In Re Keyboards America, Inc.

30 B.R. 349, 1983 Bankr. LEXIS 6088
CourtUnited States Bankruptcy Court, E.D. Virginia
DecidedJune 6, 1983
Docket19-30558
StatusPublished
Cited by7 cases

This text of 30 B.R. 349 (In Re Keyboards America, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Keyboards America, Inc., 30 B.R. 349, 1983 Bankr. LEXIS 6088 (Va. 1983).

Opinion

MEMORANDUM OPINION

MARTIN V.B. BOSTETTER, Jr., Bankruptcy Judge.

The issues here arise on the motion of S & B Corporation (“S & B”) seeking leave to file a Proof of Claim in the above-captioned Chapter 11 proceeding. By order entered May 28,1982 this Court established July 15, 1982 as the last date for filing claims herein.

S & B indicates that it did not receive the notice informing creditors of the cut-off date for filing a Proof of Claim which was mailed by the Clerk of this Court on May 28, 1982. It asserts further that it was unaware that the debtor was disputing the validity of the claim itself, rather than only the amount of the claim, until October 1982. S & B represents that it was at that time that it learned for the first time, in a telephone conversation with the debtor’s attorney, that: (a) the debtor had filed amended schedules in May 1982 reducing to zero the scheduled amount of the debt to S & B, and (b) was taking the position that S & B had waived its claim by failing to file a Proof of Claim before the cut-off date.

S & B attributes its failure to receive notice of the cut-off date to the alleged fact that the only address for S & B on file with the Court was “168-39th Street, Brooklyn, New York, 11232”, which address was no longer effective. S & B further asserts that the debtor’s attorney had been given a *350 new address in March 1982. This address was “Eastern Tea Corporation, 400 Trumble Street, Elizabeth, New Jersey 07206”. In addition, S & B points out that the security agreement which forms the basis for S & B’s claim contains a provision indicating that any and all communications with S & B should be addressed as follows: “Attention: Samuel A. Sardinia, President, 37 Star Island, Miami Beach, Florida 33139” 1

S & B further argues that the motion should be granted because its dealings with the debtor and the debtor’s attorney constituted an informal proof of claim which now may be amended. The movant cites a number of cases to support its theory of an informal proof of claim which may be amended after the “bar date” for filing has passed, and indicates that the Circuits are divided on the matter of whether the filing of a proof of claim after the “bar date” is to be permitted liberally or only in the most extraordinary circumstances. It is the position of S & B that the ruling of the Fourth Circuit favors a liberal standard on the issue.

The debtor states that prior to the mailing of the notice of the “bar date” by the Court, the debtor notified this Court’s Clerk’s Office of the additional address for S & B. The debtor states further that notice of the last date for filing a Proof of Claim also was published in the Washington Law Reporter and in The Washington Post as directed in the Court’s Order. The debt- or notes that the Order setting the “bar date” and directing that notice be sent stated that mailing to all scheduled creditors and publication would be deemed adequate and sufficient notice. The debtor asserts that the Brooklyn address had been provided to the debtor by S & B, citing Rule 2002(d) of the Local Rules of this Court which places on the creditor the responsibility for notifying the Court of changes in the creditor’s address. In addition, the debtor notes that no notices mailed to the creditor at either the Brooklyn address or the New Jersey address ever have been returned by the Post Office to the Clerk of the Court, giving rise to an inference that the notices were received by the creditor.

The debtor also indicates that S & B knew, or should have known, that the debt- or disputed the validity of the debt to S & B. As evidence, the debtor refers to a March 5, 1982 letter of debtor’s counsel to Sam Sardinia, a copy of which is attached to the original affidavit as Exhibit 2. In that letter, debtor’s counsel stated: “2. Copy of the Keyboards’ agreement with Metropolitan Capital Corporation, whereby Keyboards was forced to purchase many of the same assets it supposedly purchased from S & B Corporation.” The debtor also directs the Court’s attention to the original schedules filed in this proceeding in which the debtor listed the claim of S & B as disputed. The only difference between the original schedules and the amended schedule, the debtor notes, is the amount of the claim listed as disputed not the fact that a dispute existed. The debtor’s attorney represents that he attached a copy of the original schedules to the March 5, 1982 letter which Mr. Sardinia admits having received.

Section 1111 of the Bankruptcy Code states that a Proof of Claim is deemed filed for any scheduled debt except one “that is scheduled as disputed, contingent, or unliq-uidated.” Bankruptcy Rules 8 — 401 and 10-401 require a creditor whose claim is listed as disputed, contingent or unliquidated to file a Proof of Claim prior to the time of confirmation of a plan or before any other date fixed by the Court. In order to secure allowance of its claim in any amount, therefore, S & B was required to file a proof of claim. The Code requires this procedure regardless of whether the claim is disputed in its entirety or only as to amount.

The debtor argues that S & B’s failure to file a Proof of Claim before the “bar date” *351 can be overcome only on a finding of this Court that failure to file was due to excusable neglect. It is the debtor’s position that S & B’s conduct does not meet the standard for excusable neglect.

The debtor states that if the Court permits S & B to file its claim the debtor and other creditors will be severely prejudiced. The debtor’s plan of reorganization depends substantially upon a joint enterprise proposal with the Baldwin Piano Company. One of the conditions upon which Baldwin was willing to negotiate the joint enterprise proposal, the debtor states, was that the exact amount of all claims against the debtor be fixed. In addition, the joint enterprise proposal is specifically contingent upon confirmation of the plan of reorganization. The debtor argues that since this plan does not take into consideration the claim of S & B, and Baldwin has taken the position that it will not go forward with the joint enterprise proposal if the claim is allowed to be filed, filing of the claim of S & B would cause the debtor’s plan to fail.

Bankruptcy Rule 10-209 governs the mailing of notices to creditors and other parties in interest. Rule 10-209(d) directs that all notices to which a creditor is entitled “shall be addressed to such person as he or his authorized agent may direct in a request filed with the Court; otherwise to his address shown in the lists or, if a different address is stated in a Proof of Claim duly filed, then at the address so stated.” Local Rule 2002(d) is identical to Bankruptcy Rule 10-209(d).

The debtor’s attorney, in an affidavit, states that he telephoned and requested the Clerk’s Office to add the Elizabeth, New Jersey, address for S & B Corporation to the mailing matrix to ensure its addition prior to the mailing of the notice of the fixing of a final date for filing claims. The debtor also has submitted an affidavit of Audrey Baker, a former Deputy Clerk of this Court, in which Miss Baker states that she added the following name and address to the mailing matrix on May 28, 1982:

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Bluebook (online)
30 B.R. 349, 1983 Bankr. LEXIS 6088, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-keyboards-america-inc-vaeb-1983.