CHARLOTTE, N.C. (Legal Newsline) – On Monday, bankruptcy Judge George Hodges ruled that any unfiled claims after the approved bar date in the Garlock Sealing Technologies bankruptcy will be disallowed.
The debtors in the case – which include Garlock, Garrison Litigation Management Group and The Anchor Packing Company – requested a bar date on April 28 in the United States Bankruptcy Court for the Western District of North Carolina.
A bar date in a bankruptcy proceeding is a deadline for asbestos victims or companies to make their claims against Garlock or Garrison, which is intended to prevent surprise claims from arising.
Hodges held a hearing on July 9 to discuss the motion, during which he granted the request and established Sept. 30 as the bar date.
As a result, a bar date notice was provided to the parties involved, which notified holders of settled asbestos claims that they were required to file a proof of claim for their settled asbestos claims against either debtor.
As of the bar date, more than 2,000 proofs of claim forms asserting settled asbestos claims have been filed.
However, holders of the unfiled claims failed to file proofs of claim forms asserting the claims on time.
The debtors filed a motion to disallow any claims that were filed without the required proof of claim forms before the settled asbestos claims bar date on Sept. 30.
“Because the holders of the unfiled claims have failed to file a proof of claim before the bar date, their claims should be disallowed as settled asbestos claims,” the debtors wrote.
Hodges granted the request stating that “any holder of a disallowed unfiled claim, may assert his or her claim as an unsettled and unliquidated asbestos claim under a plan of reorganization or otherwise, subject to all defenses debtors may have to such claim and any procedures or requirements applicable to such claims imposed by this court or otherwise.”
The debtors’ motions were directed against the following firms:
-Belluck & Fox LLP;
-Simmons, Browder, Gianaris, Angelides & Barnerd LLC;
-Bifferato Gentilotti LLC;
-Simon Grenstone Panatier Bartlett PC; and
-Waters & Kraus LLP.
The debtors claim that disallowing late claims is “essential” to their ongoing reorganization efforts.
They argue that if the court allows the untimely claims, it would undermine their objective “by running the risk of opening up the floodgates to other late-filed claims.”
In their request, the debtors explain there is a “substantial uncertainty” regarding the number of settled Garlock claims; and in their amended plan, the debtors intend on paying all claims in full, which can be difficult to prepare for when the number of claims are unknown.
“Requiring that the settled asbestos claims be filed by the settled asbestos claims bar date is the first step in the process that will enable the number and amount of such claims to be finally fixed and then paid in full on the effective date,” the motion states.
The debtors add that a bar date acts as a statute of limitations for the filing process and excludes late claims “in order to provide the debtor and its creditors with finality to the claims process and permit the debtor to make swift distributions under the plan.”
They argue that by failing to file the required documents on time, holders of the unfiled claims have “opted out of the claims allowance process.”
In their plan of reorganization, the debtors explain that claimants filing an untimely manner would have to file unsettled, unliquidated claims and would not be able to vote as a settled claimant. Instead, they would have to vote as a “Garlock asbestos claimant.”
Because courts in the past have “routinely” disallowed claims that are not filed by the appropriate time, the debtors believe it is the proper action to take in this case.
“Debtors need a declaration that the claims are disallowed as settled asbestos claims, so that they can move this process forward, focus their attention on the claims that were timely filed, and thus ensure that the total number and amount of settled asbestos claims are established fully and finally by the effective date, permitting payment in full,” the debtors wrote.
From Legal Newsline: Reach Heather Isringhausen Gvillo at firstname.lastname@example.org