Donald A. Workman, Christopher J. Giaimo and Adam J. Smith (all DC) authored “Excuse Or No, A Late Claim May Cost You,” which appeared on Law360.com on Nov. 30.
In the article, the authors cited the significance of a recent ruling in the Southern District of New York—where a judge “recently disallowed seven proofs of claim that had been filed late in the Lehman Brothers Holdings Inc. bankruptcies.”
As the authors explained, the judge “held that the reasons cited by the parties for the late filing did not rise to the level of ‘excusable neglect,’ and he was thus disallowing their claims.” The article went on to explain the factors usually applied by bankruptcy courts when determining excusable neglect. In this instance, the court held that mistakes made by counsel didn’t constitute excusable neglect. Further, “The court also ruled that creditors who failed to carry out proper diligence in discovering or protecting their rights could not assert excusable neglect.”
While other courts are not as strict when applying the four factors, the authors cautioned readers that “Claim filing can be treacherous. If the claim was not timely filed, the standards of determining excusable neglect vary significantly by jurisdiction. There are certain steps that a creditor should take to protect its interests.”