451 B.R. 646
Bankr. S.D. Ga.2011Background
- Len-Verandahs seeks to file a late claim in Graham Brothers Construction’s chapter 11 case after the Feb. 7, 2011 bar date.
- The Florida action against Debtor resulted in a 2 million dollar judgment against SSI and Debtor; Len-Verandahs seeks recovery related to alleged negligent conduct in the The Verandahs project.
- National Trust Insurance Company provided defense in the Florida Action and later filed a declaratory action in SDGA.
- Debtor filed for chapter 11 on Oct. 5, 2010; schedules showed solvency and insider transfers of approximately $7.8 million.
- Len-Verandahs consciously chose not to file a proof of claim, aiming to pursue insurance proceeds and to keep the Florida venue; the motion to allow late claim was filed Apr. 12, 2011, after the bar date.
- The court denied Len-Verandahs’ motion to allow the late claim, concluding the delay did not constitute excusable neglect.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether late claim is excusable neglect under Rule 9006(b)(1) | Len-Verandahs asserts excusable neglect due to strategic delay. | Denied; the delay was strategic, not excusable. | |
| Whether deliberate decision not to file a claim constitutes neglect | Len-Verandahs argues it did not act with neglect. | Debtor/system not prejudiced by mere delay. | Denied; deliberate non-filing is not neglect under Pioneer. |
| Whether the late claim would prejudice Debtor’s plan process | No prejudice since claim is contingent on insurance proceeds. | Late claim would hinder plan negotiations and dividend projections. | Denied; court found prejudice to plan, supporting denial. |
| Whether Len-Verandahs' filing could be treated as informal proof of claim | Motion for relief from stay referenced claim. | Informal proof must show intent to hold the debtor liable. | Denied; filings did not clearly indicate personal liability or intent to hold Debtor liable. |
Key Cases Cited
- Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380 (U.S. 1993) (excusable neglect standard governs late claims under Rule 9006(b))
- In re Montaldo Corp., 209 B.R. 40 (Bankr. M.D.N.C. 1997) (two-prong analysis for excusable neglect; neglect and excusability factors)
- In re Banco Latino Int'l, 310 B.R. 780 (S.D. Fla. 2004) (deliberate actions not excusable neglect; effect on estate)
- In re Celotex Corp., 232 B.R. 493 (M.D. Fla. 1999) (deliberate non-filing not excusable neglect)
- In re Bicoastal Corp., 176 B.R. 966 (Bankr. M.D. Fla. 1994) (deliberate strategy to avoid jurisdiction not excusable neglect)
- In re Earth Rock, Inc., 153 B.R. 61 (Bankr. Idaho 1993) (contrasted excusable neglect in late filing)
- In re Charter Co., 876 F.2d 861 (11th Cir. 1989) (informal proof of claim requirements; notice sufficiency)