Opinion
Case Nos. 01-12264-SSM, 01-12265-SSM, (Jointly Administered)
July 23, 2002
Alexander M. Laughlin, Esquire, Wiley Rein Fielding, LLP, McLean, VA, Local counsel for the debtor in possession.
H. Bradley Evans, Jr., Esquire, Redmon, Peyton Braswell, L.L.P., Alexandria, VA, Counsel for Gordon P. Peyton, Trustee.
Malcolm Mitchell, Esquire, Vorys, Sater, Seymour Pease, L.L.P., Alexandria, VA, Local counsel for the Official Committee of Unsecured Creditors.
MEMORANDUM OPINION AND ORDER
Before the court is the opposition of the debtors in possession to a "Statement of Administrative Claim" filed by Gordon P. Peyton, chapter 7 trustee for Pathnet Operating, Inc. ("POI"), on May 7, 2002. A hearing was held in open court on June 18, 2002, at which the debtors in possession, Mr. Peyton, and the Official Committee of Unsecured Creditors were present by counsel. Because the claim in question was filed after the bar date for administrative claims, and because excuseable neglect has not been shown for extending that date, the claim will be denied.
Background
On April 2, 2001, Pathnet Telecommunications, Inc. ("PTI") and five subsidiaries, among them Pathnet, Incorporated ("PNI") and Pathnet Operating, Inc. ("POI"), filed voluntary chapter 11 petitions in the District of Delaware. An order was promptly entered for the joint administration of the cases, which were then transferred to this district. At the insistence of POI's secured creditors, however, POI's case was converted to chapter 7 on July 19, 2001, and three of the other companies (all subsidiaries of POI) were also converted to chapter 7 shortly thereafter. Gordon P. Peyton was appointed as trustee of the POI case. PTI and PNI, however, remained chapter 11 debtors in possession and proposed a joint plan of liquidation that was confirmed on March 12, 2002. Relevant to the present controversy, the plan provided as follows:
The bar date for seeking the allowance of Administrative Expenses, other than compensation of professionals pursuant to sections 330 and 331 of the Bankruptcy Code, shall be the 30th day following the Confirmation Date.
First Amended Joint Plan of Liquidation, Art. 2, Sec. 2.1 (Doc. # 704 at 9). The "Confirmation Date" in turn is defined as "the date on which the Confirmation Order is entered by the Clerk of the Bankruptcy Court." Id. at Art. I, Sec. 1.1.24. The confirmation order (Doc. # 710) was entered on the docket on March 12, 2002. The bar date for administrative claims was therefore April 11, 2002.
The "Statement of Chapter 7 Trustee's Administrative Claim" was filed by Mr. Peyton on May 7, 2002. It seeks contribution from the PNI estate for claims asserted against POI by Qwest Corporation in the amount of $83,624.49 and by BellSouth Telecommunications, Inc. in the amount of $1,610,510.00. In this connection, the court notes that both Qwest and BellSouth have filed what appear to be the same claims in their own behalf in the PNI case.
BellSouth's claim was dismissed with prejudice by stipulation. Qwest's claim has recently been denied by memorandum opinion and order dated July 22, 2002.
Discussion
Although both contribution claims raise interesting substantive issues, the threshold question is whether the claims have been timely asserted. A bankruptcy court, after notice and a hearing, may allow as an administrative expense "the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case." § 503(b)(1)(A), Bankruptcy Code. Allowed administrative expenses are paid ahead of general unsecured claims. § 507(a)(1), Bankruptcy Code. Neither the Bankruptcy Code nor the Federal Rules of Bankruptcy Procedure specify a date by which administrative expense claims must be filed, with the exception that in a chapter 7 case such claims must (rather reasonably) be filed "before the date on which the trustee commences distribution." § 726(a)(1), Bankruptcy Code. The court, however, clearly has the power to specify an administrative expense claim bar date. This is particularly true in a liquidation scenario where general unsecured creditors are being paid out of the pot that remains after payment of allowed priority claims. Without a bar date for administrative expense claims, distributions to unsecured creditors could be held up indefinitely while administrative claims trickle in. In the present case, the confirmed plan plainly requires that administrative expense claims, other than those for professional compensation, be filed within 30 days of the entry of the confirmation order. Although Mr. Peyton objected to confirmation of the plan, he did not take an appeal from the confirmation order.
This is not to say that the court is without power to grant relief from the claims bar date. Where an act is required or allowed to be done within a specified period by order of court, the time can be extended "for cause shown" if a motion to extend is made before the time has expired and for "excuseable neglect" if the motion to extend is made after the time has expired. F.R.Bankr.P. 9006(b)(1). The Supreme Court has held that excuseable neglect under Rule 9006 is not limited to intervening circumstances beyond a party's control, but may extend also to late filings caused by inadvertence, mistake, or carelessness. Pioneer Investment Svcs. Co. v. Brunswick Assocs. L.P., 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). As the Court explained in Pioneer, the determination of whether neglect is excuseable is an equitable one, taking into account all relevant circumstances, including the danger of prejudice to the debtor, the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith. Id.
In the present case, there is in literal terms no motion before the court to extend the time, but even if a separate pleading were not required, the trustee has put forth nothing in explanation of the late filing that would constitute excuseable neglect. Accordingly, the court can only conclude that the administrative expense claim is time-barred.
ORDER
For the reasons stated, it is
ORDERED:
1. The Statement of Administrative Claim filed by Gordon P. Peyton, Trustee, which the court treats as a motion for allowance and payment of an administrative claim, is denied.
2. The clerk will mail a copy of this memorandum opinion and order to the parties listed below.