South-Western Legal Studies in Business

One Day Late; Many Dollars Short
Description Appeals court held that a claim against a bankrupt company that was filed one day late did not have to be accepted by the bankruptcy court. The claimant knew of the filing deadline and had no good excuse for not filing before the deadline, so the claim is lost.
Topic Bankruptcy
Key Words Claimant; Late Filing; Neglect
C A S E   S U M M A R Y
Facts Kmart filed for bankruptcy relief on January 22, 2002. In March, the bankruptcy court ordered that all claims against Kmart must be filed by July 31, 2002. Simmons suffered a fall in a Kmart store in December, 2001. She intended to sue for $750,000. Her attorney was aware of the July 31 filing deadline but did not file the claim until August 1. The bankruptcy court rejected the claim as having been filed too late. The district court upheld that decision. Simmons appealed.

Affirmed. When bankruptcy courts decide whether to grant a motion to have a late-filed proof of claim deemed timely, they evaluate four factors: 1) the danger of prejudice to the debtor; 2) the length of the delay and its potential impact on judicial proceedings, 3) the reason for the delay, including whether it was in the reasonable control of the claimant; and 4) whether the claimant acted in good faith. There was no excusable neglect in this case; Simmons and her attorney were aware of the deadline and failed to make it. Due process rights were not violated by the refusal of the court to accept the late filing.

Citation In re Kmart Corp., 381 F.3d 709 (7th Cir., 2004)

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