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Bankruptcy Brief - April 26, 2010

Within a few days after a debtor files a bankruptcy petition, the Clerk of the Bankruptcy Court sends a written notice to all creditors identified by the debtor.  The notice informs the creditor of the bankruptcy filing and provides details including instructions about filing a proof of claim.  In the bankruptcy context, a claim is a right to payment.  A form for the creditor to complete to state its claim and mail to the court is enclosed with the notice.

The one page proof of claim form requests that the creditor describe its claim against the debtor's bankruptcy estate, including secured or unsecured status, list the dollar amount and attach papers supporting the claim.  If a claim is based on a writing, a creditor should file a copy of the writing with the proof of claim form.  In a Chapter 7 case, the notice often indicates it is a "no-asset" case, so filing a proof of claim is not required unless there is a subsequent notice indicating unexpected assets were found. 

Sometimes it is not necessary to file a proof of claim.  Unless there is a notice or court order directing otherwise, filing a proof of claim is not necessary if the creditor’s claim is secured and "scheduled" (or listed) by the debtor (1) in the exact amount the creditor claims and (2) is listed by the debtor as neither "contingent", "disputed" nor "unliquidated". 

The notice from the Clerk does not disclose how the debtor has listed a creditor’s claim.  Creditors may learn the debtor's proposed treatment of their claims by referring to the schedules, which the debtor may not immediately file.  All filings in a bankruptcy case, including schedules, are filed electronically and publically available via the internet through a system called PACER.

The quickest, cheapest and most prudent way to respond to the initial bankruptcy notice is simply to complete and send the proof of claim form to the address listed for filing the proof of claim.  The claim form must be signed by the creditor or the creditor’s agent. 

In certain circumstances, however, the best course of action for a creditor may be to not file a proof of claim.  A creditor submits to the jurisdiction of the Bankruptcy Court by filing a proof of claim.  Additionally, courts have determined a creditor that files a proof of claim in a bankruptcy case waives the right to a jury trial.  Therefore, a creditor may decide not to file a proof of claim if the creditor expects the debtor or trustee will sue the creditor for any reason, including, for example, avoidance and recovery of a preferential or alleged fraudulent transfer. This way, the creditor will preserve its right to seek a jury trial. 

The deadline for filing a proof of claim, the need to file a proof of claim and the repercussions of failing to file a proof of claim vary depending on the chapter of the Bankruptcy Code under which the case is filed and the nature of the claim.  Creditors are well advised to consult counsel for guidance in understanding the sections of the Bankruptcy Code and related Bankruptcy Rules that determine whether the creditor may receive a distribution from the bankruptcy estate.

If you have questions regarding a proof of claim, please contact any of the attorneys listed on Greenebaum’s Bankruptcy and Workout Team.

To learn more about Richard Boydston and his practice, please visit his profile.

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About Greenebaum Doll & McDonald PLLC
Greenebaum Doll & McDonald PLLC is a widely-respected business law firm with approximately 170 professionals in five offices, serving local, national and international clients in virtually every industry. A forward-thinking business law firm, Greenebaum is committed to the practice of Breakthrough Law®. 

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  • John W. Ames
    Senior Partner

    John is past Chairman of the Firm's Bankruptcy and Insolvency Team. He works exclusively in the business reorganization process, both in Chapter 11s and state law work outs. He represents debtors, as well as creditors, both secured ...

  • Richard  Boydston

    Mr. Boydston practices in the areas of bankruptcy (including representation of creditors, debtors and of committees and bankruptcy litigation), receiverships, debtor/creditor relations, and commercial transactions and ...



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