Opinion
No. 76 B 2410
March 6, 1979
Creditors — Proof of Claims — Late Filing
Although a creditor bank filed its formal proof of claim beyond the six month period specified in Section 57n of the Bankruptcy Act and Bankruptcy Rule 302(e) of the Bankruptcy Act, the court allowed the claim since to do otherwise would work an injustice and the equities of the situation did not militate against the creditor.
The creditor's claim arises out of a promissory note of bankrupt and her husband payable on June 30, 1976. Bankrupt's husband died prior to the due date of the note, and creditor bank filed a claim against his estate for the full amount due on the note. Because of the tangled financial affairs of the bankrupt and her husband, an unofficial committee of creditors was organized in spring of 1976. On April 9, 1976, the chairman of the unofficial creditors committee sent letters to creditors of the husband's estate and/or the bankrupt requesting information concerning their claims. On May 12, 1976 creditor bank responded asserting its claim for $172,048.26 plus $20,000 of costs and expenses. On October 22, 1976, an involuntary petition was filed against bankrupt who was adjudicated early in January, 1977. The chairman of the unofficial committee advised creditors of the adjudication and that the first meeting of creditors would be held January 19, 1977. He also advised that the informal creditors committee intended to continue to act and, in that connection, solicited the filing of a formal proof of claim with a power of attorney running to the committee. At the first meeting of creditors on January 19, 1977, an application was made pursuant to Rule 214 of the Bankruptcy Act to elect an official Creditors Committee. The attorney for the creditor bank asked to be added to the slate. The attorney for petitioning creditors, who later became trustee, asked whether the creditor bank was actually a creditor as it was not listed in the schedules. The bank's attorney protested that he had a note executed by the Committee. The creditor bank's attorney was nominated and elected to the Committee. Although prepared and executed long before, the creditor bank's formal proof of claim was not filed until August 15, 1977, approximately four weeks after the July 19, 1977 cutoff date.
The court's decision to allow the late filed proof of claim was based on several considerations. The court adopted a statement made in In the Matter of Scranton Paints Mfg. Co., Inc., SD N. Y., 1/25/78, CCH BANKRUPTCY LAW REPORTS, ¶ 66,744 that "it would appear, unless the equities of the situation militate otherwise, that the amendment should be permitted if the informal filing (1) sets forth the nature and the amount of the claim with sufficient detail to enable the trustee and the creditors to make proper investigation as to its fairness and legality, and (2) reflects the creditor's intention to assert a claim against and to share in the bankruptcy estate." Further, the court found "stronger and more compelling reasons" for allowing the filing. Since Bankrputcy Rule 214 authorizes the election of a committee "of 3 or more creditors", and the creditor bank was recognized as a creditor of the estate when its attorney was added to the official Creditors Committee at the first meeting of creditors, in open court, before the trustees and the bankruptcy judge, then the entry by the court of an order giving the committee official recognition "was a sufficient predicate for the filing of an amended claim after the expiration of the six month period provided in Bankruptcy Rule 302(e)." See Sec. 57n at ¶ 2523, Rule 214 at ¶ 20,054 and Rule 302(e) at ¶ 20,102.