486 B.R. 68
S.D.N.Y.2012Background
- Barquet Group obtained secured financing from ACG Credit in 2004, with a Note granting a continuing security interest in Barquet’s collateral and Fine Art acting as Arranger under an Arranger’s Agreement.
- In 2006 ACG Credit’s interest in the Note was assigned to ACG Finance; the parties later litigated with Sage-Crest II, LLC, culminating in a 2008 Settlement Stipulation transferring Barquet’s loan obligations to Sage-Crest.
- Barquet Group and Ramis Barquet filed Chapter 11 petitions on June 28, 2011; Claim No. 43 for money loaned was filed by ACG Credit and ACG Finance on October 28, 2011, with Fine Art not joining the claim.
- Debtor objected to Claim No. 43 in January 2012 as to expungement based on the Settlement Stipulation assignment to Sage-Crest; Claimants did not respond and a February 15, 2012 Order expunged the claim.
- Appellants moved on July 23, 2012 to vacate the February 15, 2012 Order and to amend Claim No. 43; the Bankruptcy Court denied both the motion to vacate and the request to amend on August 22, 2012; Appellants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the February 15, 2012 order should be vacated under Rule 60(b). | Appellants argue excusable neglect and voidness. | Debtor argues no excusable neglect and no void order. | No reversal; denial of vacatur affirmed. |
| Whether the claim amendment should be allowed given the February 15, 2012 expungement. | Fine Art’s arranger’s fees form a new claim. | Amendment would be a new, prejudicial claim. | Denial of leave to amend affirmed. |
| Standard of review for a bankruptcy court’s denial of motion to vacate and to amend. | Abuse of discretion standard should apply. | ABUSE standard controls. | Standard applied; no abuse found. |
Key Cases Cited
- Barquet Group, 477 B.R. 454, 477 B.R. 454 (Bankr.S.D.N.Y.2012) (central bankruptcy ruling on expungement and related issues)
- American Alliance Ins. Co. v. Eagle Ins. Co., 92 F.3d 57 (2d Cir.1996) (three-factor test for excusable neglect)
- Enron Corp. v. Springfield, 419 F.3d 133 (2d Cir.2005) (two-part test for amendments of proofs of claim)
- In re Smith, 507 F.3d 64 (2d Cir.2007) (standard for reviewing bankruptcy court decisions (Schwartz))
- Quebecor World (USA) Inc. v. American United Life Ins. Co., 480 B.R. 468 (S.D.N.Y.2012) (bankruptcy standard on findings of fact and legal conclusions)
- Pioneer Inv. Serv. Co. v. Brunswick Assoc. L.P., 507 U.S. 380 (1993) (application of more stringent test for certain relief)