Matter of Thomson McKinnon, Inc.
| Decision Date | 28 August 1991 |
| Docket Number | Bankruptcy No. 90 B 10914. |
| Citation | 130 BR 721 |
| Parties | In the Matter of THOMSON McKINNON, INC., Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
Anderson Kill Olick & Oshinsky, P.C., New York City, for movants; Roy Babitt, of counsel.
Debevoise & Plimpton, New York City, for debtor; Andrea Labov, of counsel.
Strook & Strook & Lavan, New York City, for Creditors' Committee; Barbara Kaplan, of counsel.
DECISION ON MOTION AND CROSS-MOTION FOR AN ORDER GRANTING RELIEF FROM STAY AND PERMISSION TO FILE CLAIMS
Approximately forty former customers ("the movants") of the debtor, Thomson McKinnon Securities, Inc. ("TMSI"), have moved for an order granting relief from the automatic stay pursuant to 11 U.S.C. § 362(d)(1) to permit them to prosecute to judgment a prepetition Securities Act case pending against the debtor in the United States District Court, Western District of Oklahoma. Alternatively, the movants seek leave to file a proof of claim or to consider a late-filed claim as timely. The debtor was formerly a securities investment firm and is presently proposing a complete liquidation under Chapter 11 of the Bankruptcy Code.
On July 7, 1987, the movants filed a complaint in the United States District Court for the Western District of Oklahoma against numerous defendants, including the debtor, TMSI. The complaint and amended complaints assert fraud, misrepresentation, breach of fiduciary duty and contract with respect to the issuance of a prospectus relating to the sale of limited partnership units in certain real property. The movants allege the violation of various federal securities laws, including 15 U.S.C. §§ 78j(b), 78t(a) and (b), 77l, and 18 U.S.C. § 1962.
On March 28, 1990, TMSI filed with this court its voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The debtor is presently proceeding as a debtor in possession in accordance with 11 U.S.C. §§ 1107 and 1108 and is pursuing a liquidating Chapter 11 approach.
Pursuant to Bankruptcy Rule 3003(c)(3), the court established two separate bar dates for claims. On April 3, 1990, the court fixed a bar date of October 30, 1990 for creditors defined as "Customers" by the bar order (the "Customer Bar Date"). On July 16, 1990, the court fixed a separate bar date of September 21, 1990 for all creditors of the debtor who were defined as "Creditors" by the bar order (the "Creditor Bar Date").
The Creditor Bar Date Order provides in relevant part as follows:
(emphasis added).
The debtor mailed notice of the Creditor Bar Date Order and a proof of claim form to creditors, including the movants. A separate notice was sent to "customers" who might have claims relating to customer property. The debtor did not send notice to the movants of the Customer Bar Date Order entered by the court on April 3, 1990, which set October 30, 1990 as the bar date for customers with claims relating to "customer property" or "customer name securities." This order stated in relevant part as follows:
Former customers shall file claims to "customer property" (as defined in 15 U.S.C. § 78lll(4) or to § 78lll(3)), on or before October 30, 1990 or their claims to such property shall be forever barred.
The debtor's schedules list the movants as creditors holding claims that are unliquidated and disputed. Therefore, the movants were required to file a proof of claim because 11 U.S.C. § 1111(a), which treats liquidated and undisputed schedule claims as deemed filed, is inapplicable.
Movants filed a proof of claim on October 26, 1990, which was five weeks late as to the Creditor Bar Date, but which was timely filed if it qualified under the Customer Bar Date. The Customer Bar Date expressly limited the October 30, 1991 bar date to claims for "customer property" or "customer name securities." All other claims, including claims of former customers were subject to the earlier Creditor Bar Date of September 21, 1990.
