Opinion ID: 197343
Heading Depth: 2
Heading Rank: 3

Heading: Amendments to Original POC

Text: 18 Gens next contends that the bankruptcy court erred in permitting RTC to amend its original POC (i.e., December 1993), which incorrectly stated that Knutson was the claim holder, without disclosing that it was acting as RTC's agent. Gens represents that she reasonably believed Knutson held no valid claim in its own right. Further, she argues, since RTC failed to file a POC in its own name prior to the bar date, there was no timely POC to be amended. 19 A bankruptcy court ruling allowing an amendment to a POC is reviewed for abuse of discretion, under three criteria: 20 First, the proposed amendment must not be a veiled attempt to assert a distinctly new right to payment as to which the debtor estate was not fairly alerted by the original proof of claim. Second, the amendment must not result in unfair prejudice to other holders of unsecured claims against the estate. Third, the need to amend must not be the product of bad faith or dilatory tactics on the part of the claimant. 21 Juniper Dev. Group v. Kahn (In re Hemingway Transp., Inc.), 954 F.2d 1, 10 (1st Cir.1992) (citations omitted) (emphasis added). Leave to amend a POC should be freely given when justice so requires. See Fed. R. Bankr.P. 7015. 8 The bankruptcy court did not abuse its discretion. 22 First, in order to fairly alert the debtor estate, a POC need only provide[ ] adequate notice of the existence, nature, and amount of the claim as well as the creditor's intent to hold the estate liable. Unioil, Inc. v. H.E. Elledge (In re Unioil, Inc.), 962 F.2d 988, 992 (10th Cir.1992). The original POC, accompanied by a copy of the Gens Note, see Fed. R. Bankr.P. 3001(c), met the general notice requirement. As Knutson was duly authorized to file the original POC for RTC, see supra Section II.B, the mere failure to disclose Knutson's agency status in no sense affected the validity of the claim itself. As the Tenth Circuit correctly recognized in Unioil, a simple substitution of the real party in interest (viz., RTC) for a related party mistakenly listed in the original POC (viz., Knutson qua agent) represents a proper ground for amendment. See Unioil, 962 F.2d at 992 (permitting amendment where a trustee (rather than the trust) was incorrectly listed as creditor). 9 23 Second, Gens points to no unfair prejudice from any deficiency in the original POC. See Hemingway Transp., 954 F.2d at 10; see also Unioil, 962 F.2d at 993 (noting that party opposing amendment must show actual prejudice). Instead, she suggests simply that allowing the RTC amendment prejudices unsecured creditors, who may receive less under any reorganization plan than would have been received were the FDIC claim not allowed. But the standard Gens proposes would preclude virtually any amendment, since it dispenses with the requirement that the debtor or trustee show unfair prejudice. Thus, something more than mere creditor disappointment is required to preclude amendment. See In re Stoecker, 5 F.3d 1022, 1028 (7th Cir.1993); In re Outdoor Sports Headquarters, Inc., 161 B.R. 414, 422 (Bankr.S.D.Ohio 1993); In re Brown, 159 B.R. 710, 716 n. 5 (Bankr.D.N.J.1993); In re Dietz, 136 B.R. 459, 468-69 (Bankr.E.D.Mich.1992). 24 Gens neither alleged nor demonstrated that any creditor acted in detrimental reliance on any representation or omission in the original POC. See, e.g., Brown, 159 B.R. at 716 (permitting POC amendment from unsecured to secured, given that no evidence has been offered that anyone relied to their detriment upon the claims as originally filed). Nor did Gens allege either bad faith or dilatory motive. Moreover, these RTC amendments occurred long before the formulation of a chapter 11 plan. See Holstein v. Brill, 987 F.2d 1268, 1270 (7th Cir.1993) (characterizing confirmation of debtor plan as passing milestone that makes it more likely POC amendment may be prejudicial). 25 To be sure, Knutson demonstrated considerable laxity in executing its agency responsibilities, especially its seven-month delay in submitting amended proofs of claim. Were there some showing in these circumstances that RTC gained a strategic advantage or that other parties in interest were unfairly prejudiced, the case for disallowance of the amended POCs would have been much stronger. Absent any such showing, however, the court did not abuse its discretion in permitting RTC to amend its original POC. It is well accepted that the bankruptcy court is guided by the principles of equity, and that the court will act to assure that ' ... substance will not give way to form, [and] that technical considerations will not prevent substantial justice from being done.'  Pepper v. Litton, 308 U.S. 295, 305, 60 S.Ct. 238, 244, 84 L.Ed. 281 (1939) (citation omitted).