Opinion
Case No. 13-10336
06-06-2014
In Re MICHIEL JAKOB SCHUITEMAKER Debtor-in-Possession
Susan M. Argo, Esq. Graydon Head & Ritchey LLP 1900 Fifth Third Center 511 Walnut Street Cincinnati, OH 45202-3157 E-mail: sargo@graydon.com Stephen D. Lerner, Esq. Squire Sanders (US) LLP 221 E. Fourth St., Suite 2900 Cincinnati, Ohio 45202 stephen.lerner@squiresanders.com
Chapter 11 Judge Perlman
AMENDED ORDER GRANTING OBJECTION TO CLAIM 16 AND 17 AND DENYING MOTION TO DEEM FILING AN INFORMAL PROOF OF CLAIM
I. Introduction
This matter is before the Court on the Debtor's objection to Claims 16 and 17 ("Objection") (Doc. 203) and the motion to deem filing a timely filed informal proof of claim ("Motion") filed by the creditor Perrin G. March IV, Trustee of the Perrin G. March III Irrevocable Trust for the Benefit of Perrin G. March IV, Dated December 24, 2012 ("PM4") (Doc. 216). In the Objection, filed on March 18, 2014, the Debtor seeks an order from the Court disallowing Claims 16 and 17 because they were not timely filed and because the claims are duplicative. On April 4, 2014, PM4 filed a response to the Objection (Doc. 215) and on April 14, 2014, the creditor Cincinnati Incorporated filed a reply to the response to the Objection (Doc. 225). Subsequent to the filing of the Objection, on April 3, 2014, PM4 filed the Motion requesting that the Court deem the memorandum of creditor, Perrin G. March III, in opposition to motion for relief from stay ("Memorandum") (Doc. 48) as an informal proof of claim. On April 14, 2014, Cincinnati Incorporated ("CI") filed an objection to the Motion (Doc. 226) and on April 16, 2014, PM4 filed a reply (Doc. 227). A hearing on the Motion and the Objection was held on May 20, 2014, and at the close of the hearing the Court took the matter under advisement.
In addition to taking the Motion and the Objection under advisement, at the May 20, 2014, hearing, the Court denied PM4's motion to dismiss the bankruptcy case (Doc. 199), granted the application for compensation filed by the Debtor's attorneys (Doc. 224), and took PM4's motion to dismiss adversary proceeding under advisement, see Case No. 14-1024, Doc. 5.
II. Jurisdiction
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b) and the General Order of Reference entered in this district. This is a core proceeding arising under 28 U.S.C. § 157.
III. Facts
On January 25, 2013, the Debtor filed a petition for relief under chapter 11 of the United States Bankruptcy Code (Doc. 1). On January 31, 2013, the Court entered a bar date order establishing April 30, 2013, as the deadline for filing proofs of claim ("Bar Date") (Doc. 10). On April 4, 2013, the Debtor's wife filed a motion for relief from the automatic stay to allow the allow, amongst other things, the domestic relations court to determine the ownership of the $17,495,360.90 promissory note (Doc. 30). On April 17, 2013, prior to the Bar Date, the creditor, Perrin G. March III, (PM3) filed the Memorandum whereby he claimed ownership of the promissory note and opposed having the litigation over the promissory note transferred to the Hamilton County Domestic Relations Court from the Hamilton County Court of Common Pleas, General Division. On May 28, 2013, the Court entered an order granting PM3 relief from the automatic stay to the pursue the promissory note litigation in the Hamilton County Court of Common Pleas, General Division (Doc. 96).
Subsequent to the Bar Date, on May 2, 2013, PM3, filed Claim 16 and on May 3, 2013, PM4 filed Claim 17. On March 5, 2014, Claim 16 was amended changing the holder of the claim to PM4. See Claim 16-2.
IV. Pertinent Law
In chapter 11 cases, any claim or interest which appears in a debtor's schedules is deemed to be a valid filed proof of claim, unless that claim or interest is scheduled as disputed, contingent, or unliquidated. 11 U.S.C. § 1111(a). If an claim or interest of an unsecured creditor is scheduled as disputed, contingent or unliquidated, then, in order to receive a pro-rata distribution from the assets of a bankruptcy estate, the unsecured creditor must timely file a proof of claim with the bankruptcy court. Fed. R. Bankr. P. 3003(c)(2). Failure to file a timely proof of claim is grounds for the claim being disallowed. 11 U.S.C. § 502(b)(9).
