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Full title: Reply by Debtor 1 Minnesota School of Business, Inc. to 435 Motion objecting to claim. An affidavit or verification. (Andre, Samuel) (Entered: 06/11/2021)

Document posted on Jun 10, 2021 in the bankruptcy, 11 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

Based on the Debtors’ books and records, the Claimant’s enrollment ended in September 2016 after the Claimant withdrew from the Debtors, one year before the Debtors’ closure. Nowhere within the Claim or Response does the Claimant identify how the Debtors are legally obligated to the Claimant for any lost wages based on their closure or the Claimant’s continued education, nor does the Claimant articulate any viable theory for why the Debtors are liable for the Claimant’s medical expenses.Ignoring the fact that the Claimant failed to articulate a valid claim or provide necessary supporting documentation, the Claimant waived any available cause of action for damages based on the Debtors’ closure by failing to assert any such claim within twelve months after their enrollment with the Debtors ended or from the Debtors’ closure.When submitted in a form that does not comply with applicable Bankruptcy Rules, a proof of claim does not constitute prima facie evidence of the validity of the claim amount, and therefore the burden remains on the creditor to prove the claim is valid. Because these are the amounts claimed by the Claimant against the Debtors and the Claimant utterly fails to provide any supporting documentation illustrating the Claimant’s entitlement to these amounts (or excuse for why such documents are unavailable), their Claim fails to conform to Official For 410 and the bankruptcy rules and therefore lacks prima facie validity.

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA Jointly Administered Under Case No. 19-33629 (WJF) In re: Minnesota School of Business, Inc., Case No.: 19-33629 Globe University, Inc., Case No.: 19-33632 Chapter 11 Cases Debtors. REPLY IN SUPPORT OF MOTION OBJECTING TO CLAIM (CLAIM NO. 40, CASE NO. 19-33629) Minnesota School of Business, Inc. and Globe University, Inc. (the “Debtors”) hereby file this reply in support of their Motion Objecting to Claim (Claim No. 40, Case No. 19-33629) [Dkt. No. 435] (the “Motion”). The supporting facts are set forth in the verified motion (the “Motion”). All capitalized terms herein have the meaning ascribed to them in the Motion. For the reasons set forth below, the Claim should be disallowed in its entirety. BACKGROUND The Debtors refer to the facts stated in the Motion. Additionally, on May 26, 2021, the Debtors received a letter response from the Claimant (the “Response”). A true and correct copy of the letter is attached hereto as Exhibit A. Within the Response, the Claimant states that their Claim, submitted on Official Form 410, is based on their enrollment within the Debtors’ “Nursing Program”. (Ex. A at 2.) Based on the Debtors’ books and records, the Claimant’s enrollment ended in September 2016 after the Claimant withdrew from the Debtors, one year before the Debtors’ closure. The Claimant, however, still allegedly seeks damages in the form of lost wages plus interest arising from the Claimant’s delayed attainment of their degree because of the Debtors’ closure “due to the Criminal Justice Program case” and the Claimant’s subsequent

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requirement to complete their nursing degree at other institutions, as well as missed work due to a flare up of the Claimant’s Crohn’s Disease based on stress occurring due to the Claimant’s requirement to complete their degree at those other institutions. (Id. at 2-3.) The Claimant additionally seeks medical expenses related to their Crohn’s Disease flare up. (Id. at 3.) The Response includes no supporting documentation or evidence corroborating Claimant’s allegations nor does it assert any legal basis through which the Debtors may be liable. ARGUMENT A. The Claim Does Not Assert a Valid Claim Against the Debtors. The Debtors originally objected to the allowance of the Claim because the Claimant failed to assert a valid basis for a claim against the Debtors within the Claim. The Claimant’s Response suffers from the same fate. The Claimant continues to fail to provide any legal basis pursuant to which they are entitled to the damages described in the Claim and Response. Nowhere within the Claim or Response does the Claimant identify how the Debtors are legally obligated to the Claimant for any lost wages based on their closure or the Claimant’s continued education, nor does the Claimant articulate any viable theory for why the Debtors are liable for the Claimant’s medical expenses. The Claimant only relies on the general claim that they were allegedly harmed by the Debtor’s closure (despite the fact that the Claimant withdrew a year before the Debtors ceased operating). The Claimant points to no contract that the Debtors breached, duty that the Debtors violated with respect to the Claimant, or any other legal basis or theory on which they base their Claim. Accordingly, the Claimant fails to assert a valid claim and the Claim should be disallowed.

