The Most Common Problem Associated
With Filing a Proof of Claim in a Chapter 11 Bankruptcy
By Steven Kozack.
Question: One reader asked: What is the most common problem associated
with filing a proof of claim in a Chapter 11 bankruptcy?
Answer. I believe the most serious problem involves failing to
file a proof of claim by the Bar Date. Filing of a proof of claim
is essential to preserving the right of the holder of the claim
to participate in any dividend distribution from the bankruptcy
estate. In a chapter 11 case, if the debtor schedules the creditor's
claim other than as unliquidated, contingent or disputed, the claim
is deemed filed by the creditor in the amount of the scheduled
claim. However, if the claim is scheduled as contingent, unliquidated,
or disputed, the creditor must file a proof of claim.
As a practical matter, most creditors should file a proof of claim
immediately upon receiving notice of the bankruptcy.
One of the more common problems involves the creditor providing
insufficient documentation from which the validity of the claim
can be determined. This usually results from a failure to attach
copies of documents evidencing the claim and/or the security interest
to the proof of claim when it is filed.
However, the most embarrassing mistake that can be made by a creditor
remains failing to file a proof of claim at all, or failing to
file before the Bar Date. In this scenario, there is little that
the credit manager / credit department can offer to try to justify
this oversight. Unfortunately, the fact that a claim was not filed
before the bar date may limit [or in some instances prevent] the
creditor company from receiving a payout under the debtor's Plan
Thanks for asking!! Steven Kozack
Reprinted with permission from the Covering
Credit Newsletter 02/07/03 Edition © 2003 All Rights