485 B.R. 153
Bankr. W.D. Mich.2012Background
- In 2012 the court disallowed California's claim against the bankruptcy estate but allowed it to be paid through the Class, in the amount of $6,354,166.81.
- German States moved for clarification/reconsideration of the California Order, seeking to know if California had a valid Class claim or if the order recharacterized the claim.
- Second Chance Body Armor, Inc. filed a Chapter 11 in 2004, later converted to Chapter 7; James W. Boyd was Trustee.
- California filed Proof of Claim No. 304 in 2005 for damages (Damage Portion) and penalties (Penalty Portion) related to vests in California.
- The Class Claim was certified in 2005; a series of stipulations reallocated the Damage Portions to be paid through the Class and subordinated the Penalty Portions; California’s response to the Trustee’s objection was absent at material times.
- California's lack of response led to a scheduling order and a July 25, 2012 default hearing, resulting in an order that disallowed California's estate claim but included California's damage portion in the Class.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the California Order should be clarified/reconsidered regarding CA’s Class claim. | German States contend the CA Order affirmatively determined a Class claim. | CA argues the Order merely states CA shall have a Class claim; not an affirmative determination. | Denied; CA Order remains binding and CA’s damage claim is to be paid through the Class. |
Key Cases Cited
- In re Colley, 814 F.2d 1008 (5th Cir.1987) (discretion of bankruptcy court to reconsider a claim is virtually plenary)
- In re Enron Corp., 352 B.R. 363 (S.D.N.Y.2006) (reconsideration often analyzed as Rule 59/60; timing matters)
- In re Leroux, 216 B.R. 459 (Bankr.D.Mass.1997) (consider factors for reconsideration of claims; 'equities of the case')