Opinion
Case No. 98-19161-SSM, Chapter 13
February 5, 2001
Carl Eason, Esquire, Virginia Beach, Va., Counsel for First Accounts Receivable.
Paul McGlone, Esquire, Fairfax, Va., Counsel for the Debtor.
Gerald M. O'Donnell, Esquire, Alexandria, VA Chapter 13 Trustee.
MEMORANDUM OPINION AND ORDER
Before the court is a motion filed by First Accounts Receivable ("First Accounts") on November 9, 1999, to file a late proof of claim. The motion has been served on the debtor, the chapter 13 trustee, and all creditors. No objections have been filed, and both the debtor and the chapter 13 trustee have endorsed a proposed order allowing the late filing. Nevertheless, because it is questionable whether there is a proper legal basis to permit the late filing, the court will set the motion for an evidentiary hearing.
Background
Kevin L. Sprecker ("the debtor") filed a voluntary petition seeking relief under chapter 13 of the Bankruptcy Code on December 29, 1998. On his schedules, the debtor listed Household Bank ("Household") as an unsecured nonpriority creditor holding a claim totaling $6,100.00. First Accounts represents that it is the assignee of Household's claim. When First Accounts acquired the claim, and when, if ever, notice of the assignment was given to the debtor, is not stated in the motion.
In any event, First Accounts was not listed on the debtor's schedules. On January 1, 1999, the clerk of court sent notices of the commencement of the case (Official Form 9) to all of the creditors listed in the debtor's schedules. The notice included the date and time of the § 341 meeting of creditors, as well as the deadline under Fed.R.Bankr.P. 3002(a) for the filing of proofs of claim. The § 341 meeting was set for January 27, 1999, and under Rule 3002(a), the deadline for filing of proofs of claim was 90 days later, or April 27, 1999. The record does not reflect whether Household or First Accounts attended the § 341 meeting of creditors; however, the notice sent from the court clerk on January 1, 1999, indicates that only Household was provided with notice of that meeting.
The debtor's plan, dated January 21, 1999, was confirmed on May 3, 1999. The plan requires that the debtor pay $300.00 per month for 60 months, or a total of $18,000.00, to the chapter 13 trustee. The estimated dividend on allowed unsecured claims is 35 cents on the dollar. Neither Household nor First Accounts filed a proof of claim within the claims bar date.
On November 7, 1999, First Accounts filed the motion that is presently before this court for an order allowing it to file a late proof of claim in the amount of $6,703.37. The only ground stated for granting motion is that the debtor "is desirous" of having the claim paid.
Discussion
Except in chapter 11, where certain scheduled claims are deemed filed, a creditor desiring to receive distributions in a bankruptcy case is required to file a proof of claim. § 502(b)(9), Bankruptcy Code; Fed.R.Bankr.P. 3002(a). The deadline for filing proofs of claim in a chapter 13 case is 90 days after the first date set for the § 341 meeting of creditors. Fed.R.Bankr.P. 3002(c). There are, however, several exceptions to that rule:
The order appealed from does not in express terms contain a finding or judgment of contempt, although the court's bench ruling certainly reflected the court's finding that Gracedale's conduct with respect to the post-petition credit card charges constituted a violation of the automatic stay. The order set a separate evidentiary hearing — subsequently continued on joint motion of the parties to April 16, 2001 — "to determine appropriate sanctions" for the violation of the automatic stay. Thus, as to any finding of contempt, the order of March 13, 2001, is rather plainly interlocutory, although it may be final with respect to the other issues adjudicated.
1. A proof of claim filed by a governmental unit is timely filed if it is filed not later than 180 days after the date of the order for relief. On motion of a governmental unit before the expiration of such period and for cause shown, the court may extend the time for filing of a claim by the governmental unit[;]
2. In the interest of justice and if it will not unduly delay the administration of the case, the court may extend the time for filing a proof of claim by an infant or incompetent person or the representative of either[;]
3. An unsecured claim which arises in favor of an entity or becomes allowable as a result of a judgment may be filed within 30 days after the judgment becomes final if the judgment is for the recovery of money or property from that entity or denies or avoids the entity's interest in property. If the judgment imposes a liability which is not satisfied, or a duty which is not performed within such period or such further time as the court may permit, the claim shall not be allowed[;]
4. A claim arising from the rejection of an executory contract or unexpired lease of the debtor may be filed within such time as the court may direct[;]
5. If notice of insufficient assets to pay a dividend was given to creditors pursuant to Rule 2002(e), and subsequently the trustee notifies the court that payment of a dividend appears possible, the clerk shall notify the creditors of that fact and that they may file proofs of claim within 90 days after the mailing of the notice[; and]
6. In a chapter 7 liquidation case, if a surplus remains after all claims allowed have been paid in full, the court may grant an extension of time for the filing of claims against the surplus not filed within the time herein above prescribed.
