Opinion ID: 199934
Heading Depth: 3
Heading Rank: 3

Heading: Statements made in proofs of claim

Text: 60 The bankruptcy court held that the government had waived its right of setoff by expressly stating in its Second Proof of Claim dated January 25, 1996 and the attachment that its claim for prepetition taxes was not subject to setoff. Calore Express, 199 B.R. at 432. This reasoning can apply, of course, only to the IRS's prepetition claims, which are the only ones described in the January 25 proof of claim. We agree that as to these claims the government's filing contained a waiver (which may later have been rescinded, as discussed below). The proof of claim itself stated that [i]n filing this claim, claimant has deducted all amounts that claimant owes to debtor; the attachment to the proof stated that [t]his claim is not subject to any setoff or counterclaim. The government argues that this should be discounted as preprinted form language, an argument we consider irrelevant. The IRS, of all litigants, can hardly complain to the courts when it errs in filling out a form. 61 The government also points out that the language of the form contemplates that a creditor will exercise setoff rights before even filing a proof of claim. That language seems inconsistent with 11 U.S.C. § 362(a)(7), which subjects prepetition rights of setoff to the automatic stay. It also seems inconsistent with the broader policy of the Bankruptcy Code regarding setoff, which is — particularly in Chapter 11 reorganization cases — to encourage creditors to forbear at least temporarily from exercising setoff rights that, if exercised, would put debtors immediately out of business. See Pub. Serv. Co., 884 F.2d at 13 (To implement the congressional purpose, courts should attempt to minimize the dislocations attendant to setoffs.). Nonetheless, the IRS could have easily fixed any inconsistency by striking the offending language or attaching an explanation, as the GSA did to its February 1 proof of claim. 62 Stronger, and possibly correct, is the government's argument that it sufficiently preserved its rights as to the setoff of the GSA's debt against Calore's overcharges by asserting them in the GSA's February 1 proof of claim, and as to the setoff of the GSA's debt against Calore's tax debt by asserting them in the government's April 1 objection to Calore's third amended reorganization plan. As to the February 1 proof of claim, this is unquestionably correct, as no prior statement of waiver applies to the GSA's claim for overcharges. That claim, however, amounts to only $6,734.24. As to the April 1 objection to Calore's plan, it stated: The Bankruptcy Code specifically preserves the United States' right to offset any pre-petition claims of the United States against any pre-petition claims of the Debtor. That statement expresses the Government's intent, as of April 1, to assert its setoff rights on its prepetition claims — that is, it rescinds any prior waiver of setoff. See Chassen, 207 F.2d at 83 (holding that a clarification by the government was the equivalent of an amendment of [the government's] proof of claim). 8 63 That recission came too late, however, if Fleet had in fact previously relied to its detriment on the IRS's waiver of January 25. The bankruptcy court stated that Fleet's continued lending to Calore demonstrated both reliance and detriment, a statement that suggests the application of estoppel, although the court did not use that term. Fleet reasserts this theory on appeal. The government responds that: first, it is not clear when Fleet learned of the statement on the government's proof of claim, as shown by a statement by Fleet's counsel that he did not review proofs of claim ... at that stage in the case; second, Fleet's actual lending exposure was approximately the same in August 1996 as it had been in May 1995, so that it is unclear that Fleet took any knowledge about the government's intent as to setoff into consideration; third, no deadline for the filing and amendment of claims had passed before April 1, which appears to amount to an argument that Fleet could not have reasonably relied on the original waiver. Whether Fleet actually relied on the government's waiver is a question of fact that the parties dispute, and cannot be determined purely from the record. See Metro. Int'l, 616 F.2d at 86-87 (holding that the undisputed facts of that case established waiver but remanding for a hearing to establish the question of detrimental reliance). On the facts of this case, the government's possibly-rescinded waiver therefore did not deprive the government of a colorable claim based on its right of setoff, and does not support the bankruptcy court's finding of waiver as a matter of law.