- Case Type:
- Case Status:
- 19-10461 (5th Circuit, Mar 20,2020) Not Published
- Affirmed lower courts' decision to disallow a late-filed claim by a Korean-based creditor. Burden of showing excusable neglect was not met by arguments and evidence of an English-Korean language barrier, particularly given the record demonstrating that the creditor sent an e-mail to the claims agent 60 days before the bar date asking for more information about the bankruptcy case. Court also rejected arguments that service of the bar date notice was improper under the Hague Convention because the arguments were not properly preserved for appeal.
- Procedural context:
- Appeal from the Northern District of Texas, which affirmed the order of the Bankruptcy Court, disallowing a late-filed claim.
- The debtor filed its bankruptcy petition on October 27, 2016. The claims bar date was set for March 7, 2017. The debtor served notice of the bar date in November 2016 -- at least 90 days before the bar date. Appellant (Jinil) was a creditor based in South Korea. It received the bar date notice. On January 4, 2017, its accounting manager followed up with the debtor's claims agent but failed to file a proof of claim. Over a year later, the son of Jinil's principal followed up on the status of the bankruptcy and filed a proof of claim on March 6, 2018--nearly one year after the bar date. The claim was based on a guarantee the debtor had signed to guarantee payment to Jinil in the event that the debtor's supplier (WooSung) failed to pay. WooSung filed its own bankruptcy in South Korea months before the debtor's chapter 11 filing in America and did not pay Jinil amounts it owed. WooSung filed a $2 million proof of claim in the debtor's case, but the claim was disallowed when the debtor filed an objection and WooSung failed to respond. Jinil argued that it was expecting to receive payment from WooSung upon its receive of funds from the debtor. It argued that the Court's ruling to disallow WooSung's claim left it with no alternative other than to file its own claim after the bar date. Jinil also argued that the language barrier prevented it from comprehending the impact of not filing its own claim sooner. The bankruptcy court considered these arguments and sustained the debtor's objection, concluding that Jinil could not overcome its burden of showing excusable neglect, particular given that the principal for Jinil had been educated in America and could read and write English well enough to be on notice of the need to file a claim or at least follow up further. Indeed, the evidence indicated that Jinil did take steps to learn more about the process, but decided not to follow up to the point of filing a claim. Thus, the Court was unpersuaded that the language barrier was a primary reason for the delay. Jinil raised arguments that the bar date notice did not comply with the Hague Convention's foreign service requirements, but the issue was raised for the first time in oral arguments before the bankruptcy court. On appeal, the Fifth Circuit held that this issue was not properly preserved for appeal and, thus, waived.
- Clement, Higginson, Engelhardt
3121 in the system
1 Being Processed