MERRITT S. DEITZ, Jr., Bankruptcy Judge.
The question of what constitutes an actual or constructive proof of claim, when viewed within the broad scope of federal bankruptcy law and the practicalities of insolvency, would seem to be an issue of only micronic dimension. Yet upon such a question turns, in this case, an actual cash value of over $60,000 in distributions to be made under a Chapter 11 reorganization plan. We will outline the facts before exploring the issue.
On May 28, 1982, Curtis D. McCoy, Jr., Mina C. McCoy and McCoy Management Services, Inc. [the debtors] filed for reorganization under Chapter 11 of the Bankruptcy Code. Wetterau, Inc., the plaintiff in this action, was not listed as a creditor by the debtors in any of their bankruptcy schedules.
On September 7, 1982 the debtors entered into an agreed order with Morgantown Deposit Bank and First National Bank of Louisville to terminate the automatic stay and allow the two banks to take possession of property
In October of 1982, the motion to set aside the agreed order was argued before this court. We held that the lifting of the stay was not a "substantive adjudication of rights"
On September 23, 1983, in the ordinary course of administration of the Chapter 11 proceeding, this court entered an order which set November 30, 1983, as the last day for filing proofs of claim against McCoy. Wetterau, Inc. did not file a formal proof of claim until January 24, 1984.
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The case presents two issues involving the filing of proofs of claim. One is simple and can be decided in summary fashion. The other, however, poses a question that by comparison makes the fabled Gordian Knot look like a piece of yarn tangled by a mischievous kitten.
The initial issue is whether to grant Wetterau's motion to permit a late filing of a proof of claim. Rule 9006(b) of the Federal Rules of Bankruptcy Procedure governs the late filing of proof of claims in Chapter 11 cases and provides in pertinent part:
The standard of "excusable neglect" is flexible and subject to interpretation by the trier of fact in each instance.
In the instant case the plaintiff was aware of the debtors' bankruptcy over a year before the final day for filing proofs of claim. It chose not to file a proof of claim under the belief that the entity with which they dealt was not in bankruptcy and that there was no need to file a claim against the debtor. It is a clearly established rule of bankruptcy law that when a party fails to timely file a proof of claim due to "a chosen course of action and the circumstances were within the party's reasonable control, [then] the courts will not offer relief from the choice taken".
The remaining and more difficult issue is whether Wetterau's motion to set aside an agreed order and attached security agreement and filing statement constitute an informal proof of claim which may be perfected by amendment.
Courts have interpreted the Bankruptcy Code and its rules of procedure to require five elements in order for an informal proof of claim to be valid and amendable:
In the case at bar, the court is of the opinion that the debtor's motion and accompanying documents meet both the statutory
Finally it is abundantly clear that it would be inequitable under the circumstances of the case to prevent Wetterau from amending its informal claim. The debtor's bankruptcy presents us with one of the most complex labyrinths of corporate entities, wholly owned subsidiaries and "operated businesses" encountered in recent days by this bankruptcy court.
Although the record is not totally clear on the point it appears that Wetterau and both creditor banks actually dealt with Sav-On Food Center of Kentucky, Inc., a "technically" separate corporation, rather than the debtors.
Equity is further served by our ruling in that the Wetterau claim of $61,514 represents a miniscule .0065 per cent of the debtor's total listed claims of $9,329,065, and would have no material impact on the Chapter 11 plan or distributions under it.
As noted earlier, we directed Wetterau to take its priority dispute with the creditor banks to the Kentucky court system. Wetterau followed that directive and now merely seeks to press its claim against the sole owner of Sav-On Food Centers, McCoy Management. It seems to this court that it would be a violation of fundamental principles of justice to prohibit a creditor from asserting a facially valid claim, due only to a minor technical error of counsel, which was mainly caused by that creditor's obedient compliance with a ruling from this court.
Accordingly, we find that Wetterau's motion to set aside an agreed order constituted an "informal proof of claim" and grant the creditor leave to file an amendment, within 30 days of the date of this opinion, which will more closely conform with the formalities of a proof of claim required by rule 3001(a).