconsideration of claims are addressed below.
1 The filing of a proof of claim is governed by 11 U.S.C. § 501 and Fed. R. Bankr. P. 3001–3005.
2 The allowance of a proof of claim is governed by 11 U.S.C. § 502.
3 Fed. R. Bankr. P. 3002(c).
4 Fed. R. Bankr. P. 3002(c)(1). 11 U.S.C. § 1308 prescribes the time by which a chapter 13 debtor must file outstanding tax returns for all tax periods ending during the four-year period preceding the filing of the petition.
6 Fed. R. Bankr. P. 3003(c)(3).
8 Fed. R. Bankr. P. 3004.
9 9 Collier on Bankruptcy ¶ 3004.01 (Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev.
10 Fed. R. Bankr. P. 3002(c)(2).
the foregoing language [of Fed. R. Bankr. P. 3002(c)(4)] permits the court to specify a special deadline for the filing of claims arising from the rejection of an executory contract or unexpired lease, there is no requirement that such specialized orders be entered.”) (citing Liakas v. Creditors’ Comm. of Déjà Vu, Inc., 780 F.2d 176, 178 (1st Cir. 1986)).
15 Fed. R. Bankr. P. 9006(b)(3). See also In re Jensen, 333 B.R. 906, 909 (Bankr. M.D. Fla.
(Bankr. C.D. Cal. 1987) (court specially set bar date other than date provided under Fed. R.
whether a judge in equity could permit an entirely new claim to be filed after bar date).
16 Fed. R. Bankr. P. 3003(c)(3).
17 9 Collier on Bankruptcy ¶ 3003.03[b].
18 Pioneer Inv. Servs. Co. v. Brunswick Assocs. P’ship, 507 U.S. 380 (1993).
20 Artificial Intelligence Corp. v. Casey (In re Casey), 198 B.R. 918, 924–25 (Bankr. S.D. Cal.
1996) (“Ignorance of the law or Federal Rules, or mistakes in their construction, do not usually constitute excusable neglect.”).
21 Schmidt v. Boggs (In re Boggs), 246 B.R. 265, 268 (B.A.P. 6th Cir. 2000) (“‘Clerical or office problems’ are simply not a sufficient excuse for failing to file a notice of appeal within the ten day period.”).
22 Jones Truck Lines v. Foster’s Truck & Equip. Sales (In re Jones Truck Lines), 63 F.3d 685 (8th Cir. 1995).
23 Finger v. County of Sullivan (In re Paramount Hotel Corp., 319 B.R. 350 (Bankr. S.D.N.Y. 2005).
Gehl, 324 B.R. 756, 759 (Bankr. N.D. Iowa 2005)).
disallowed, and creditor subsequently filed two additional claims, court found that the additional claims were untimely and did not amend the earlier claim, as there was nothing left to amend once the earlier claim was disallowed).
26 Clamp-All Corp. v. Foresta (In re Clamp-All Corp.), 235 B.R. 137, 140 (B.A.P. 1st Cir. 1999) (“Post-bar date amendments should be scrutinized to ensure that the amendment is not making a new claim against the estate.”).
27 Id. (citing In re International Horizons, 751 F.2d 1213, 1216 (11th Cir. 1985)).
Inc., 152 Bankr. 189, 192 (Bankr. W.D. Mich. 1993)).
29 9 Collier on Bankruptcy ¶ 3001.05 and n.33 (collecting cases).
30 In re Sherret, 58 B.R. 750, 751 (Bankr. W.D. La. 1986).
31 In re Sambo’s Restaurants, Inc., 754 F.2d 811, 817 (9th Cir. 1985).
32 Fed. R. Bankr. P. 3001(a); see also Official Form No. 10 (2008).
provide details of the charges and interest imposed in responding to the trustee’s objection and, failing to do so, the court sustained the objection. In re Plourde, 397 B.R. 207, 226 (Bankr. D.N.H. 2008) (“The need to provide details on the terms and conditions of the contract, and the actual charges and interest imposed, from time to time may be onerous from the credit card [issuers’] point of view. However, such difficulties flow from the business model that the credit card industry has voluntarily adopted. So long as credit card issuers wish to maintain sole discretion to vary the terms of their agreement with a consumer at any time, and from time to time, they must accept the legal consequences of that business model.”).
