New century liquidating trust agreement
Earlier in the Debtors' bankruptcy case, I noted that allowance of late-filed claims might open the floodgates to filings of similar claims: As the Court is already aware from this and other similar matters now before it in the New Century case, allowance of late-filed claims in this case unquestionably will open a floodgate to similar claims by other borrowers.
At the evidentiary hearing, the Trustee testified that the continuous filing of late claims prejudices the Trust by adding administrative costs and causing significant delay to wind-up the estate.
Russell notifying the Debtors of a potential claim.
The record before me supports the conclusion that the Trust would suffer prejudice if Ms. The second Pioneer factor to consider is the length of the delay in filing the proof of claim and the impact of the delay on the judicial proceedings. Russell filed her claim almost four years after the Bar Date. What qualifies as proper notice, however, is dependent upon whether the creditor is known or unknown.
Preventing the continuing submission of late claims will permit the Trustee to finalize administration of the Trust and move to close the bankruptcy cases. The purpose and procedures for setting a claims bar date were aptly discussed by my colleague, Judge Gross, in In re Smidth & Co., 413 B. This concern is resolved through notice: when a debtor provides proper notice to its creditors, due process is satisfied, and a court can bar creditors from asserting claims.
She argues that she acted reasonably by filing her claim as soon as she became aware of the Debtors' bankruptcy filing.
As discussed above, the impact of allowing a late-filed claim at this juncture in the case would render the Bar Date meaningless; the continuous filing of late claims prevents the Trustee from completing distributions under the Modified Plan to creditors with timely-filed claims. Russell argues that her late filing is excusable because the Debtors failed to provide her with adequate notice of the bankruptcy filing and the Bar Date. If a creditor is known, the debtor must provide actual notice of the bankruptcy proceedings, whereas if the creditor is unknown, notice by publication is sufficient.
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In the instant case, the debtor would be prejudiced by allowing the [claimants] to assert their claim six months after the bar date had passed, particularly in a case as large as this. Following passage of the bar date, the debtor should reasonably be able to assume that all claimants needing to be dealt with in the plan have come forward to vindicate their rights, thereby allowing the debtor to calculate its potential liabilities for purposes of effectuating its reorganization.