Movants concede that they make no claim to "customer property" or "customer name securities" as expressed in the Customer Bar Date Order which set October 30, 1990 as the bar date for such customer claims. Accordingly, the movants did not file a timely proof of claim by September 21, 1990, as required or by the Bar Date Order for all creditors, including former customers, other than those customers holding claims with respect to "customer property" or "customer name securities." They argue that they are former customers of the debtor who hold general unsecured, unliquidated claims which are disputed and that their claims filed on October 26, 1990 should be treated as timely filed within the Customer Bar Date or regarded as late-filed claims under the Creditor Bar Date because the Creditor Bar Date should be extended to permit the filing of the late claim in accordance with Bankruptcy Rules 3003(c)(3) and 9006(b)(1).
The movants' prepetition lawsuit in the United States District Court for the Western District of Oklahoma cannot be considered as an informal proof of claim which may be amended by the movants' late-filed customer claim. There must be some informal writing or pleading filed in the bankruptcy court which could be treated as a timely assertion by the movants of their claim against the debtor's estate. Vertientes, Ltd. v. Internor Trade, Inc. (In re Vertientes, Ltd.), 845 F.2d 57, 60 (3d Cir.1988); Biscayne 21 Condominium Association, Inc. v. South Atlantic Financial Corp. (In re South Atlantic Financial Corp.), 767 F.2d 814, 819 (11th Cir. 1985) (); In re W.T. Grant Co., 53 B.R. 417 (Bankr.S.D.N.Y.1985). There must be something in the bankruptcy court's records to reflect the informal proof of claim because Bankruptcy Rule 5005(a) expressly states that proofs of claim and other papers required to be filed "shall be filed with the clerk in the district where the case under the Code is pending." Thus, a prepetition pending lawsuit between a creditor and a debtor relating to a claim by the creditor cannot be treated as an informal proof of claim because the pending lawsuit does not appear upon the record in the bankruptcy case. In re FRG, Inc., 121 B.R. 710 (Bankr.E.D.Pa.1990).
In view of the fact that the movants do not qualify as having timely filed an informal proof of claim which may be amended, it follows that the September 21, 1990 Creditor Bar Date may not be enlarged because the movants have not produced any evidence as to the factors which would justify such relief, including excusable neglect, as required by Bankruptcy Rule 9006(b)(1).
At the first hearing in this matter held on August 20, 1991, the court suggested that this dispute might be a matter of form over substance because the movants could simply remove their prepetition pending litigation in the Western District of Oklahoma to this court pursuant to 28 U.S.C. § 1452 and Bankruptcy Rule 9027. Accordingly, the parties considered whether or not the debtor might, instead, wish to consent to the movants' late-filed claim. At the adjourned hearing held on August 27, 1991, the debtor and the creditors' committee reasserted objections to the movants' claim. The debtor reasoned that the movants could not remove the Oklahoma litigation to this court because Bankruptcy Rule 9027(a)(2) requires the application for removal of a prepetition claim be made within the longer of either 90 days after the filing of the petition or 30 days after the lifting of the automatic stay. Accordingly, the debtor maintains that because more than 90 days have passed since the debtor filed its Chapter 11 petition, relief from the stay must be obtained prior to removing an action pursuant to 28 U.S.C. § 1452.
Bankruptcy Rule 9027(a)(2) provides as follows:
(2) Time for Filing; Civil Action Initiated Before Commencement of the Case Under the Code. If the claim or cause of action in a civil action is pending when a case under the Code is commenced, a notice of removal may be filed only within the longest of (A) 90 days after the order for relief in the case under the Code, (B) 30 days after entry of an order terminating a stay, if the claim or cause of action in a civil action has been stayed under § 362 of the Code, or (C) 30 days after a trustee qualifies in a chapter 11 reorganization case but not later than 180 days after the order for relief.
There is no question that if an automatic stay under 11 U.S.C. § 362 is not implicated in the case, the party seeking removal of a pending nonbankruptcy case has a fixed 90-day period after the...
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In re Passodelis, Bankruptcy No. 97-24837-MBM
...sought and obtained stay relief on November 25, 1997 (i.e., to liquidate said claims to judgment). See In re Thomson McKinnon, Inc., 130 B.R. 721, 722-24 (Bankr.S.D.N.Y.1991) (granting relief from stay "to prosecute to judgment a prepetition Securities Act case pending against the debtor," ......