Opinion ID: 540395
Heading Depth: 2
Heading Rank: 1

Heading: affirmance of the bankruptcy court

Text: 7 The Trustees were notified that if they opposed Centric's objection to their proof of claim, a written opposition and request for a hearing had to be filed by June 22, 1987. Yet, the Trustees did not try to respond until January 29, 1988--seven months after their opposition was due. The bankruptcy court denied their motion: 8 This Court is convinced that if it were to allow the response of the Trust Fund to the Debtor's Objection to Claims, which was extremely tardy and which was the product of what is admitted to be simple oversight and neglect, then further unnecessary delay, cost, and disruption to the case is assured.... 9 .... 10 To grant the Motion to Respond will, inevitably, cause continuing confusion in an already disputed bankruptcy case, further dissipate an estate already inadequate to allow distribution to unsecured creditors, and send a message to creditors and the bar alike that schedules, timelines, and bar dates are not of importance in bankruptcy proceedings. 11 R. Vol. III, Tab 18 at 3-4. 12 A bankruptcy court may allow a party to act tardily when the failure to act in a timely manner was the result of excusable neglect. Bankr.R. 9006(b)(1). Courts have generally not been liberal in granting [such] motions.... 9 L. King, Collier on Bankruptcy p 9006.06, at 9006-16 (15th ed. 1989). The court's decision on a Rule 9006(b) motion shall be reversed only for an abuse of discretion. In re Int'l Coating Applicators, Inc., 647 F.2d 121, 124 (10th Cir.1984). 13 The bankruptcy court tested the Trustees' claim of excusable neglect against the factors identified as relevant by the Ninth Circuit in In re Magouirk, 693 F.2d 948 (9th Cir.1982): 14 (1) whether granting the delay will prejudice the debtor, (2) the length of the delay and its impact on efficient court administration, (3) whether the delay was beyond the reasonable control of the person whose duty it was to perform, (4) whether the creditor acted in good faith, and (5) whether the clients should be penalized for their counsel's mistake or neglect. 15 Id. at 951. 16 Regarding the first factor, the court found that allowing the Trustees to raise their response to Centric's opposition to their claim after a seven-month delay would prejudice Centric because the debtor was on the verge of executing its plan of liquidation. The effect on a plan which was prepared before the creditor made its motion is a valid consideration under this factor. See In re Standard Metals Corp., 48 B.R. 778, 782 (D.Colo.1985); cf. In re Dix, 95 B.R. 134, 138 (9th Cir. BAP 1988). Further proceedings in the bankruptcy court would both disrupt and diminish the distribution of the estate to Centric's creditors by requiring time and money to litigate the Trustees' claim. Centric would indeed have been prejudiced by the resurrection of litigation in its almost-completed bankruptcy proceeding. 17 The court held that the second factor weighed against the Trustees because delaying the termination of the proceeding would add to the congestion currently plaguing the Bankruptcy Court for the District of Colorado. A delay which hinders the objective of finality which the fixing of a bar date seeks to establish has an adverse impact on efficient court administration. In re Standard Metals Corp., 48 B.R. at 788. The premium on finally disposing of a matter is especially high when the court's docket is already overcrowded. 18 The third Magouirk factor--whether the delay was within the creditor's reasonable control--has been interpreted as simply asking whether the creditor had knowledge of his duties. See id. at 789; In re Dix, 95 B.R. at 138-39; In re Figueroa, 33 B.R. 298, 302 (Bankr.S.D.N.Y.1983). Because the Trustees received notice of the deadline, it was within their reasonable control to respond promptly. 19 The bankruptcy court decided that these three factors weighed so substantial[ly] and compelling[ly] against the Trustees' motion that, even assuming that the last two factors mitigated in favor of the motion, relief would not be granted. R. Vol. III, Tab 18 at 5. A similar conclusion was reached in In re Standard Metals Corp., 48 B.R. at 789. Moreover, because the Trustees were an unsecured creditor, they would not have collected anything on their claim anyway, so they lost very little (if anything) by being denied the opportunity to respond belatedly to Centric's objection to their claim. The district court correctly determined that the bankruptcy court did not abuse its discretion when it denied the Trustees' motion.