Opinion
Case No. 02-69077-DOT.
July 20, 2007
MEMORANDUM OPINION AND ORDER
Hearing was held July 18, 2007, on objection by the chapter 13 trustee to proof of claim # 14 filed on behalf of Ocean Beach Club dba Gold Key Resorts. The claimant did not appear at hearing, but it had previously submitted a written response to the objection, which the court will consider.
For reasons stated below, the objection will be sustained and the claim disallowed.
Facts.
Proof of claim # 14 was filed by Gold Key Resorts on March 19, 2007, as unsecured, nonpriority in the amount of $6,807.53. Attached to the claim is a statement that it amends the Gold Key's original claim filed on December 9, 2002. The original claim, entered on the court's claims register as # 4, was filed as a time share secured claim in the amount of $8,071.71. According to documentation attached to the new claim, Gold Key sold the debtor's time share at foreclosure on March 20, 2003, and the new amount of $6,807.53 represents the deficiency upon foreclosure.
The case docket reveals that this chapter 13 case was filed on October 23, 2002, and that debtor's chapter 13 plan was confirmed on January 15, 2003. The plan provided for 57 monthly payments of $50.00 and estimated a dividend to unsecured creditors of 13 percent. The plan proposed to surrender debtor's time share. Thus the trustee did not administer the asset, and Gold Key was not entitled to any payment from the trustee on the secured claim.
At the present time, the trustee has disbursed virtually all plan funds received from the debtor, with the debtor due to make a final plan payment in the approximate amount of $62.00. When this payment is made and distributed to creditors, the case will be due for the trustee's final report, a discharge for debtor and closing by the court.
Conclusions of Law.
The trustee objected to claim # 14 on the ground that it was not timely. Gold Key Resorts asserted in its response to the objection that the claim was timely because it amended the timely filed claim # 4. Although it is generally true that an amended claim relates back to the original filing, the court must agree with the trustee as a practical matter that the new claim is untimely. The debtor will shortly complete his obligations under the chapter 13 plan, and there are no funds available to make more than a nominal payment toward the new claim. (Assuming a 13% dividend, if the claim had been filed within a reasonable time following the foreclosure sale in March 2003, Gold Key Resorts would have received an approximate $885.00 dividend distribution over the life of the plan.)
It is within the court's discretion whether to allow the claim. Although amendments of timely-filed claims are generally allowed after the claim bar date, it is not a matter of right if it will cause undue prejudice to the debtor or to other creditors. In re Sequeira, No. 01-12403-SSM (Bankr. E.D. Va. 2004). See Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993); See also In re Marohn, 1997 WL 866612 (Bankr. E.D. Va. 1997). Under some circumstances, a trustee might be required to recover funds paid to creditors for disbursement to an overlooked claimant. Here, given the creditor's four year delay in amending its claim, the court finds it would not be appropriate to require the trustee to recover funds for such a purpose. As in In re Sequeira, the creditor's amended claim "was filed long after the claim bar date and long after the point that the trustee could have adjusted the distribution on timely filed unsecured claims to provide for the same percentage payment." In re Sequeira, at 3. Allowing the claim at this time would cause undue prejudice to the debtor. Accordingly, the claim must be disallowed.
IT IS THEREFORE ORDERED that claim #14 filed by Ocean Beach Club dba Gold Key Resorts is disallowed.