477 B.R. 454
Bankr. S.D.N.Y.2012Background
- Movants seek reconsideration and vacatur of the February 15, 2012 Order expunging Claim No. 43 and to amend the claim to add Fine Art as a claimant.
- Debtor objected to Claim No. 43 on grounds that obligations had been assigned to SageCrest and that SageCrest filed its own claim.
- Settlement Stipulation (2008) and Collateral Assignment (2008) designates SageCrest as holder of the Claim, with Fine Art retaining only an alleged carveout for fees; ACG Credit/ACG Finance assigned to SageCrest.
- SageCrest filed amended claims (No. 25-2 and No. 17-2) based on the Note and Ramis Guaranty; Debtor’s objection led to the 2012 Order expunging Claim No. 43.
- Movants allege lack of notice of the objection, improper service, and that an adversary proceeding was not pursued; they move for relief under Rule 60(b) and seek to amend to add Fine Art.
- Court finds Movants fail to show basis for Rule 60(b) relief or for amendment; any amendment would impermissibly create a new claim for Fine Art not tied to the Original Claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 60(b) relief is warranted to overturn the expungement. | Movants argue excusable neglect and lack of notice. | Debtor/SageCrest contend proper service and that revoking expungement would disrupt settlement. | No; movants fail Rule 60(b) burden. |
| Whether movants have a meritorious defense to the Claim Objection. | ACG/ACG Finance lack valid claims since rights assigned to SageCrest. | Settlement and assignment foreclose movants’ claims; Fine Art only seeks arranger/fees. | No meritorious defense to reinstate the expunged claim. |
| Whether the amendment to add Fine Art as claimant is permissible. | Proposed amendment seeks to add a new claimant with a different basis (Arranger’s Agreement). | Amendment would be a new claim, not an amendment of the Original Claim. | Amendment improper; would be a new claim and prejudicial to reorganization. |
| Whether the Order expunging Claim No. 43 is void. | Movants claim void due to due process/notice issues. | Order not void; service complied with mailbox rule; proper process followed. | Order not void under Rule 60(b)(4). |
Key Cases Cited
- Munafo v. Metro. Transp. Auth., 381 F.3d 99 (2d Cir. 2004) (standard for reconsideration under Rule 9023)
- In re BDC 56 LLC, 330 F.3d 111 (2d Cir. 2003) (reconsideration standards and data courts may overlook)
- Am. Alliance Ins. Co. v. Eagle Ins. Co., 92 F.3d 57 (2d Cir. 1996) (three-factor test for excusable neglect)
- In re Fair-Point Commons, Inc., 462 B.R. 75 (Bankr.S.D.N.Y. 2012) (application of American Alliance factors; Pioneer test)
- In re Enron Corp., 419 F.3d 115 (2d Cir. 2005) (two-step test for amendments to claims; relation back)
- In re Enron Creditors Recovery Corp., 370 B.R. 90 (Bankr.S.D.N.Y. 2007) (two-prong test for amendments to proofs of claim)
- Pioneer Inv. Serv. Co. v. Brunswick Assoc. L.P., 507 U.S. 380 (U.S. 1993) (establishes four-factor test for excusable neglect)
- In re Lehman Bros. Holdings Inc., 433 B.R. 113 (Bankr.S.D.N.Y. 2010) (Pioneer factors applied to bankruptcy bar-date extensions)