448 B.R. 84
Bankr. N.D. Ga.2011Background
- Debtors filed Chapter 7 on Jan 28, 2010; Trustee appointed and investigated asset recovery.
- Claims Bar Date of Aug 4, 2010 was noticed by BNC on May 6, 2010.
- Movant Community and Southern Bank filed a proof of claim late and sought a priority finding, not merely late-claim allowance.
- Movant had actual knowledge of the case before the bar date and received related documents; FNBG was listed as holder of the debt.
- Debtors scheduled FNBG but did not schedule Movant; Movant acquired debt via assignment from FNBG.
- Court indicated Movant could request evidentiary hearing to present further evidence on actual knowledge timing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Movant's late claim can be paid as timely under 726(a)(2). | Simpkins | Simpkins | No; not timely under 726(a)(2) given Movant had notice/knowledge before bar date. |
| Whether Movant can be paid with timely claims under 726(a)(2) or only under 726(a)(3). | Movant seeks 726(a)(2) treatment due to due process. | Movant had actual knowledge and inquiry burden; not entitled to 726(a)(2). | Movant bears burden to show lack of notice; not entitled to 726(a)(2) payment. |
| Does due process require treating Movant as timely due to lack of notice of bar date? | Movant argues notice requirement violated due process. | Movant had actual knowledge; inquiry duty applies. | Spring Valley Farms distinguished; Movant had inquiry burden; due process not violated. |
| Should movant be allowed an evidentiary hearing on timing of actual knowledge? | Movant requested evidentiary hearing. | Not necessary unless evidence material. | Court invited evidentiary hearing within 30 days; otherwise deny motion. |
Key Cases Cited
- Spring Valley Farms, Inc. v. Crow (In re Spring Valley Farms, Inc.), 863 F.2d 832 (11th Cir. 1989) (actual knowledge insufficient without burden to inquire; due process in notices)
- In re Alton, 837 F.2d 457 (11th Cir. 1988) (creditor with knowledge has a duty to inquire; dischargeability context)
- Alcatel Contracting, Inc. v. Slaughter Company & Associates, 251 B.R. 437 (N.D. Ga. 1999) (notice issues where creditor not properly served; due process analysis varied by facts)
- In re Slaughter Co. & Associates, 219 F.3d 1279 (11th Cir. 2000) (affirmed Seventh Circuit/related points on notice and bar dates)
- In re Coastal Alaska Lines, Inc., 920 F.2d 1428 (9th Cir. 1990) (actual knowledge plus not yet listed may suffice for notice and rights)
- Feldman, In re Feldman, 261 B.R. 568 (E.D.N.Y. 2001) (notice to creditor cannot be imputed to assignee in some contexts)