513 B.R. 779
Bankr. D.P.R.2014Background
- Debtors filed Chapter 13 and a confirmed plan (June 10, 2008) providing surrender of shares to Cooperativa and payment of an unsecured debt of $20,773.04.
- Cooperativa timely filed Proof of Claim No. 12-1 (Aug. 18, 2008) for $26,817.50 but inverted the secured ($19,901.40) and unsecured ($6,916.10) amounts on the face of the claim.
- No party objected to confirmation; the Chapter 13 Trustee made disbursements based on Proof of Claim No. 12-1, paying Cooperativa $6,916.10 as unsecured claim proceeds.
- Debtors completed plan payments in May 2013; Cooperativa filed an amended Proof of Claim No. 12-2 on July 8, 2013 (after plan completion) correcting the secured/unsecured split and then moved to recover sums paid to other unsecured creditors.
- Trustee moved for debtors’ discharge and opposed Cooperativa’s recovery request; the court held a hearing and solicited memoranda.
- Court ruled Cooperativa’s amendment and recovery motion were untimely and prejudicial; amendment disallowed, motion denied, and trustee’s discharge certification granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a creditor amend a timely-filed proof of claim after plan completion to recharacterize secured vs unsecured portions and force the trustee to recover/distribute additional funds? | Cooperativa: clerical error; supporting docs show correct split; trustee has duty to verify claims and recover mistaken disbursements. | Trustee/Debtors: original claim was timely and unopposed, constituting prima facie allowed claim; trustee properly disbursed; amendment filed after plan completion is untimely and prejudicial. | Amendment disallowed as untimely/dilatory and prejudicial; motion to recover denied. |
| Do supporting documents filed with a proof of claim override the face of a timely, unobjected claim for distribution purposes? | Cooperativa: the supporting documentation proved the correct secured/unsecured allocation and should control. | Trustee/Debtors: Rule 3001(f) makes the filed proof of claim prima facie evidence; absent objection, trustee may rely on the claim as filed for distributions. | The court treats the filed proof of claim as controlling for distributions absent timely objection; supporting docs did not permit late recharacterization. |
Key Cases Cited
- Woburn Assocs. v. Kahn (In re Hemingway Transp. Inc.), 954 F.2d 1 (1st Cir. 1992) (sets three-part test for amendments to proofs of claim: new claim, prejudice, bad faith)
- Gens v. Resolution Trust Corp. (In re Gens), 112 F.3d 569 (1st Cir. 1997) (reviews allowance of claim amendments under Hemingway factors for abuse of discretion)
- Midland Cogeneration Venture L.P. v. Enron Corp. (In re Enron Corp.), 419 F.3d 115 (2d Cir. 2005) (examines equitable factors and prejudice in permitting claim amendments)
- Candelario del Moral v. UBS Fin. Servs. (In re Efron), 746 F.3d 30 (1st Cir. 2014) (endorses principle that vigilance is required when protecting rights in litigation)
- In re Taylor, 280 B.R. 711 (Bankr. S.D. Ala. 2001) (disallowed late amendment where creditor’s delay prejudiced debtor and plan completion)