531 B.R. 339
Bankr. S.D.N.Y.2015Background
- Conway filed a 2012 proof of claim for damages arising from the 1998 Agreement with LBSF.
- Lehman Brothers affiliates, including LBHI, filed Chapter 11 in 2008; LBSF’s petition triggered events under the 1998 Agreement.
- The Bar Date Order set September 22, 2009 as the deadline to file prepetition claims; Conway did not file until 2012.
- The 1998 Agreement allowed Conway to terminate for an Event of Default and seek damages, which occurred after LBSF’s bankruptcy filing.
- The Plan became effective March 6, 2012; LBHI objected to Conway’s late claim, and the bankruptcy court disallowed it; the district court affirmed.
- The court held Conway’s claim arose prepetition and was barred by the Bar Date; § 502(g)(2) does not save the claim; due process notice was sufficient.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Conway’s claim arise prepetition and is time-barred by the Bar Date? | Conway contends postpetition origin; Bar Date notice is constitutionally insufficient. | Claim arose before petition and was untimely under Bar Date; notice suffices. | Time-barred; Bar Date applies. |
| Does § 502(g)(2) treat Conway’s damages as prepetition despite postpetition contingencies? | § 502(g)(2) should allow postpetition contingency as postpetition. | § 502(g)(2) treats claim as if arising prepetition for damages; not saved by timing. | § 502(g)(2) treats as prepetition; barred by Bar Date. |
| Is the Bar Date Notice constitutionally adequate to require filing of prepetition claims? | Conway argues notice was deficient. | Notice was explicit that prepetition claims must be filed by Bar Date. | Notice adequate; due process not violated. |
| Should Conway’s claim be allowed under contract-based prepetition accrual principles? | Contracts accrue at execution; postpetition events do not create postpetition claims. | Contract claims arise when contract is executed; postpetition termination yields prepetition liability. | Contract claims arise prepetition; Bar Date governs. |
Key Cases Cited
- Pearl-Phil GMT (Far East) Ltd. v. Caldor Corp., 266 B.R. 575 (S.D.N.Y. 2001) (contract-based claims arise at contract execution; prepetition unless term changed by bankruptcy)
- Ogle v. Fid. & Deposit Co. of Md., 586 F.3d 143 (2d Cir. 2009) (contingent claims arise prepetition and may liquidate postpetition)
- In re Manville Forest Prods. Corp., 209 F.3d 125 (2d Cir. 2000) (contract relationships create prepetition rights to payment)
- In re Texaco, Inc., No. 10cv8151, 2011 WL 4526538 (S.D.N.Y. 2011) (contract claims arise upon execution of the contract)
- In re Chateaugay Corp., 53 F.3d 478 (2d Cir. 1995) (contingencies may convert to liquidated claims postpetition)
- In re Wireless Data, Inc., 547 F.3d 484 (2d Cir. 2008) (adequate bar-date notice required to avoid due process issues)
- In re Lehman Bros. Holdings Inc., 433 B.R. 113 (Bankr.S.D.N.Y. 2010) (bar dates are integral to bankruptcy process and claims timely filing)