36 Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989).
38 MCI WorldCom Communs., Inc. v. Communs. Network Int’l, Ltd. (In re WorldCom, Inc.), 378 B.R. 745, 751 (Bankr. S.D.N.Y. 2007) (quoting Germain v. Connecticut Nat’l Bank, 988 F.2d 1323, 1331 (2d Cir. 1993)).
40 Durkin v. Benedor Corp. (In re G.I. Indus.), 204 F.3d 1276, 1279–80 (9th Cir. 2000).
41 Langenkamp v. Culp, 498 U.S. 42, 44 (1990) (quoting Granfinanciera, 492 U.S. at 58–59, n.14). See also In re S.G. Phillips Constructors, Inc., 45 F.3d 702, 704–08 (2d Cir. 1995).
Peachtree Lane Assocs.), 150 F.3d 788, 799 (7th Cir. 1998)).
43 28 U.S.C. § 157(b)(2)(C).
Further, any claim by a governmental unit is offset by any claim against the governmental unit that is property of the estate.(45) Of course, when a filing is required, if a discharge is ultimately entered or the debt is not otherwise excepted from discharge, a subsequent affirmative recovery from the debtor is barred.
the same transaction or occurrence as the state’s claim).
45 Id. at (c). Any concerns about the constitutionality of § 106(b) and (c) have been laid to rest the Supreme Court’s conclusion that the “States agreed in the plan of the Convention not to assert any sovereign immunity defense they might have had in proceedings brought pursuant to ‘Laws on the subject of Bankruptcies.’” Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 377 (2006).
46 29 U.S.C. § 2101 et seq.
47 In re Protected Vehicles, Inc., 397 B.R. 339 (Bankr. D.S.C. 2008).
48 In re Herrera v. JPMorgan Chase Bank, N.A., 369 B.R. 395, 400 (E.D. Wis. 2007) (“[Fed. R. Bankr. P.] 3007 sets no bar date for objections.”) (citing In re Kolstad, 928 F.2d 171, 174 (5th Cir. 1991), cert. denied, 502 U.S. 958 (1991); In re Consolidated Pioneer Mortgage, 178 B.R.
222, 225 (B.A.P. 9th Cir. 1995), aff’d, 91 F.3d 151 (9th Cir. 1996)).
49 Id. (“The bankruptcy court may set deadlines for filing objections.”) (citing In re Hovis, 356 F.3d 820, 822 (7th Cir. 2004)).
50 See Universal Am. Mortgage Co. v. Bateman (In re Bateman), 331 F.3d 821 (11th Cir. 2003) (“Although [11 U.S.C.] § 502(a) does not provide a time limit to file an objection, it must be filed prior to plan confirmation.”) (citing In re Justice Oaks II, Ltd., 898 F.2d 1544, 1553 (11th Cir. 1990), cert. denied, 498 U.S. 959 (1990); In re Starling, 251 B.R. 908, 909–10 (Bankr. S.D. Fla. 2000)) (emphasis in original).
51 See Morton v. Morton (In re Morton), 298 B.R. 301, 309–10 (B.A.P. 6th Cir. 2003) (“Neither the Bankruptcy Code nor the Bankruptcy Rules contain a bar date or deadline for filing objections to claims in a chapter 13 case and we will not read one into the law where none exists.”).
