Opinion ID: 478416
Heading Depth: 2
Heading Rank: 2

Heading: Late Claimants

Text: 20 In its November 5, 1985 order, the district court made detailed findings of fact concerning each Intervenor who sought leave to file a late Investor Claim Form. The Late Claimants filed their Claim Forms from three weeks to three years late, and generally asserted that they were confused by the procedure. The district court found that the reasons asserted by each of these late claimants were not adequate or sufficient to allow late filing. 21 The Late Claimants' challenge to the district court's decision not to allow their late filings is essentially two-fold. First, they contend that their failure to file timely claims was reasonable because the notices sent by the Receiver were confusing and the deadlines were too short. Second, they argue that the competing equities involved in these cases favor the Late Claimants. They note that the district court's denial effectively results in a total forfeiture of the Late Claimants' claims. Moreover, they argue that because the Late Claimants stand to recover only $17,000 from a receivership estate worth over $25 million, the impact to other Investors and the prejudice to the receivership is insignificant. They argue that a balancing of these considerations indicates that the district court abused its discretion. 22 At the outset, we find that the notices and deadlines approved by the district court were fair and reasonable. Although the First Notice was detailed, it was not unduly complex, and it clearly stated that any claims to the receivership must be filed on March 1, 1982. The newspaper notices similarly informed Investors of the March 1, 1982 deadline. The two-and-one-half-month period during which the Investors could file Claim Forms was a reasonable length of time to respond to these notices. 23 We also conclude that the district court in denying the applications for late claim filing properly exercised its discretionary authority. The district court's use of reasonably expeditious and efficient procedures to supervise a receivership is within its broad equitable powers. 4 We have previously noted that the rights of creditors of a receivership must be balanced against the need for expeditious administration of the receivership; a district court in overseeing a receivership must make rules which are practicable as well as equitable. First Empire Bank, 572 F.2d at 1368. Additionally, we have specifically recognized that a receiver appointed in the wake of a securities fraud may encounter difficulties sorting out the financial affairs of the defrauded entity. SEC v. Wencke (Wencke I), 622 F.2d 1363, 1373 (9th Cir.1980) (upholding district court's stay of proceedings against the receivership). Accordingly, the district court's decision to establish deadlines for filing claims, and to bar untimely claims, is reasonable in light of the complexity of the receivership and the procedure employed to notify potential claimants. See Krause v. Featherston, 376 F.2d 832, 833-34 (1st Cir.1967) (per curiam) (district court did not err in entering default judgment against claimants who did not file timely claims pursuant to court order); cf. Wheeling Valley Coal Corp. v. Brady, 159 F.2d 155, 157 (4th Cir.1947) (same in a bankruptcy case). 5 24 Moreover, the record in this case demonstrates that the district judge was not inflexible on the issue of late filing. Upon motion from Intervenor's counsel, he extended the deadline for filing Claim Forms three weeks (from March 1, 1982 to March 22, 1982). More importantly, the court did permit filing of late claims in the vast majority of cases. 6 In ruling on these motions, the court considered the declarations of the Intervenors and heard argument from the Intervenors' counsel. In some cases, the court held hearings to reconsider previous denials; in fact, in at least two cases the district judge granted a Late Claimant's motion after previously denying it. The record thus clearly reveals that the district judge painstakingly considered, and often reconsidered, each request for late filing. 7 25 Thus, the March 22, 1982 deadline for filing Claim Forms was reasonable and practicable given the need for efficient and orderly administration of the receivership. Moreover, the district judge actually granted a number of motions for leave to file late claims where the movants demonstrated good cause. Accordingly, the district court did not abuse its discretion in denying the Late Claimants' motions.