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The Security National Bank of Sioux City, IA v. Vera T. Welte Testamentary Trust

Summarizing by Amir Shachmurove

(State of North Dakota, et al. v. Bala ), In re: Racing Services, Inc.

Case Type:
Case Status:
No. 21-6007 (8th Circuit, Jan 07,2022) Not Published
The BAP affirmed the bankruptcy court's ruling sustaining the trustee's objections to: (1) the state's claim that a nonprofit, not the debtor, should recover the remaining tax settlement funds, and (2) the state's contract claim because it could not be amended to assert new evidence when such evidence was available 14 years earlier and regardless, the state failed to prove breach of contract claim.
Procedural context:
This case returned to the BAP for the second time. After 14 years into the case, the state filed a proof of claim to share settlements funds with a nonprofit in its parens patriae authority. At the close of an evidentiary hearing for its claim, it moved orally to amend its claim for breach of contract. Trustee objected. The court denied the state's claim and also found that a nonprofit's claim was barred by laches. On the first appeal, the BAP affirmed the court's ruling on the state's claim but reversed and remanded the nonprofit's claim. On remand, the state again filed a new claim to include the breach of contract claim to which the Trustee objected again. The bankruptcy court denied the entirety of the state's claim. This appeal followed.
This case spans over 17 years. The debtor, a licensed provider of pari-mutuel wagering system filed for chapter 11 that was converted to a 7. Ten years into the case, the district court ruled that the state was not authorized to collect taxes from the debtor and the state settled with the debtor's estate to pay $15 million. When creditors asserted claims for the settlement funds, the state did not oppose or file a claim on behalf of a non-profit. 14 years later, it filed a new proof of claim.
Shodeen, Dow, and Ridgway

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