If you own or operate a business, you have likely received a notice of a bankruptcy case filing from a customer or client who has owed you money. As a creditor, you have certain rights, including the ability to file a proof of claim. This article raises some issues to consider if you receive such a notice.
Federal Rule of Bankruptcy Procedure 3001(a) defines a proof of claim as a written statement setting forth a credi- tor’s claim. The form on which to file a claim is an official form, which appears deceivingly simple. The failure to complete a proof of claim properly can result in serious consequences, including the disallowance of your claim, which in turn, prevents your ability to share in any distri- bution that may ultimately be made from the bankruptcy estate that is comprised of all property in which the debtor has an interest at the time of the bankruptcy filing.
In some cases, a creditor is not required to file a proof of claim. In other cases, it may not be in a creditor’s best interest to file a proof of claim. Deciding whether to file a claim at all is not to be taken lightly. Once the decision is made to file a proof of claim, you should first verify the bar date. The bar date is the last date by which the court must receive the proof of claim. If a claim is not filed by the bar date, the proof of claim will not be timely, and you will be required to show excusable neglect in order to have your claim allowed. Demonstrating excusable neglect is difficult so it is important to make sure your claim is timely filed.
Once you establish that you haven’t missed the bar date and you are using the proper proof of claim form, you then need to properly assert your claim by accurately fill- ing in the information about your claim and attaching the required documentation. A proof of claim identifies the amount you believe you are owed by the debtor in bank- ruptcy and the status (secured, priority, or unsecured) that you believe the claim should have in the bankruptcy case. After the expiration of the bar date, you may not be permitted to amend your proof of claim so it is important to take the time to gather adequate support for your claim and properly prepare the official form.
A proof of claim provides the name and address where no- tices, objections and other documents relating to the proof of claim should be sent so it is important to provide accurate information and to update the information with the court and the debtor if the contact information changes. You have a limited period of time to respond to objections so prompt notice of any filings related to your claim is important.
While the filing of a proof of claim does not guarantee you will receive a distribution of any amount from the bankruptcy estate, it does put your foot in the ring in the event a distribution is possible. Filing a proof of claim is an important step toward collecting money you may be owed, and in consultation with bankruptcy counsel, you are more likely to have your claim allowed and avoid the time and expense of dealing with an objection to your claim. That could improve your business’s bottom line.