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Northern District of Ohio Bankruptcy Court Holds that it Lacks Discretion to Allow Late-Filed Proof of Claim pursuant to the “Excusable Neglect” Standard

Posted By USFN, Tuesday, December 4, 2018
Updated: Friday, November 30, 2018

December 4, 2018

by Edward J. Boll III
Lerner, Sampson & Rothfuss, LPA – USFN Member (Kentucky, Ohio)

On October 17, 2018 U.S. Bankruptcy Judge Koschik (N.D. Ohio) held that a creditor cannot use “excusable neglect” as a basis to file a proof of claim (POC) after the bar date in a Chapter 7 or Chapter 13 case. Six months after the claims bar date, non-mortgage creditor individuals filed a “motion for leave to file late proof of claim,” seeking 30 more days to file a claim. The creditors asserted that they did not receive notice of the bankruptcy case and, therefore, did not timely file a POC. The creditors also argued that even if they received sufficient notice, their failure to file a timely proof of claim was due to “excusable neglect.” They sought to invoke Bankruptcy Rule 9006(b)(1) to enlarge the time. That rule provides, in part:

“Except as provided in paragraphs (2) and (3) of this subdivision, when an act is required or allowed to be done at or within a specified period by these rules . . . the court for cause shown may at any time in its discretion . . . on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of
excusable neglect.” Fed. R. Bankr. P. § 9006(b)(1).

The court ultimately denied the creditors’ motion on the basis that Bankruptcy Rule 3002(c) established the exclusive grounds for allowing claims to be filed by a creditor after the bar date in a Chapter 13 case. Therefore, the court lacked discretion to permit a late-filed proof of claim by creditors pursuant to the excusable neglect standard in Rule 9006(b)(1).

The case citation is In re Rady, 2018 Bankr. LEXIS 3208 (Bankr. N.D. Ohio (Akron), Oct. 17, 2018).

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