Fed.R.Bankr.P. 3002(c)(1)-(6); § 502(b)(9), Bankruptcy Code. In the present case, the meeting of creditors took place on January 27, 1999, and the claims bar date for all creditors, with the exception of those described in Fed.R.Bankr.P. 3002(c)(1)-(6), was April 27, 1999. Here, none of the exceptions provided for in Fed.R.Bankr.P. 3002(c)(1)-(6) are applicable. First Accounts is not a governmental unit; it is not an infant or incompetent or the representative of either; the claim at issue is not the result of a final judgment for the recovery of money or property entered within the last 30 days; nor does it arise from a rejection of an executory contract or an unexpired lease. Finally, the case was not initially noticed to creditors as a "no asset" case, nor is this a chapter 7 case in which there is a surplus from which late claims might be paid. Accordingly, under the plain language of Fed.R.Bankr.P. 3002(c), the last day on which First Accounts could have filed its proof of claim was April 27, 1999.
As explained by a leading treatise:
Courts have uniformly held that no extension of the time fixed by Rule 3002(c) may be granted after the time has passed. The court has no equitable power to extend the time fixed by Rule 3002(c).
9 Collier on Bankruptcy, ¶ 3002.03[1], p. 3002-11 (Lawrence P. King, ed.; 15th ed. rev. 1997) (footnotes omitted). Thus, Rule 3002(c) is strictly construed as a statute of limitations since the purpose of such a claims bar date is "to provide the debtor and its creditors with finality" and to "insure the swift distribution of the bankruptcy estate." In re Johnson, 84 B.R. 492, 494 (Bankr. N.D. Oh. 1988). In the present case, First Accounts does not fall under any exceptions to Rule 3002(c). Likewise, its stated justification for allowing a late claim — that the debtor "is desirous" of having First Account's claim paid — is insufficient to carry the day, since Rule 3002 simply gives the court no discretion. See Matter of Greenig, 152 F.3d 631, 634-35 (7th Cir. 1998) (acknowledging harshness of result, but holding that failure to file claim within time period specified by rules is "absolute bar" unless one of the specific exceptions in Rule 3002(c) applies; bankruptcy court "cannot use its equitable power to circumvent the law"). This is not a case, it must be stressed, where allowing a late claim will have no practical effect on the plan. The plan in this case, as in almost every chapter 13 case filed in this district, is a "pot plan." Claims are not being paid at 100 cents on the dollar. Allowing First Accounts to file a late claim necessarily reduces the dividend to be paid on other unsecured claims. While it is true that no creditors have objected, the court must take account that creditors with relatively small claims who are already being paid only a fraction of their claim are not likely to incur the expense of formally objecting to the motion.
In literal terms, Rule 3002(a) refers only to unsecured claims. Thus, a different issue is presented where a secured creditor whose claim is provided for in the plan fails to file a proof of claim by the bar date as set forth in the notice for the meeting of creditors. But that is not this case.
In a "pot plan," as distinguished from a "percentage plan," the debtor, instead of promising to pay a specific percentage on account of unsecured claims, pays instead a fixed amount or "pot" of money into the estate, and the percentage payment that unsecured creditors receive is based on the total amount of claims that are ultimately allowed. Matter of Witkowski, 16 F.3d 739, 741 (7th Cir. 1994). 3 In this case, the timely-filed unsecured claims, including the unsecured portion of the automobile loan, total $19,650.00. After payment of administrative and secured claims, it appears that $10,452.12 remains for unsecured claims, resulting in an actual dividend of 53 cents on the dollar. Adding the $6,703.37 First Accounts claim to the pool would reduce the dividend to 40 cents on the dollar. Even though this exceeds the 35% projected in the plan, the reduction nevertheless prejudices the unsecured creditors who filed timely claims.
It is possible — an issue the court simply need not reach on the current limited record — that the 5th Amendment to the United States Constitution might operate as a constraint on a strict application of Rule 3002(c), depending on what notice, or lack of notice, First Accounts was given. At this point, however, there are simply too many unanswered questions to reach that issue. When, in relation to the chapter 13 filing, did First Accounts acquire the claim from Household? When did First Accounts acquire actual knowledge of the bankruptcy filing? Was notice of the assignment given to the debtor? Did Household forward any of the notices it received to First Accounts, and, if so, when? Out of an abundance of caution, therefore, the court, rather than simply denying the motion outright, will set the matter for an evidentiary hearing.
ORDER
It is, accordingly,
ORDERED:
1. An evidentiary hearing on the motion to file late claim will be held on February 21, 2001, at 1:30 p.m. in Courtroom I, Martin V. B. Bostetter, Jr., United States Court House, 200 South Washington Street, Alexandria, Virginia.
2. The clerk will mail a copy of this order to the parties listed below.