In re Alsofari

588 B.R. 58
CourtUnited States Bankruptcy Court, E.D. Arkansas
DecidedDecember 14, 2017
DocketCase No. 4:17-bk-10502
StatusPublished
Cited by1 cases

This text of 588 B.R. 58 (In re Alsofari) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Alsofari, 588 B.R. 58 (Ark. 2017).

Opinion

Phyllis M. Jones, United States Bankruptcy Judge

Before the Court is the Objection to Claim filed by the Debtor, Sammy Alsofari (the "Debtor "), objecting to the formal proof of claim filed by Allowey Ahmed ("Mr. Ahmed "), together with the Response to Objection to Claim filed by Mr. Ahmed. A hearing on the objection and response was held on September 15, 2017. The Debtor argued that Mr. Ahmed's formal proof of claim should be disallowed because it was filed after the deadline for filing proofs of claim. Mr. Ahmed argued that he had an informal proof of claim, and his formal proof of claim should be allowed as an amendment to the informal proof of claim.

Following the hearing, the Court took the matter under advisement. For the reasons stated below, the Debtor's objection is sustained, and Mr. Ahmed's claim is disallowed.

Jurisdiction

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B). The following constitutes the Court's findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052, made applicable to this contested matter by Federal Rule of Bankruptcy Procedure 9014.

Findings of Fact

The Debtor and Mr. Ahmed are former business partners. Prior to the bankruptcy filing, the parties agreed to end their business relationship and divide their businesses as reflected in a certain document styled "Arbitration Agreement and Judgment," dated May 19, 2013, and a corresponding amendment thereto dated June 2, 2013 (collectively, the "Agreement "). (Debtor's Ex. 4, at 6-14). According to the Agreement, the Debtor was to receive the business known as The Tire Shoppe in Little Rock, Arkansas, and Mr. Ahmed was to receive the business known as Famous Tire Shop LLC in North Little Rock, Arkansas. (Debtor's Ex. 4, at 6-7). Mr. Ahmed's auto accessories business in Arkansas is currently being operated by his son.

Mr. Ahmed testified that as a result of the division of the businesses, the Debtor owed him $115,500.00 and owed $100,000.00 to a private investor, Khalil Azazi (the "Private Investor "). (Debtor's Ex. 4, at 4, 7-8). The Debtor made several payments to Mr. Ahmed on the $115,500.00 debt, and Mr. Ahmed believed the balance was "probably ... about 90-something thousand" dollars. (Tr. at 38). Mr. Ahmed testified he is not certain about the total amount of debt owed to him by the Debtor because he does not know if the Debtor has paid the $100,000.00 debt to the Private Investor. Mr. Ahmed explained that he believes he will be liable to the Private Investor if the Debtor fails to pay the $100,000.00. In the event Mr. Ahmed is required to pay the Private Investor, he believes the Debtor would have to reimburse him for doing so pursuant to the Agreement.

*62Sometime after the Agreement was entered into, the Debtor ceased paying Mr. Ahmed, and Mr. Ahmed took legal action to collect his debt. He sought relief in state court, but the action was removed to federal court. On the eve of the trial in federal court, the Debtor filed for bankruptcy relief. The Debtor admitted the upcoming federal court trial caused him to file bankruptcy.

The Debtor filed a voluntary petition for relief under the provisions of Chapter 13 of the United States Bankruptcy Code on January 27, 2017. (Debtor's Ex. 1). The notice of the Chapter 13 filing (the "Case Filing Notice ") provided that the Debtor's 341(a) meeting would be held in Little Rock, Arkansas, on March 3, 2017, and that June 1, 2017, was the deadline set for all creditors (except governmental units) to file a proof of claim in the case. (Debtor's Ex. 2, at 3). It is undisputed that Mr. Ahmed received the Case Filing Notice at his address in Brooklyn, New York, but did not file a formal proof of claim by the June 1, 2017 deadline.

Although the Debtor's 341(a) meeting was originally scheduled for March 3, 2017, he did not appear because he had not yet filed his schedules in the case. (Creditor's Ex. 3). On March 10, 2017, the Debtor filed his schedules, which reflected a contingent, disputed debt owed to Mr. Ahmed in the amount of $147,638.77. (Creditor's Ex. 4). The Private Investor was not listed as a creditor in the Debtor's schedules. (Creditor's Ex. 4).

The 341(a) meeting was rescheduled for April 14, 2017. The Debtor did not appear at the meeting or file a motion to continue the meeting. Unaware that the Debtor would not attend, Mr. Ahmed and his attorney both appeared at the April 14, 2017 meeting. The Debtor explained that he did not attend the meeting because his religious practice prohibited him from attending the meeting on a Friday afternoon. (Creditor's Ex. 3). The Court finds the Debtor's testimony on this issue credible.

On April 24, 2017, Mr. Ahmed's attorneys filed a Notice of Appearance and Request for Service of Notice (the "Notice of Appearance ") in the Debtor's bankruptcy case. (Debtor's Ex. 3). The Notice of Appearance identified Mr. Ahmed as a "creditor" and requested that copies of "all notices and pleadings pursuant to Bankruptcy Rules 2002(a), (b), and (f), and 3017(a)" be addressed to Mr. Ahmed's attorneys. (Debtor's Ex. 3, at 1). The Notice of Appearance did not state the nature or amount of Mr. Ahmed's claim or explicitly state Mr. Ahmed's intent to pursue a claim or hold the Debtor liable.

Upon request of the Debtor, the 341(a) meeting was rescheduled a third time for May 22, 2017, at which time the Debtor did appear. Ms. Kellie Emerson Holt, a staff attorney for the standing Chapter 13 Trustee assigned to this case, conducted the meeting, which lasted over an hour. Mr. Ahmed and his attorney appeared and asked the Debtor questions. Mr. Ahmed was asked by his counsel if part of the reason he attended the first meeting, "along with enforcing [his] claim," was to determine how much the Debtor had paid the Private Investor. (Tr. at 51). He answered yes. Mr. Ahmed questioned the Debtor about the debt to the Private Investor, but testified that the Debtor was not clear on how much he had paid to the Private Investor.

Ms. Holt testified regarding the first meeting stating the Debtor did not deny that he owed money to Mr. Ahmed. When asked whether, based on her experience, she believed Mr. Ahmed appeared to be "trying to enforce [his] rights in this bankruptcy" Ms. Holt responded that Mr. Ahmed was "very adamant about his claim." (Tr. at 25). No other pertinent testimony *63was given regarding the specific questions asked or answers given at the first meeting.

On June 5, 2017, four days after the deadline for filing proofs of claim, Mr. Ahmed timely objected to the confirmation of the Debtor's original plan.

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John A. Little, III
E.D. Arkansas, 2021

Cite This Page — Counsel Stack

Bluebook (online)
588 B.R. 58, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-alsofari-areb-2017.