Reuter v. Cutcliff (In re Reuter)
- Citation:
- No. 10-6043 (8th Cir. B.A.P. January 31, 2011).
- Tag(s):
-
- Ruling:
- Affirmed. Each point of error alleged by the debtor-appellant was rejected by the B.A.P. with a minimum of analysis or discussion—in each case, the appellant’s arguments were rejected as being either contrary either to established precedent or inconsistent with the evidence adduced at trial. One point of interest in this decision, however, concerns the allowance of claims unsupported by a proof of claim. The debtor alleged that, because the plaintiffs had not filed proofs of claim in the chapter 11 case that would have entitled the claims to a presumption of validity under Fed. R. Bankr. P. 3001(f). The bankruptcy court held, however, that where the plan “deemed” each of the unliquidated and disputed claims as allowed in specific amounts and treated under the plan, the debtor had effectively conceded the validity of the claims as a prerequisite to the court’s determination of their validity.
- Procedural context:
- A group of creditors objected to confirmation of the debtor’s chapter 11 plan, moved to dismiss the case and filed an adversary proceeding seeking to have certain claims declared nondischargeable under 11 U.S.C. § 523(a). At the conclusion of trial, the bankruptcy court entered orders denying confirmation of the plan and dismissing the chapter 11 case and entered judgment declaring the claims nondischargeable under § 523(a)(2(A) (false representation and false pretense) and § 523(a)(19) (fraud and securities law violations). The debtor appealed these decisions to the Bankruptcy Appellate Panel.
- Facts:
- Reuter was a founding member of a financial services company in Missouri that handled mortgages, insurance and investments for its clients. In 2005, the investors in Reuter’s company lost their entire investments and filed a civil suit against the company and Reuter, among others, for, among other things, selling unregistered securities and misrepresenting the nature of certain financial instruments sold by the company. A second civil suit was filed against the company and Reuter alleging additional securities law and RICO Act violations. Thereafter, Reuter filed chapter 11. The debtor’s schedules listed the plaintiffs as holding contingent, unliquidated and disputed claims of $2.9 million against the estate; however, the plaintiffs did not file proofs of claim in the case.
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