IN RE P & L CREDIT AND COLLECTION SERVICES, INC., Bankruptcy No. 96-13060B.

• Citation: 238 BR 556
• Decision Date: 13 September 1999
• Docket Number: Bankruptcy No. 96-13060B.
• Parties: In re P & L CREDIT AND COLLECTION SERVICES, INC., Debtor.
• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Western District of New York

238 B.R. 556 (1999)

In re P & L CREDIT AND COLLECTION SERVICES, INC., Debtor.

Bankruptcy No. 96-13060B.

United States Bankruptcy Court, W.D. New York.

September 13, 1999.

Zdarsky, Sawicki & Agostinelli, Mark J. Schlant, Esq., of counsel, Buffalo, for Trustee.

Hiscock & Barclay, Michael E. Ferdman, Esq., of counsel, Buffalo, for Federal Deposit Insurance Corp. Receiver of Goldome.

CARL L. BUCKI, Bankruptcy Judge.

In this Chapter 7 proceeding, the case trustee has moved to disallow the claim of the Federal Deposit Insurance Corporation ("FDIC"), on the ground that it was filed subsequent to the applicable bar date. Because the creditor received no formal notice of that bar date, the trustee's objection is overruled.

The interest of the FDIC derives from its position as receiver of Goldome, FSB. As receiver, the FDIC in 1995 commenced an action against P & L Credit and Collections Services, Inc., ("P & L") to recover damages allegedly arising from a failure to remit moneys that P & L had collected on behalf of Goldome. Before any judgement was rendered, however, P & L filed a petition for relief under Chapter 7 of the Bankruptcy Code on July 11, 1996. Although the Statement of Financial Affairs indicated that the FDIC had commenced a pre-petition action against the debtor, both the various schedules and the mailing matrix failed to list either the FDIC or Goldome as creditors. Thus, until such time as the FDIC filed its own proof of claim, it was excluded from the list of parties to whom the clerk of this court would send notices in connection with this case.

On July 24, 1996, the bankruptcy clerk mailed a notice of the first meeting of creditors to all of the parties listed on the debtor's mailing matrix. As allowed by Bankruptcy Rule 2002(e), this notice further advised that "there appear to be no assets available from which payment may be made to unsecured creditors," and that accordingly, creditors were not to file proofs of claim "unless you receive a court notice to do so." Although the FDIC would not have received the clerk's notice, it somehow learned about the bankruptcy filing, and appeared through counsel at the first meeting of creditors on August 15, 1996.

Sometime during his administration of this case, the trustee determined that sufficient assets would likely be available to effect a distribution to unsecured creditors. For this reason, on February 6, 1997, the bankruptcy clerk mailed a document entitled "Notice of Need to File Proof of Claim Due to Recovery of Assets." Specifically, this notice advised that "creditors who wish to share in any distribution of funds must file a proof of claim with the Clerk of the Bankruptcy Court . . . on or before May 12, 1997." Not receiving this notice, the FDIC filed its proof of claim on May 30, 1997.

Section 726 of the Bankruptcy Code establishes the scheme for distribution of property of a Chapter 7 estate. Pursuant to subdivision (a)(2) of this section, after payment of priority claims, the trustee is to distribute assets to a class that consists primarily of allowed unsecured claims that have been timely filed. Also included in this class, however, are claims that a creditor has tardily filed, if "(i) the creditor that holds such claim did not have notice or actual knowledge of the case in time for timely filing of a proof of such claim under section 501(a) of this title; and (ii) proof of...