exception from the automatic stay to insulate a consumer debtor from the trustee’s attempt to require her to “turnover” the amounts reflected by pre-petition checks and debits that were paid by her bank shortly after filing bankruptcy and thus were no longer in the account at the time it was remitted to the estate. In In re Minter-Higgins
[2]
the Chapter 7 Trustee sought turnover from the debtor of money that had been in the debtor’s bank account at the instant of filing for bankruptcy. The debtor objected to the turnover, however, because she had issued checks and initiated debit transfers before filing for bankruptcy that were not honored by the bank until after the filing.If the Trustee were successful in obtaining the turnover, the debtor would be liable to the estate for the amount of those items and effectively pay twice – once when the funds in her account were used to honor the check and debit transfers and a second time in response to the turnover.
By: Robert Ryan
St. John's Law Student
American Bankruptcy Institute Law Review Staff
Firmly adopting the “exclusive” view of claim objections, the Tenth Circuit Bankruptcy Appellate Panel in B-Line, LLC v. Kirkland
held that a claim could not be disallowed under 11 U.S.C. § 502
[2]
for failure to submit supporting documentation with a proof of claim since that is not one of the grounds expressly stated in the statute.
[3]
Although Federal Rule of Bankruptcy Procedure 3001 requires that supporting documentation be provided with a proof of claim,
[4]
neither the Rule nor the statute clearly states what to do if a creditor fails to submit supporting documentation.
[5]
The court held that section 502(b) provided an exclusive list of reasons why a claim should be dismissed, reasoning that the “shall allow … except” command in section 502(b) and the absence of an expansive term like “including” indicated that the list was exclusive.
[6]
Since the Rules cannot modify substantive rights, technical defects in the proof of claim are not grounds for objection.
