Many creditors are unaware that a special rule applies in Chapter 11 bankruptcy cases that may eliminate the need for them to file a proof of claim.  Section 1111(a) of the Bankruptcy Code (applicable in all Chapter 11 cases) provides that a proof of claim is “deemed filed” for any claim that appears in the debtor’s schedules of liabilities, except a claim or interest that is scheduled as “disputed, contingent or unliquidated.” Therefore, if a debtor lists you on its schedules as a creditor with a claim in an amount you agree is correct, and correctly classifies the claim (as secured or unsecured, priority or non-priority), then the “deemed filed” rule eliminates the need to file a proof of claim unless the debtor has checked the box beside your claim indicating the claim is “disputed, contingent or unliquidated.” 

If the debtor labels your claim as “disputed, contingent or unliquidated,” then you must file a proof of claim by the bar date in order to preserve your right to participate in any payment distribution in the bankruptcy case.  In the event you have a claim that you agree is disputed (in amount or otherwise) or contingent (upon the occurrence of some triggering event or condition) or unliquidated (because the amount is not yet subject to ready calculation), you should file a claim by the bar date including as much information as possible to protect your rights.  Subject to some caveats, claims can be amended after the bar date to clarify or specify the amount or other details.

On the other hand, if the debtor does not label your claim as “disputed, contingent or unliquidated,” but lists your claim in an incorrect amount or classification, you need to make a judgment call whether the discrepancy is material enough to justify the effort to file a proof of claim with the information you deem correct. 

How will you know how the debtor has scheduled your claim?  Many times when you receive a notice of the bar date with a proof of claim form, the notice will state how your claim was scheduled.  Some bankruptcy courts have a local rule that requires a Chapter 11 debtor to serve special notice on creditors whose claims are scheduled as disputed, contingent or unliquidated so they are aware of the need to file a claim, and if such notice is not given, the court will treat the claim as filed (with an opportunity to amend) despite the debtor’s notation of the claim as disputed, contingent or unliquidated.  If you or your bankruptcy attorney have access to PACER, you can pull up the debtor’s schedules via the internet and see how your claim was scheduled.

If you have any questions regarding this article, please contact Lisa Sumner at 919.783.2869 or lsumner@poynerspruill.com. 

This electronic publication is published by Poyner & Spruill LLP to provide general information about significant legal developments. Because the facts in each situation vary, the legal precedents noted herein may not be applicable to individual circumstances.