Opinion ID: 499748
Heading Depth: 2
Heading Rank: 1

Heading: The Code

Text: 21 In reconciling these provisions, we begin, as we must with the statutory language. Kelly v. Robinson, --- U.S. ----, 107 S.Ct. 353, 358, 93 L.Ed.2d 216 (1986). Section 1141(d)(1)(A) of the Code discharges a debtor from debts that arise before confirmation of a reorganization plan. The Code defines debt as liability on a claim, id. Sec. 101(11), and claim as a: 22 (A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, dispute, undisputed, legal, equitable, secured, or unsecured; or 23 (B) right to an equitable remedy for breach of of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured; 24 Id. Sec. 101(4). 25 By defining claim in these terms, Congress opted for an expansive treatment, thereby eliminating the provability and allowability requirements of the Bankruptcy Act of 1898. In re Johns-Manville Corp., 57 B.R. 680, 686 (Bankr.S.D.N.Y.1986). Indeed, Congress unambiguously stated its intent to address all possible legal obligations in defining a bankruptcy claim: 26 The effect of the definition is a significant departure from present law.... The definition is any right to payment whether or not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.... By this broadest possible definition and by use of the term throughout the title 11, especially in subchapter I of chapter 5, the bill contemplates that all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case. It permits the broadest possible relief in the bankruptcy court. 27 H.R.Rep. No. 595, 95th Cong., 2d Sess. 309, reprinted in 1978 U.S.Code Cong. & Ad.News 5963, 6266 (emphasis added); S.Rep. No. 989, 95th Cong., 2d Sess. 21-22, reprinted in 1978 U.S.Code Cong. & Ad.News 5787, 5807-08 (emphasis added). We recently recognized the far-reaching scope of this definition. See In re Frenville, 744 F.2d at 336; accord Ohio v. Kovacs, 469 U.S. 274, 279, 105 S.Ct. 705, 708, 83 L.Ed.2d 649 (1985); In re Robinson, 776 F.2d 30, 35 (2d Cir.1985) (collecting cases), rev'd on other grounds, Kelly v. Robinson, --- U.S. ----, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986). 28 As this court stated in In re Frenville, the existence of a valid claim depends on: (1) whether the claimant possessed a right to payment; and (2) when that right arose. In re Frenville, 744 F.2d at 336. For example, an indemnity or surety agreement creates a right to payment, albeit contingent, between the contracting parties immediately upon the signing of the agreement. Id. at 336. In Frenville, however, we held that a third-party's indemnity or contribution claim did not arise before the bankruptcy petition because, under state law, third-parties do not possess any rights until the contracting parties first establish a primary obligation to pay. Id. at 337. 3 29 Although we determined that state law governed the right to payment inquiry in Frenville, we acknowledged that in some cases, overriding federal policy would require us to consult federal law. Id. at 337 & n. 8; accord Vanston Bondholders Protective Committee v. Green, 329 U.S. 156, 161, 67 S.Ct. 237, 239, 91 L.Ed. 162 (1946); Schweitzer v. Consolidated Rail Corp., 758 F.2d 936, 941 (3d Cir.), cert. denied sub nom., Reading Co. v. Schweitzer, 474 U.S. 864, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985); In re Altair Airlines, Inc., 727 F.2d 88, 90 (3d Cir.1984). Reference to non-bankruptcy law is critical: unless state or federal law independently creates obligations, the bankruptcy court is not presented with a claim to either recognize or reject. See Vanston, 329 U.S. at 170, 67 S.Ct. at 243 (Frankfurter, J., concurring); In re Penn Central Transp. Co., 771 F.2d 762, 766 (3d Cir.), cert. denied sub nom., Pinney Dock & Transp. Co. v. Penn Central Transp. Co., 474 U.S. 1033, 106 S.Ct. 596, 88 L.Ed.2d 576 (1985); In re Frenville, 744 F.2d at 337. State law applies, however, unless federal law creates substantive obligations wholly apart from bankruptcy. See Schweitzer, 758 F.2d at 941 (citing Vanston, 329 U.S. at 170, 67 S.Ct. at 243 (Frankfurter, J., concurring)).