52 Fed. R. Bankr. P. 3007 Notes of Advisory Committee on 2007 Amendment. Prior to 2007 amendment, courts applied the doctrine of excusable neglect to reconsider claims of creditors that had been expunged due to failure to respond to an omnibus objection. See Pro-Tec Servs., LLC v. Inacom Corp. (In re Inacom Corp.), 2004 U.S. Dist. Lexis 20822 (D. Del. Oct. 4, 2004) (finding excusable neglect through application of Pioneer factors); In re Enron, 325 B.R. 114 (Bankr. S.D.N.Y. 2005) (finding excusable neglect where inaction was based upon the erroneous assumption that the debtors would not file a formal objection to claim while engaged in negotiations regarding claim). See also supra Part II.A.
53 Fed. R. Bankr. P. 3007(c)–(d).
and specifying additional requirements for the filing of omnibus objections).
57 Fed. R. Bankr. P. 3007(a).
58 See In re Lomas Fin. Corp., 212 B.R. 46, 52 (Bankr. D. Del. 1997) (“Most authorities agree that claim[s] objections are contested matters.”) (quoting United States v. Levoy (In re Levoy), 182 B.R. 827, 834 (B.A.P. 9th Cir. 1995)).
59 Fed. R. Bankr. P. 9014(b) (incorporating Fed. R. Bankr. P. 7004).
claim that service of process at that address was either defective or violative of [the creditor’s] rights.”); but see In re Sunde, 2007 Bankr. LEXIS 3704, *6 (Bankr. W.D. Wis. Oct. 2, 2007) (“[Fed. R. Bankr. P.] 7004(b)(3) expressly requires that service be addressed to the attention of ‘an officer, [or] agent’ of the business. The court is not persuaded that the plain language of [Fed. R. Bankr. P.] 7004(b)(3) should be overridden simply because the [c]reditor failed to provide a proper address for service on its proof of claim form.”).
61 In re Outlet Dep’t Stores, Inc., 49 B.R. at 540 (quoting Hackner v. Guaranty Trust Co., 117 F.2d 95, 98 (2d Cir. 1941), cert. denied, 313 U.S. 559 (1941)).
62 See D. Md. Rev. Local Bankr. R. 3007-1 (2008) (“In addition to the service required by [Fed. R. Bankr. P.] 9014 and 7004(b), a party objecting to a proof of claim must serve a copy of the objection and any supporting memorandum and affidavit on the claimant at the address (and in care of the individual) shown on the proof of claim and must certify that service to the court.”).
63 See infra Part IV.D.
chapter 11, chapter 12, or chapter 13 plan provides for subordination; 9) a proceeding to obtain a declaratory judgment relating to any of the foregoing; or 10) a proceeding to determine a claim or cause of action removed under 28 U.S.C. § 1452.
65 Fed. R. Bankr. P. 3007 (amended Dec. 1, 2007) (“If an objection to a claim is joined with a demand for relief of the kind specified in [Fed. R. Bankr. P.] 7001, it becomes an adversary proceeding.”).
of a claim, but may include the objection in an adversary proceeding.”).
67 Fed. R. Bankr. P. 3007 Notes of Advisory Committee on 2007 Amendment.
given the mandatory language of [Fed. R. Bankr. P.] 3007(b). At a minimum, use of the words ‘shall not’ should result in greater caution by practitioners to utilize adversary proceedings when appropriate.”).
69 Fed. R. Bankr. P. 3007 Notes of Advisory Committee on 2007 Amendment.
70 Fed. R. Bankr. P. 3001(f).
evidence to overcome the prima facie validity of the claim, the claimant is required to meet the usual burden of proof to establish the validity of the claim.”).
73 See In re Moreno, 341 B.R. 813, 819 (Bankr. S.D. Fla. 2006) (“If the original proof of claim contains only summary information and lacks the documentation necessary under [Fed. R. Bankr. P.] 3001 to establish prima facie validity, the claimant will have the burden of establishing its claim . . . including, for example, providing a breakdown of how it calculated charges such as interest, late fees, or attorneys fees if it is these types of charges which represent the challenged amount.”). See also supra Part II.B.
