Pioneer Inv. Services Co., In re

• Citation: 943 F.2d 673
• Decision Date: 06 September 1991
• Docket Number: No. 90-6339,90-6339
• Parties: , 25 Collier Bankr.Cas.2d 921, 22 Bankr.Ct.Dec. 82, Bankr. L. Rep. P 74,228 In re PIONEER INVESTMENT SERVICES COMPANY, Debtor. BRUNSWICK ASSOCIATES LIMITED PARTNERSHIP, Clinton Associates Limited Partnership, Ft. Oglethorpe Associates Limited Partnership, and West Knoxville Associates Limited Partnership, Plaintiffs-Appellants, v. PIONEER INVESTMENT SERVICES COMPANY, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 673

943 F.2d 673

60 USLW 2250, 25 Collier Bankr.Cas.2d 921,

22 Bankr.Ct.Dec. 82,

Bankr. L. Rep. P 74,228

In re PIONEER INVESTMENT SERVICES COMPANY, Debtor BRUNSWICK ASSOCIATES LIMITED PARTNERSHIP, Clinton Associates Limited Partnership, Ft. Oglethorpe Associates Limited Partnership, and West Knoxville Associates Limited Partnership, Plaintiffs-Appellants, v. PIONEER INVESTMENT SERVICES COMPANY, Defendant-Appellee.

No. 90-6339.

United States Court of Appeals Sixth Circuit.

Argued May 23, 1991.

Decided Sept. 6, 1991.

John A. Lucas (argued), Howard E. Frasier, Jr. (briefed), Hunton & Williams, Knoxville, Tenn., for plaintiffs-appellants.

John S. Hicks, Dearborn & Ewing, Nashville, Tenn., Craig J. Donaldson (argued and briefed), Riker, Danzig, Scherer, Hyland & Perretti, Morristown, N.J., for defendant-appellee.

Before JONES and NORRIS, Circuit Judges, and JOINER, Senior District Judge. ^*

NATHANIEL R. JONES, Circuit Judge.

Plaintiffs-appellants Brunswick Associates Ltd. ("Brunswick"), Clinton Associates Limited Partnership ("Clinton"), Ft. Oglethorpe Associates Limited Partnership ("Ft. Oglethorpe"), and West Knoxville Associates Limited Partnership ("W. Knoxville"), appeal the district court's order affirming the Bankruptcy Court's decision denying their motion for leave to file their proofs of claim out of time. For the reasons that follow, we reverse.

I.

The facts giving rise to this appeal are uncontested. On April 12, 1989, the debtor-appellee Pioneer Investment Services Company ("Pioneer") filed its voluntary petition for bankruptcy under Chapter 11 of the United States Bankruptcy Code. At the same time, Pioneer filed a list of its twenty largest unsecured creditors. This list included Brunswick, Clinton and W. Knoxville. Pioneer asked for and was granted extensions by the bankruptcy court through May 17, 1989, within which to file its statement of affairs and the relevant schedules.

On April 13, 1989, a Notice for a Meeting of Creditors was mailed by the bankruptcy court clerk's office to the parties in interest setting May 5, 1989 as the date for the creditor's meeting required under Section 341(a) of the Bankruptcy Code. This notice also fixed August 3, 1989, as the bar date for filing proofs of claim by unsecured creditors. This notice specifically provided as regards the bar date:

You must file a proof of claim if your claim is scheduled as disputed, contingent or unliquidated, is unlisted or you do not agree with the amount. See 11 U.S.C. § 1111 & Bankruptcy rule 3003.

Bar date is August 3, 1989.

J.App. at 175 (quoting notice). The bankruptcy court found that Mark A. Berlin, president of Robriste Enterprises, Inc., general partner of Clinton, W. Knoxville, and Brunswick, and president of Pudding Enterprises, Inc., general partner of Ft. Oglethorpe, received and read the April 13, 1989 notice. The court also found that Berlin is an experienced businessman engaged in real estate and financial management, an attorney licensed to practice in Florida and New York and a certified public accountant.

The bankruptcy court found that Berlin attended and participated in the May 5, 1989 meeting of creditors. The records to the creditor's meeting held on May 19 also indicate that Berlin entered an appearance on behalf of the partnerships.

Prior to the May 19 meeting, Pioneer filed its statement of financial affairs and the relevant schedules. The plaintiffs are not listed on the schedules as originally filed. However, on May 25, Pioneer amended its schedules to include Clinton, W. Knoxville and Brunswick as creditors holding contingent unliquidated, and disputed claims. Ft. Oglethorpe is not listed on the schedules as a creditor.

On June 5, the United States Trustee filed his "Appointment of Committee of Unsecured Creditors" designating Clinton as a member of the creditors' committee. Berlin, representing Clinton, was a member of this committee from its inception.

The plaintiffs collectively retained Marc Richards as their legal counsel. The bankruptcy court found that Richards was retained in mid-June and was an experienced bankruptcy attorney. Berlin's affidavit also suggests that Richards was provided with a complete copy of the bankruptcy file for all the partnerships and that the file contained the above-mentioned notice for filing proofs of claim. The testimony also indicates that Richards advised Berlin that there was no bar date in the file and that therefore, filing proofs of claim was not a matter of urgency.

