Court Permits Creditor To File Late Proof Of Claim Because Of Excusable Neglect Where Claim Was Scheduled By Debtor In Different Amount, But Creditor Filed Claim Three Days After Claim Bar Date
In re Garden Ridge Corp., 348 B.R. 642 (Bankr. D. Del. 2006) (Judge Randolph Baxter)
The Debtor Scheduled a Creditor’s Claim in One Amount and the Creditor Filed a Proof of Claim in Another Amount Three Days After the Bar Date. Eighteen Months Later, the Post-Effective Date Committee Rejected the Late Filed Claim. The Court Permitted the Late Filing.
The court set a bar date of April 19, 2004 for filing general claims in the bankruptcy cases of the Garden Ridge debtors. Thereafter, the debtors scheduled claimant Lancaster Colony Corp. for a $100,999.56 unsecured, non-priority liquidated claim. On April 22, 2004, Lancaster filed a proof of claim in the amount of $186,236.87. Counsel for Lancaster acknowledged that the proof of claim was filed late because Lancaster simply made a mistake. Five months after the plan effective date, and eighteen months after Lancaster filed the proof of claim, the Post Effective Date Committee filed its objection to the Lancaster proof of claim on the ground that it was late. The Court determined that the lateness of the filing of the proof of claim was the result of excusable neglect, and allowed Lancaster to file its proof of claim.The Court analyzed the issue under the U. S. Supreme Court’s framework set forth in Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380 (1993). Under that case, if the reason for the late-filed claim was excusable neglect of the claimant, the court may allow the claim. The Court analyzed the following factors:
1. Prejudice – Because the claim was scheduled by the debtors, albeit at a smaller amount, the Committee could not have been surprised by the claim. Also, because allowed unsecured claims were to be paid in stock, there was no risk of disgorgement of previously paid claims. Finally, there were few post-bar date claims, so the Court rejected the Committee’s argument that allowing the claim would open the floodgates to other late-filed claims. The Court found this factor favored Lancaster.
2. Length of delay and potential impact on proceeding – Lancaster filed the claim three days after the bar date. This factor also favored Lancaster.
3. Reason for Delay – Counsel for Lancaster admitted that its own carelessness caused it to miss the bar date, and file the claim late. This factor favored the Committee.
4. Good Faith – There were no allegations that Lancaster did not act in good faith. This factor favored Lancaster.
Weighing these factors, the Court concluded that excusable neglect was present and overruled the Committee’s objection.
