Fed.R.Bankr.P. 3002(c); Late Filed Claim
In re Middlebrooks, 2006 Bankr. LEXIS 860, Case No. 03-71937 (Bankr. N.D. Ga. February 6, 2006)(Murphy)
Prior to the filing of debtors’ joint petition, the Bank extended a line of credit to a non-debtor corporation, with the debt being personally guaranteed by the debtors. During this prior business relationship, the Bank contended, an employee of the Bank engaged in misconduct by, inter alia, concealing from the Bank the fact that the loan was in default and failed to pursue the claim against the debtors in their bankruptcy case.
The Bank missed the bar date for filing a claim, and subsequently filed a motion to allow its late claim based upon the misconduct of its employee and its failure to discover the misconduct until after the bar date. The Bank conceded that none of the exceptions set forth in Rule 3002(c) were applicable to the facts, but instead argued that its claim should be allowed to “avoid an injustice to the bank caused by the misconduct of its employee.” The trustee opposed the motion and objected to the Bank’s claim.
The court denied the Bank’s motion. Rule 3002(c) permits late filed claims in some circumstances, but none were applicable to the case. Even where the failure to file was otherwise an “act of God” and not the result of wrongdoing on the part of the creditor, the court may not have discretion to allow the late claim. Further, the Bank did not establish that any equities were in its favor. The alleged misconduct took place two years before the bar date and the Bank had sufficient time to investigate the status of the loan and file a claim. Neither the debtor, the trustee nor any creditor contributed to the Bank’s failure to file the claim and the Bank failed to show why misconduct on the part of the Bank’s employee should be absorbed by other creditors. If the claim were allowed, it would significantly reduce the distribution to other unsecured creditors who timely filed claims.
Note: It appears from the docket that the Bank appealed this order.