In re Griffin Trading Co.
| Decision Date | 05 December 2001 |
| Docket Number | No. 01 C 6397.,01 C 6397. |
| Citation | 270 BR 905 |
| Parties | In re GRIFFIN TRADING COMPANY, Debtor. |
| Court | U.S. District Court — Northern District of Illinois |
Kimberly J. Stone, Pedersen & Houpt, P.C., Chicago, IL, Gregory N. Kazarian, Pedersen & Houpt, Chicago, IL, for appellants.
Mark P. Naughton, Jr., Piper, Marbury, Rudnick & Wolfe, Chicago, IL, for appellee.
Griffin Trading Company "Griffin Trading" filed a Chapter 7 bankruptcy petition on December 30, 1998. On October 30, 2000, the Chapter 7 trustee filed a motion for approval of a settlement agreement. The proposed settlement barred the claims of Group A English creditors "English creditors" who had not filed timely proofs of claim. In response, the English creditors, along with court-appointed English liquidators, filed motions to allow informal proofs of claim. In a carefully considered memorandum opinion issued on July 3, 2001, the bankruptcy court overruled all relevant objections to the proposed settlement agreement and denied the English creditors' motions to allow informal proofs of claim. The English creditors appeal.
Griffin Trading was a commodities broker with offices in Chicago, Illinois and London, England. The company had significant assets and conducted business in England, but its principal place of business and assets were located in the United States. A week after Griffin Trading filed bankruptcy, the court authorized the trustee to issue a winding-up petition in England. In an ancillary proceeding a month later, an English court authorized appointment of liquidators and issued a winding-up order. Because Griffin Trading's English assets were insufficient to satisfy all English creditors' claims, the trustee and the liquidators agreed any shortfall would be sought in the American bankruptcy proceeding.
In early January 1999, notices of the bankruptcy case, the creditors' meeting and filing deadlines were served on Griffin Trading's creditors and other interested parties in the United States and England. The notice explicitly provided that proofs of claim were to be filed with the bankruptcy court clerk by May 11, 1999. In early 1999, the liquidators were aware that some English creditors had received notice of the filing deadline. The liquidators sent the trustee information regarding the English creditors' claims on February 9, 1999, April 16, 1999 and May 20, 1999. Neither the English creditors nor the liquidators filed any formal proofs of claim with the bankruptcy court before the May 11th deadline. The court-approved settlement order entered two years later barred the English creditors from sharing in proceeds of the estate.
The bankruptcy court held an evidentiary hearing on the motions to permit the English creditors to participate in the estate based upon information the liquidators sent to the trustee. The liquidators testified they were under the impression the trustee agreed to file claims on behalf of the English creditors. However, attorneys for the trustee adamantly denied such an agreement, which would circumvent the Bankruptcy Code. There was no testimony that the trustee or his counsel actually agreed to file proofs of loss on behalf of the English creditors.
The bankruptcy court found the testimony of both the trustee's counsel and the liquidators credible, but attributed the serious misunderstanding between the American and English practitioners to language and cultural differences. Specifically, the bankruptcy court found there was a different interpretation of the term "schedules in bankruptcy." Apparently the English liquidators interpreted "schedules in bankruptcy" to be synonymous with "proofs of claim." The bankruptcy court reasoned that it was entirely possible that the trustee told the liquidators he would file bankruptcy schedules; and the liquidators thought the trustee meant he would file proofs of claim on the English creditors' behalf. One of the liquidators testified he was unaware that under American law, claims must be filed before the deadline with the bankruptcy court — and not merely submitted to liquidators as is the case in England. However, the liquidators did not furnish the trustee with sufficient information to file claims on behalf of the English creditors until May 20, 1999, nine days after the deadline. The bankruptcy court concluded that the liquidators were not agents of the English creditors.1 Assuming arguendo that an agency relationship existed, the bankruptcy court concluded the information submitted by the liquidators to the trustee did not constitute informal proofs of claim. Accordingly, the liquidators' opposition to the trustee's motion to approve the settlement agreement was overruled and the English creditors' motion to allow amended informal proofs of claim was denied.
Subject matter jurisdiction over this bankruptcy appeal is established by 28 U.S.C. § 158(a)(1). This court's review of the bankruptcy court's factual findings is subject to a clearly erroneous standard, while review of its conclusions of law is de novo. Fed.R.Bankr.P. 8013; Fed.R.Civ.P. 52; In re Lefkas Gen. Partners, 112 F.3d 896, 900 (7th Cir.1997).
A proof of claim must be timely filed. Fed.R.Bankr.P. 3002(c). Late-filed claims are generally barred because they disrupt orderly discharge of bankruptcy proceedings. Here, the deadline was May 11, 1999. It is the English creditors' burden to show they filed their claims before the deadline. They have failed to do so. They argue the bankruptcy court erred in refusing to treat information that the liquidators provided to the trustee before the May 11th deadline as timely filed informal proofs of claim, later amended by claim forms filed on May 20th.
The English creditors contend that client claim forms they each submitted to the liquidators in January 1999 constitute informal proofs of claim. These client forms were not filed with the bankruptcy court, nor have the English creditors shown they are part of the bankruptcy record.. Rather, the English creditors cite evidence produced at the hearing to establish that the documents included claim amounts and supporting documentation. Tr., Vol. V, pp. 45-46; Tr., Vol. III, pp. 54-55; Joint Ex. 14, 18, 19. The bankruptcy court rejected this argument because the January submissions were not filed with the bankruptcy court and did not evidence the English creditors' intent to hold Griffin Trading liable. The English creditors fail to demonstrate that the bankruptcy court's factual findings were clearly erroneous or that its legal conclusion was in error.
As the English creditors recognize in their briefs, the requirements for recognition of an informal proof of claim are set out in In re Wigoda, 234 B.R. 413, 415 (Bankr.N.D.Ill.1999). Appellants' br. at 16; appellants' reply br. at 1-2. It is telling that they omit and ignore the first Wigoda requirement: an informal proof of loss must be timely filed with the bankruptcy court and become part of the record. See also Barlow v. M.J. Waterman & Assoc., Inc. (In re M.J. Waterman & Assoc., Inc.), 227 F.3d 604, 609 (6th Cir. 2000); Nikoloutsos v. Nikoloutsos (Matter of Nikoloutsos), 199 F.3d 233, 236 (5th Cir.2000); Clark v. Valley Fed. Sav. & Loan Assoc. (In re Reliance Equities, Inc.), 966 F.2d 1338, 1344 (10th Cir.1992). The record is barren of any evidence the English creditors complied with this condition. The only reasonable inference is that the January client forms were not filed with the bankruptcy court nor were they part of the bankruptcy record. The fact that ...
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