74 Fed. R. Bankr. P. 3001(e)(1).
77 In re Lynn, 285 B.R. 858, 862 (Bankr. S.D.N.Y. 2002) (“[T]hird parties, including the [d]ebtor, do not have standing to object to a claim assignment itself.”) (citing Viking Assocs. v. Drewes (In re Olsen), 120 F.3d 98, 102 (8th Cir. 1997)).
78 Prin Corp. v. Altman (In re Altman), 265 B.R. 652, 658–59 (Bankr. D. Conn. 2001).
79 11 U.S.C. § 553(a)(2)(A).
80 Id. at (a)(2)(B). This provision contains an exception for a setoff of a kind described in 11 U.S.C. §§ 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 560, and 561.
reduce their indebtedness through the exercise of acquired setoff rights.”).
82 NL Indus., Inc. v. GHR Energy Corp., 940 F.2d 957, 966 (5th Cir. 1991), cert. denied, 502 U.S. 1032 (1992).
83 Fed. R. Bankr. P. 2002(a)(6).
84 11 U.S.C. § 503(b). This provision provides a nonexhaustive list of allowable administrative expenses. See In re Kadjevich, 220 F.3d 1016, 1019 (9th Cir. 2000).
85 See 11 U.S.C. § 503(b)(1)–(8).
87 Supplee v. Bethlehem Steel Corp. (In re Bethlehem Steel Corp.), 479 F.3d 167, 172 (2d Cir. 2007) (quoting Trustees of the Amalgamated Ins. Fund v. McFarlin’s, Inc., 789 F.2d 98, 101 (2d Cir. 1986)).
88 In re Goody’s Family Clothing, Inc., 392 B.R. 604, 607, 609–14 (Bankr. D. Del. 2008) (finding that 11 U.S.C. § 365(d)(3) and (b)(1)(A) were not the sole bases for approving a claim for postpetition rent, and approving administrative claim for unpaid rent pursuant to 11 U.S.C. §503(b)(1)(A) where the claim was for an actual, necessary cost of preserving the bankruptcy estate).
89 Id. at 607, 614-18 (finding that an administrative expense claim under 11 U.S.C. § 503(b)(1) for postpetition rent need not be timely paid under 11 U.S.C. § 365(d)(3) and denying request for immediate payment).
90 11 U.S.C. § 503(b)(1)(A)(ii); see also 11 U.S.C. § 503 Comment on 2005 Amendment.
termination without notice occurred pre or post-petition.”).
92 In re First Magnus Fin. Corp., 390 B.R. at 678.
93 11 U.S.C. § 503(b)(9); see also 11 U.S.C. § 503 Comment on 2005 Amendment.
94 See Brown & Cole Stores, LLC v. Associated Grocers, Inc. (In re Brown & Cole Stores, LLC), 375 B.R. 873, 875n.3 (B.A.P. 9th Cir. 2007) (“The legislative history of [11 U.S.C.] §503(b)(9) ‘suggests that it was aimed at providing relief to sellers of goods who fail to give the required notice under the reclamation provision of [11 U.S.C. §] 546(c).’”) (quoting Shirley S. Cho, The Intersection of Critical Vender Orders and Bankruptcy Code § 503(b)(9), 29 Cal. Bankr. J. 7, 11 (2007)).
95 In re Global Home Prods., LLC, 2006 Bankr. LEXIS 3608, *12-13, *16 (Bankr. D. Del. Dec. 21, 2006).
96 Fed. R. Bankr. P. 9023 Notes of Advisory Committee.
97 Fed. R. Bankr. P. 9024.
98 See In re Cassell, 206 B.R. 853, 856 (Bankr. W.D. Va. 1997).
99 11 U.S.C. § 502(j). See also In re Zeider, 263 B.R. 114, 117 (Bankr. D. Ariz. 2001) (“[11 U.S.C. §] 502(j) permits reconsideration of claims ‘according to the equities of the case.’”).
100 In re Gomez, 250 B.R. 397, 401 (Bankr. M.D. Fla. 1999).
101 Id. (citing In re Bernard, 189 B.R. 1017, 1022 (Bankr. N.D. Ga. 1996)).

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