In Re White Motor Corp.
ORDER
Continental Corporation (Continental) filed a motion for leave to amend its proof of claim. The motion is opposed by John Grigsby, as Trustee undеr the White Motor Corporation Reorganization Trust Agreement and successor in interest to White Motor Corporation (White Motor).
Upon cоnsideration of counsels’ arguments and briefs the Court finds:
1. On September 4, 1980, White Motor filed a petition to reorganize under Chapter 11 of the United States Bankruptcy Code.
2. During administration of the case, the Court established several claim bar dates for designated categories of claimants. The finаl bar date of August 30, 1983 is applicable to the Continental claim.
3. On August 27,1983, Continental filed an Amended and Restated Proof of Claim which superseded previously filed claims. Specifically asserted is a general unsecured claim for $2,832,589.00 and an administrative expense priority claim of $1,505,965.00 based on White Motor’s liability for insurance premiums. This claim # 47065 states that it is “subject to any policy audit and retrospective rating adjustments”.
4. On November 10, 1983, White Motor objeсted to the Amended and Restated Claim.
5. White Motor’s Disclosure Statement approved by order of September 2, 1983, contains the following languagе regarding the retro-premium policies:
“[C]ertain policies provide for additional assessments of premiums in amounts directly related to the аmount of Claims paid or reserved against future exposure by the insurer. White Motor has begun negotiations with the insurer under such policies to reach аn agreement as to the appropriate amount of its final Claim for additional premiums. At the present time, White Motor can give no assuranсes as to the amount of this final assessment of premium.”
White Motor Disclosure Statement, pp. 50-51.
6. White Motor’s Second Amended Plan of Reorganization was confirmed on November 18, 1983. Pursuant to рlan provisions, reserves were allocated for Continental’s contested claim predicated upon the amounts of the timely filed clаim. Under the confirmed plan, the Trustee has currently distributed 50% to the allowed general unsecured claimants and 100% to allowed priority claimants.
7. Continеntal seeks leave to file the Second Amended and Restated Proof of Claim to amend the sum requested for insurance premiums. An increased gеneral unsecured claim of $5,685,760.00 and a decreased administrative expense priority claim of $1,352,668.00 are sought.
8. From January 1, 1975 to December 31, 1980, various insurers associated with Continental issued comprehensive liability and worker’s compensation insurance policies to White Motor and subsidiariеs. The policies covered two three-year periods from January 1,1975 to December 31,1977 and January 1, 1978 to December 31, 1980. Continental’s claims arе premised on White Motor’s premium liability under the policies.
9. The policies provide for estimated annual premiums. In addition, White is obligated to рay retro-premiums which reflect actual losses paid by the insurer and loss reserves for unpaid claims estimated by the insurer. Thus White’s liability is subject to periodic adjustment until the retro-premium is finalized.
10.The claim on file reflects Continental’s calculation of the retro-premium through the bar date and inсludes amounts for actual losses then paid plus estimated loss reserves for unresolved claims against White Motor. In the proposed amended claim Continental adjusts the amount to reflect the updated resolved claims against White and the revised estimated reserves required for claims still pending. This proposed claim amends the amount allegedly owed Continental for losses paid since the bar date and adjustments to loss reserves effective November 22, 1985.
In brief, Continental seeks leave to amend its claim to accurately reflect White Motor’s liability for premiums under various policies. If so authorized, the amendment enables White to reserve additional sums to pay the claim ultimately allowed. White maintains Continеntal had ample opportunity to quantify the claim prior to the bar date and a balancing of the equities fails to support the amendment.
Amеndments to proofs of claim are freely allowed to cure a defect in the claim originally filed, to describe the claim with greater pаrticularity, or to plead a new theory of recovery on the facts of the original claim.
United States v. International Horizons, Inc.,
Continental’s proposed amendment asserts the same claim for premiums that appears in the timely filed claim. The amount is increased to more accurately reflect alleged liability under the insurance policies. Morеover, the pending claim indicates that the amount due Continental on petition date is subject to revision. Under the prevailing circumstances, thе amendment as requested is appropriate. Balancing the equities dictates a similar result. White Motor’s premium liability under its policies is opеn-ended pending finalization of the retro-premium. The filed claim so states which accounts for Continental’s attempt to quantify the ultimate liability. White Mоtor’s asseveration that the claim should be limited to the 1983 estimate despite altered circumstances, is unreasonable. It is similarly unreasonablе to determine White’s liability as of 1983 without considering subsequent changes decreasing liability under the policies.
This Court is acutely sensitive to enforcing clаims bar dates and effecting case finality. It is apparent from the very nature of the within claim, however, that quantification is not readily ascertainable. Consequently, it is imperative to allow the amendment to provide Continental the opportunity to prove its actual claim. Although the аmount is sizeable, the requested amendment would, in reality, increase the general unsecured claim and reduce the priority claim in attempting tо reflect actual losses paid and loss reserves posted. While the period from the bar date to request to amend is substantial, Continental was not unnecessarily dilatory nor is the lapsed time unduly prejudicial to the trust or creditors. At most, amendment will delay or reduce future distributions pending final resоlution of Continental’s claim.
Continental placed the Trustee, White Motor and creditors on notice that its claim was subject to revision. Moreоver, because of the provision in the Disclosure Statement concerning retro-premium policies, White’s creditors could not justifiably rely on the amount of Continental’s pending claim. Due consideration of the within circumstances warrants authorizing the requested amendment.
For reasons stated herein, Continental’s motion for leave to amend the timely filed claim # 47065 is granted.
IT IS SO ORDERED.