Matter of Pennsylvania Iron & Coal Co., Inc.
| Decision Date | 26 July 1984 |
| Docket Number | Bankruptcy No. 3-83-00087. |
| Citation | 40 BR 918 |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
| Parties | In the Matter of PENNSYLVANIA IRON & COAL COMPANY, INC., Debtor. |
Ira Rubin, Dayton, Ohio, for debtor.
Daniel G. Gehres, Sp. Counsel, Dayton, Ohio, for State of Ohio.
Margaret Quinn, Ass't U.S. Atty., Dayton, Ohio, for the United States.
Kevin R. Abrams, for Ohio Bur. Workers Comp., Columbus, Ohio.
DECISION AND ORDER
This case was instituted by petition for relief under Chapter 11 filed on 18 January 1983 by Pennsylvania Iron & Coal Company, Inc. "Pennsylvania". The Ohio Bureau of Workers' Compensation "the Bureau" was scheduled as a general, unsecured creditor in the aggregate amount of $28,279.28.
In pertinent part, among very extensive litigation, the following facts and procedures ensued.
Upon numerous requests by the Debtor, orders were entered seriatim granting for cause extensions of time to file schedules and statement of affairs until 25 May 1983, which were eventually filed on 31 May 1983. Likewise, orders were entered, because of pending litigation, extending the time within which Debtor would have the exclusive right to file a plan of reorganization until January 3, 1984. A Plan of Reorganization was filed on 18 December 1983 and an Amended Plan of Reorganization was filed on 19 January 1984.
An order for the 11 U.S.C. § 341(a) meeting of creditors, combined with notice thereof, was entered on 20 January 1983. The combined order and notice contains typical language, as follows:
On 1 December 1983 the Bureau audited the books of Pennsylvania at the business premises and, also, of Ohio Briquetting Company "OBC", owned as partners with Hot Briquetting, Inc., a wholly owned subsidiary.
The assets of both the Debtor and Ohio Briquetting Co. were scheduled as if they were a single entity because it is not possible or practical to separate them; and, also, because the Debtor as a partner is liable for all of the debts of OBC. Further, OBC's facilities are encumbered by certain industrial revenue bonds in the amount of approximately $450,000.00, for which Debtor would be ultimately liable upon an indemnity agreement.
On 9 February 1984 the Bureau filed a claim (No. 129 on the Claims Register) in the amount of $12,910.25 and on 2 April 1984 it filed a claim (No. 140 on the Claims Register) in the amount of $17,116.56 against Pennsylvania. The aggregate amount of both claims was $28,321.64, or $42.36 more than the amount scheduled by Pennsylvania. These claims were designated on their face as "Priority" claims for "premiums owed."
A Disclosure Statement filed by Debtor on 19 January 1984 was set for hearing on 5 March 1984. An Order Approving Disclosure Statement was entered by the Court on 6 March 1984.
As soon as the attorney for Pennsylvania became aware of the filing of the Bureau claims (on 19 April 1984 and on 27 April 1984), objections to the claims were filed on the basis that they were filed after the bar date for filing claims as fixed by the Court and that they were not legally entitled to "priority" status. A hearing was set for 25 June 1984.
On 4 June 1984 the Bureau filed a "Motion to Establish Priority Status and to Extend Time for Filing Proof of Claim Pursuant to Rule 9006 in Response to Debtor's Objection to Claims." Debtor filed a reply memorandum on 25 June 1984 and the Bureau filed a "Reply Memorandum to Memorandum" on 2 July 1984.
Considerable attention has been devoted by the Attorneys for both parties to rationalize whether or not the proofs of claims filed by the Bureau can be considered because they were filed after the original bar date (July 18, 1983) for filing claims as fixed in the § 341 meeting order and notice.
In behalf of Pennsylvania it is urged, as follows:
As to the branch of its Motion seeking a nunc pro tunc extension of time in an attempt to validate its late filed claims, Workers Compensation takes the position that it was not possible for it to timely file its claims because of delays encountered in determining the amounts owed; because Pennsylvania and its affiliate, Ohio Briquetting Company, had two different risk numbers; and that it was necessary for an audit to be performed and that the audit could not be completed until December, 1983 because the Debtor ceased operations for eight months after the filing of its Petition in this proceedings. It claims that these factors demonstrate excusable neglect for its failure to file its claims for some 201 days (Claim No. 129) and 254 days (Claim No. 140) after the last day to file claims as fixed by Order of this Court.
It is urged by Pennsylvania that, "On July 18, 1983, when the time to file claims in this case expired, former Rule 906 was in force and, under its provisions, no extension of time within which to file a claim could be granted after the time for the filing of claims had expired."
This Court concurs with the view of counsel for Pennsylvania in commenting upon the Bureau's laxity in filing claims, that, "the attitude of Workers Compensation can best be described as one of indifference to the time limitations in this case; the needs of the Debtor to have knowledge of claims against it within a reasonable period of time so as to permit it to formulate a Plan and file an accurate Disclosure Statement; and to permit the Court and other creditors to intelligently assess the Debtor's overall financial picture in connection with its Plan and Disclosure Statement."
Whether such patent dereliction in litigating its claim and ignoring bankruptcy court necessary procedures and jurisdiction was especially prejudicial to Pennsylvania is not entirely certain, nevertheless, for several reasons. First, it must be noted that Pennsylvania itself did not abide by statutory time periods as contemplated when the six-months bar period for claims was incorporated into the Rule 2002 order and notices. It may fairly be concluded that this date became practically moot. Pursuant to extension orders requested by Pennsylvania, a plan of reorganization and approval of a disclosure statement was not processed until 6 March 1984, when the court entered an order approving a disclosure statement and setting the date for a hearing on confirmation of a plan.
Further, the amounts contained in the proofs of claims (despite the dereliction of the Bureau in not complying with court procedures, and not even seeking court leave for a delayed filing), are not the crucial issue. Rather the issue of whether the claims should be accorded excise tax priority status is the crucial problem.
With reference to granting leave nunc pro tunc to file the proofs of claim after the bar date, the result would be the same under Interim Bankruptcy Rule 3001 () as under present Rule 3003. Under Interim Rule 3001(b)(3), "a proof of claim may be filed at any time prior to the approval of the disclosure statement unless a different time is fixed by the court on notice as provided in Rule 2002." (as herein). This Rule does not preclude changing an earlier court fixed bar date for cause. Furthermore, the Order of the Supreme Court of April 25, 1983, adopting the current Bankruptcy Rules, effective August 1, 1983, specifically provides the current Rules "shall be applicable to proceedings then pending, except to the extent that in the opinion of the court their application in a pending proceeding would not be feasible or would work injustice, in which event the former procedure applies." See Supreme Court Order in 6 Bkr.L.Ed. § 51:87.
Under either the prior Rule or present Rule 3003(c)(3), requests to extend the time to file the late claims herein would invoke the court's discretion "for cause shown." The Bureau's delay from January, 1983, until February, 1984, demonstrates such a lack of regard for the court jurisdiction as to dictate cause for not extending the time to file claims to the prejudice of a debtor and other interested parties. If the delay in conducting an audit herein was reasonably the fault of circumstances beyond the control of the Bureau, such facts should have been timely presented to the court by a reasonable request for extension of time.
The prejudicial effect of such...
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