However, even when an unsecured creditor fails to file a timely proof of claim, the unsecured creditor can seek to have the claim allowed as timely as an informal proof of claim by referencing a pre-bar date filing that put all parties on notice that the unsecured creditor is asserting a claim. See In re Nowak, 586 F.3d 450, 455 (6th Cir. 2009). In order for a pre-bar date filing by an unsecured creditor to constitute an informal proof of claim, "'(1) [t]he [informal] proof of claim must be in writing; (2) [t]he writing must contain a demand by the creditor on the debtor's estate; (3) [t]he writing must express an intent to hold the debtor liable for the debt; and (4) [t]he [informal] proof of claim must be filed with the bankruptcy court.'" Id. (quoting In re M.J. Waterman & Associates, Inc., 227 F.3d 604, 609 (6th Cir. 2000)). If a bankruptcy court determines that the above four factors are met, the court then looks to a fifth factor, whether or not it would be equitable to allow the informal proof of claim. Nowak, 586 F.3d at 455.
The determination of whether or not it would be equitable to allow the informal proof of claim "does not lend itself to bright-line rules" and instead "the bankruptcy court is charged with balancing the interests of the parties to determine whether the equities favor the allowance of the informal proof of claim." Id. In balancing the equities in determining whether or not to allow an informal proof of claim courts have considered factors including: (1) the lack of an explanation by the creditor for the delay and/or failure to file a formal proof of claim; (2) the drastically reduced distribution available to other unsecured creditors if the informal proof of claim is allowed; (3) the sophistication of the lender; and (4) the presence of counsel. See id. at 456-459; In re Outboard Marine Corp., 386 F.3d 824, 828-29 (7th Cir. 2004).
V. Analysis
In this case, the Debtor's schedules clearly listed the claims at issue as unliquidated. See Doc. 1. Accordingly, pursuant to the operation of § 1111(a) and Rule 3003(c)(2), PM4 was required to file a proof of claim prior to the Bar Date in order to have an allowed claim against the Debtor's estate. The Bar Date in this case was April 30, 2013, and Claims 16 and 17 were not filed until after the Bar Date on May 2, 2013, and May 3, 2013, respectively. Despite Claims 16 and 17 being filed after the Bar Date, the claims may be allowed through the common law doctrine of an informal proof of claim since the Memorandum was filed prior to the Bar Date on April 17, 2013.
The Memorandum clearly meets the first and fourth factor for being an informal proof of claim since it is in writing and was filed with the Court. However, to constitute an informal proof of claim, the Memorandum must also "contain a demand by the creditor on the [D]ebtor's estate" and "must express an intent to hold the [D]ebtor liable for the debt." Nowak, 586 F.3d at 455 (quoting M.J. Waterman & Associates, 227 F.3d at 609). In the Memorandum, PM4 merely asserts that in the ongoing action in the Hamilton County Court of Common Pleas, General Division, PM4 seeks the return of the promissory note and the disgorgement of benefits fraudulently obtained by the Debtor. While this assertion by PM4 may assert an intent to hold the Debtor liable for a debt, there is no demand for payment on its claim against the Debtor's estate. See In re Spresser, 2011 WL 2083964, at *4-5 (Bankr. D. Kan. May 19, 2011) (The court held that while the motion for relief from the automatic stay did indicate that the debtors owed a debt to the creditor, was in writing, and filed with the bankruptcy court, "there is simply nothing in the stay relief motion that can be construed as a demand against Debtors' bankruptcy estate" and therefore the motion did not constitute an informal proof of claim.). Accordingly, since the Memorandum does not meet all four factors it cannot be deemed an informal proof of claim. See Nowak, 586 F.3d at 455.
However, even if the Memorandum did qualify as an informal proof of claim under the four-factor test in Nowak, after a weighing of the equities the informal proof of claim would not be allowed. Prior to the Bar Date, PM3 was represented by counsel, was an active participant in the bankruptcy proceedings, and there has been no explanation for the delay in filing the formal proof of claim. Further, allowance of the informal proof of claim would appear to also drastically reduce the distribution to other unsecured creditors who did timely file proofs of claim. Accordingly, the Court finds that even if PM4 satisfied the threshold four-factor test for the Memorandum to be deemed an informal proof of claim, a weighing of the equities leads to the conclusion that the informal proof of claim should not be allowed. See id. at 456-459; Outboard Marine, 386 F.3d at 828-29.
VI. Conclusion
Accordingly, for the reasons stated above, the Motion is hereby DENIED and the Objection is hereby SUSTAINED. Claims 16 and 17 are disallowed as late filed claims submitted to the Court after the Bar Date.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: June 6, 2014
/s/_________
Burton Perlman
United States Bankruptcy Judge
Copies to: Default List Susan M. Argo, Esq.
Graydon Head & Ritchey LLP
1900 Fifth Third Center
511 Walnut Street
Cincinnati, OH 45202-3157
E-mail: sargo@graydon.com
Stephen D. Lerner, Esq.
Squire Sanders (US) LLP
221 E. Fourth St., Suite 2900
Cincinnati, Ohio 45202
stephen.lerner@squiresanders.com