The Ninth Circuit rejected every conceivable theory that would allow a creditor to participate in distributions under a chapter 13 plan without filing a proof of claim.
The case turned on Bankruptcy Rule 3002(a), which says that a creditor “must file a proof of claim,” except in circumstances not applicable in chapter 13.
The creditor held uncontested claims that the debtor scheduled for more than $50,000. The creditor did not file a claim by the bar date and did not file an objection to the plan, which was confirmed. After confirmation, the creditor filed a motion for leave to file a late claim.
As an excuse, the creditor blamed the failure to file a timely claim on a “disgruntled employee.”
The bankruptcy court denied the motion to permit a late claim and was upheld by the Ninth Circuit Bankruptcy Appellate Panel. The creditor appealed again and lost again in an Oct. 27 opinion by Circuit Judge N. Randy Smith.
Distinguishing chapter 13 from chapter 11, where creditors can participate in plan distributions if their claims are scheduled as undisputed, Judge Smith said that the “plain meaning” of the statute shows that Congress intended “to require all creditors wishing to enforce their claims to file a proof of claim in the chapter 13 context.” He noted, though, that a secured creditor does not forfeit its lien by failing to file a claim.
In agreement with the Seventh Circuit’s Greenig opinion, Judge Smith held that a creditor must file a timely claim to participate in a plan distribution “even if the debt was listed in the debtor’s bankruptcy schedules.”
Judge Smith rejected several theories relieving the creditor of an obligation to file a claim that was scheduled by the debtor as undisputed:
· Even if scheduling the claim amounted to a judicial admission, the creditor was not relieved of the obligation to file a proof of claim.
· The scheduled claim did not qualify as an informal claim.
· Scheduling the claim was not a proof of claim filed by the debtor.
· Equity did not require the bankruptcy court to allow a late-filed claim.