On August 23, 1989, twenty days after the expiration of the bar date, the plaintiffs filed their proofs of claim. The claims were signed on behalf of Clinton, W. Knoxville, and Brunswick by "Mark A. Berlin, President of Robriste Enterprises, Inc. (General Partner)." The claim filed on behalf of Ft. Oglethorpe is signed "Mark A. Berlin, President Pudding Enterprises, Incorporated (General Partner)." The plaintiffs acknowledge that they filed the proofs of claim after the bar date and that they did not file any petition for an extension of time to file such proofs of claim. However, they claimed below, and claim before this court, that the bar date for filing should have been extended as their failure to timely file was due to "excusable neglect", or, in the alternative, that their claims should be allowed nunc pro tunc to the bar date.

The bankruptcy court denied the plaintiffs' motion to file their claims late, finding no "excusable neglect" within the meaning of the bankruptcy rules and no reason to exercise its equity power to allow the filing of the claims nunc pro tunc. 106 B.R. 510. The plaintiffs then appealed to the district court. While the district court accepted all of the bankruptcy court's factual findings, the court found that the bankruptcy court had applied an overly strict interpretation of "excusable neglect" and the court remanded for reconsideration under a more liberal standard. On remand the bankruptcy court again found that, even under the more liberal interpretation of "excusable neglect" there was no basis for allowing the plaintiffs to file their claims out of time. The plaintiffs again appealed and the district court affirmed. This timely appeal followed.

II.

We review the factual findings of the bankruptcy court under a clearly erroneous standard. Bankr.R. 8013. Whether the court properly found that a proof of claim was filed late due to "excusable neglect" is reviewed for abuse of discretion. In re Yoder Co., 758 F.2d 1114, 1117 (6th Cir.1985).

Section 1111(a) of the Bankruptcy Code requires creditors to file a proof of claim in circumstances where a particular claim is "scheduled as disputed, contingent, or unliquidated." 11 U.S.C. § 1111(a). In this case the plaintiffs acknowledge that they were required to file a proof of claim. Bankruptcy Rule 3003(c) requires the court to set a time within which proofs of claim may be filed and authorizes the court to extend such time limit "for cause shown." Bankr.R. 3003(c)(3). It appears to be well-established that Bankruptcy Rule 3003 must be read in conjunction with Rule 9006(b), which guides courts as to how and when extensions of time may be granted. See, e.g., In re Vertientes, Ltd., 845 F.2d 57, 60 (3d Cir.1988); In re South Atlantic Fin. Corp., 767 F.2d 814, 817 (11th Cir.1985), cert. denied, 475 U.S. 1015, 106 S.Ct. 1197, 89 L.Ed.2d 311 (1986); In re Dix, 95 B.R. 134, 137 (Bankr. 9th Cir.1988). Rule 9006(b) provides:

(b) Enlargement

(1) In General. 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 or by a notice given thereunder or by order of court, the court for cause shown may at any time in its discretion (1) with or without motion or notice order the period enlarged if the request therefor is made before the expiration of the period originally prescribed or as extended by a previous order or (2) 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.

Bankr.R. 9006(b)(1). In this case, no request for extension of time was made prior to the expiration of the bar date, therefore, the court only has discretion to extend the time for "excusable neglect." See, In re Vertientes, 845 F.2d at 59 (court only has discretion to grant extensions as permitted in the two circumstances outlined in Rule 9006(b)(1)).

This court has never defined "excusable neglect" as it relates to the filing of late proofs of claim. Though the question was raised in In re Yoder, the court decided the case on other grounds and declined to adopt either a strict or a liberal interpretation of the term. 758 F.2d at 1118 and n. 4. The bankruptcy court in the instant action originally adopted the strict interpretation of "excusable neglect" following the Eleventh Circuit. Under this view, "excusable neglect" could only be found when the failure to timely perform was due to circumstances beyond the reasonable control of the party. In re South Atlantic Fin. Corp., 767 F.2d at 817. Other courts have also indicated a tendency to read the procedural requirements of the Bankruptcy Rules and notices strictly in order to further the purpose of quick and effective settlement of bankrupt estates. See, e.g., In re Robintech, Inc., 863 F.2d 393, 397-98 (5th Cir.1989), cert. denied sub nom., Bullock v. Oppenheim, Appel, Dixon & Co., --- U.S. ----, 110 S.Ct. 55, 107 L.Ed.2d 24 (1989); Maressa v. A.H. Robins Co., 839 F.2d 220, 221 (4th Cir.1988); In re Vertientes, 845 F.2d at 60-61. Reasoning from these and other similar precedents, the bankruptcy court determined that the proper interpretation of the "excusable neglect" rule was a strict one.

On its initial review, the district court reversed, arguing that Sixth Circuit precedent interpreting rules analogous to Bankruptcy Rule 9006(b) indicated a more liberal approach to the concept of...