Filing a Proof of Claim in a US Bankruptcy

A proof of claim is a creditor’s written statement, filed in a bankruptcy case for purposes of showing the basis and amount of the creditor’s claim against the debtor. Although the filing of a proof of claim is permissive, among the reasons for doing so are to

share in any distribution of the estate’s assets,
make others aware of claims against the estate,
make the debtor aware of claims against the estate,
vote for the election of a trustee in cases under chapters 7 or 11,
establish claimant’s entitlement to receive notices from the court or the parties relating to the bankruptcy case, and
participate in and vote for a Plan of Reorganization.

Certain creditors do not have to file proofs of claim to participate in a bankruptcy case. For example, lien holders and other secured creditors do not have to file a proof of claim in order to have their liens preserved in a bankruptcy case. In addition, in chapter 11 cases, claims and interests listed in the schedules filed by the debtor are deemed to be allowed unless such claims or interests are listed on the schedules as being disputed, contingent, or unliquidated. Nonetheless, it is generally preferable to file a proof of claim to assure the creditor’s claim is treated in an amount and on the basis desired. Moreover, in the event a chapter 11 case is converted to a case under chapter 7, 12, or 13, a proof of claim must be filed in order for the claim to be allowed. As such, it may be more prudent to file the claim at the outset of the chapter 11 case and avoid the administrative follow-up necessary to assure that the claim is honored in the event of a conversion.

By filing a proof of claim, a party submits itself to the jurisdiction of the Bankruptcy Court. Such filing invokes certain protections, responsibilities, and rules prescribed by the United States Bankruptcy Code (the “Bankruptcy Code”) and the Federal Rules of Bankruptcy Procedure. Most important, however, a properly executed and filed proof of claim is prima facie evidence of a claim or interest. Once filed, a proof of claim is deemed allowed, subject only to the sustained objection of the debtor or any other party able to object.

In most instances, a proof of claim will be filed by a creditor or the creditor’s authorized agent, which may include the creditor’s counsel or its authorized representative(s). In addition, parties authorized to file a proof of claim on behalf of a creditor include the debtor, a trustee, a guarantor, a surety, an endorser, or other co-debtor. Generally, a claim filed by the creditor will supersede any claim filed by any of these additional parties.

A proof of claim is required to conform substantially with the approved official form. The basic information contained in the official form includes

identification of the debtor and its bankruptcy case number,
identification of the creditor and the mailing address for receipt of notices, whether or not the claim is filed as an original claim or an amended claim,
the amount of the claim,
the basis for the claim, and
the type of claim.

Furthermore, the proof of claim should include as an attachment any supporting documentation, particularly in situations involving secured claims. In an effort to sustain the veracity of claims, a proof of claim must be filed with the original signature of the creditor, and is subject to criminal fines or imprisonment for the presentation of false claims. As a practical matter, it is recommended that when filing a proof of claim, a copy of same, along with a pre-addressed, postage paid envelope, be provided so a date-stamped copy of the proof of claim can be maintained in the creditor’s records. Moreover, special attention must be paid to any filing procedures prescribed by the Bankruptcy Court. In larger cases, these procedures set forth the place of filing (i.e., with the Bankruptcy Court and/or claims agent) as well as the form of filing. For example, in jointly administered cases, the creditor may be able to file a proof of claim in just one case or may be required to file claims against each individual debtor.

In light of the relatively liberal policy in favor of allowing amendments to claims, it is imperative that the original proof of claim be filed in a timely manner. Generally, in chapter 7, 12, and 13 cases, the deadline for filing proofs of claim is 90 days after the first date scheduled (not actually held) for the meeting of creditors held pursuant to Section 341 of the Bankruptcy Code (often referred to as the “341 Meeting”). Filing claims outside of this 90 day period is prohibited unless the claim fits within certain limited exceptions. Due to the large number of chapter 7 cases ultimately determined to be “no asset cases,” creditors are often advised not to file proofs of claim unless further instructed to do so. However, under chapters 9 and 11, the filing must take place within the time prescribed. In a typical chapter 9 or 11 case, the debtor will make a motion to the Bankruptcy Court seeking the establishment of bar date for filing proofs of claim. Although this bar date is generally a firm deadline, in chapter 11 cases, tardy claims may be allowed if a court determines the late filing was the result of “excusable neglect.” It should be noted, however, that this limited exception, which is based upon factual findings, is not liberally granted. As a result, the timely filing of a proof of claim is critical.

Although relatively simple to accomplish, the filing of a proof of claim is a crucial step that must be undertaken in a timely and thoughtful manner to assure a creditor’s participation in distributions made in a bankruptcy case, as well as in the proceedings in general.

Web design and CMS by Algonquin Studios.