599 B.R. 706
S.D. Ill.2019Background
- Appellant Roger Dean Gillispie was convicted in 1991; he later pursued efforts to overturn his conviction and, before Old GM's 2009 bankruptcy filing, knew facts implicating GM employees in his prosecution.
- Old GM filed Chapter 11 in June 2009; the bankruptcy court approved a Section 363 sale of substantially all assets to New GM and set a claims bar date of November 30, 2009, with notice by mail and publication.
- Appellant, incarcerated during the bankruptcy, did not receive mailed notices and did not file a proof of claim by the bar date.
- After his conviction was vacated and indictment dismissed, Appellant filed a § 1983 suit against government actors and several GM employees and sought either leave to proceed against New GM or permission to file a late (post‑bar‑date) proof of claim against Old GM.
- The bankruptcy court denied relief; the district court affirmed, holding Appellant’s § 1983 cause of action qualified as a contingent bankruptcy "claim," that publication notice was constitutionally adequate for an unknown creditor, and that he failed to show excusable neglect to permit a late proof of claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Appellant’s § 1983 action is a "claim" under 11 U.S.C. §101(5) | Gillispie: Heck doctrine delayed accrual; no viable claim existed before bar date, so bankruptcy cannot extinguish it | Debtors/New GM: Claim arose from pre‑petition conduct and was contingent but within fair‑contemplation of parties, so it is a bankruptcy "claim" | Held: §101(5) covers contingent claims; Appellant’s §1983 action is a bankruptcy claim originating from pre‑petition conduct |
| Whether notice (mail/publication) was constitutionally adequate | Gillispie: As an incarcerated potential claimant, he could not have received effective notice; no notice could adequately warn him of extinguishment | Debtors/New GM: He was an unknown creditor entitled to constructive (publication) notice; mailed notices were sent to last known address | Held: Publication notice was constitutionally sufficient for an unknown creditor; Appellant was an unknown creditor |
| Whether Appellant should be allowed to file a late proof of claim (excusable neglect) | Gillispie: Incarceration and focus on overturning conviction excused noncompliance; inequitable to bar him | Debtors/New GM: Failure to file was due to a legal mistake and lack of diligence; Pioneer factors weigh against relief | Held: Bankruptcy court did not abuse discretion; failure was mistake of law and not excusable neglect; late claim denied |
| Whether the Sale Order barred suit against New GM | Gillispie: Sale Order cannot bar him because claim did not exist pre‑bar date and he lacked adequate notice | Debtors/New GM: Sale extinguished claims fitting §101(5); New GM acquired assets free and clear | Held: Sale Order can extinguish contingent claims that are bankruptcy "claims"; Appellant’s suit is barred by the Sale Order |
Key Cases Cited
- Elliott v. GM LLC, 829 F.3d 135 (2d Cir. 2016) (successor liability claims in §363 sales can be extinguished if they are "claims" under the Code)
- In re Chateaugay Corp., 944 F.2d 997 (2d Cir. 1991) (contingent claims arise from pre‑petition conduct when future events were fairly contemplated)
- LTV Steel Co. v. Shalala (In re Chateaugay Corp.), 53 F.3d 478 (2d Cir. 1995) (applying fair‑contemplation test to exclude obligations that had no pre‑petition basis)
- Johnson v. Home State Bank, 501 U.S. 78 (1991) (Bankruptcy Code’s definition of "claim" is to be construed broadly)
- Heck v. Humphrey, 512 U.S. 477 (1994) (limits on bringing §1983 actions that would imply invalidity of conviction)
- Pioneer Inv. Servs. v. Brunswick Assocs., 507 U.S. 380 (1993) (standards for excusable neglect and allowance of late filings)
- Silivanch v. Celebrity Cruises, 333 F.3d 355 (2d Cir. 2003) (strict approach to excusable neglect for failure to meet court deadlines)
- In re Manville Forest Prods. Corp., 209 F.3d 125 (2d Cir. 2000) (application of contingent‑claim analysis to indemnification obligations)