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B. The Claimant Waived Causes of Action Under Their Enrollment Agreement.1 Ignoring the fact that the Claimant failed to articulate a valid claim or provide necessary supporting documentation, the Claimant waived any available cause of action for damages based on the Debtors’ closure by failing to assert any such claim within twelve months after their enrollment with the Debtors ended or from the Debtors’ closure. Under their enrollment agreement with the Debtors, the Claimant agreed to waive any claims they had against the Debtors if not asserted via arbitration within twelve months of the date that the claim arose. (Dkt. No. 435 at 7.) The Claimant’s enrollment with the Debtors ended in September 2016 and the Debtors closed in 2017. The Claimant failed to assert any claims within twelve months of either date. By failing to assert a claim in a timely manner, the Claimant waived any available claims pursuant to the enrollment agreement. See, e.g., Woodland Dev. Corp. v. City of Andover, No. A05-1636, 2006 WL 1644039, at *3 (Minn. Ct. App. June 13, 2006) (finding contractual waiver of claims to be enforceable and not against public policy where unambiguous); Suburban Nat. Bank v. Morlock, No. C0-88-2154, 1989 WL 32488, at *2 (Minn. Ct. App. Apr. 11, 1989) (finding waiver of defenses provision was enforceable); see also Hobby Lobby Stores, Inc. v. Cole, 287 So. 3d 1272 (Fla. Dist. Ct. App. 2020) (finding arbitration agreement containing term limiting statute of limitations to one year for claims lacking statutory statute of limitations was enforceable). C. The Claim Is Not Entitled to Prima Facie Validity for Failure to Attach Necessary Documentation. Even if the Claim articulates a claim against the Debtors, the Claim is not entitled to a 1 Because the Claim and Response fail to assert any cause of action against the Debtors, it is unclear what statute of limitations or other legal limitations or defenses may apply to the Claim. The Debtors therefore reserve all rights to assert any and all defenses to the Claim as may arise as part of this claim objection process and/or related to the Motion.

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presumption of prima facie validity because it and the subsequent Response fail to attach supporting documentation or information that explains the basis for the amount claimed against the Debtors. As discussed within the Motion, Bankruptcy Rule 3001(a) requires that a filed proof of claim must “conform substantially to the appropriate Official Form.” Fed. R. Bankr. P. 3001(a). The appropriate Official Form, Official Form 410, requires that the claimant “[a]ttach redacted copies of any documents that support the claim, such as promissory notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments, mortgages, and security agreements.” Official Form 410. If such documents are not available, the claimant must explain as much in an attachment to the proof of claim. Id. If a proof of claim is submitted that does not conform substantially to Official Form 410 and its requirements, the proof of claim does not comply with Bankruptcy Rule 3001(a). See Fed. R. Bankr. P. 3001(a). When submitted in a form that does not comply with applicable Bankruptcy Rules, a proof of claim does not constitute prima facie evidence of the validity of the claim amount, and therefore the burden remains on the creditor to prove the claim is valid. AFY v. N. Plains Feeders, Inc., 482 B.R. 830, 839–40 (D. Neb. 2012) (quoting In re Porter, 374 B.R. 471, 483 (Bankr. D. Conn. 2007); see Caplan v. B-Line (In re Kirkland), 572 F.3d 838, 840–41 (10th Cir. 2009); In re Duke and King Acquisition Corp., No. 10-38652, Dkt. No. 571 (Bankr. D. Minn. Jul. 2, 2012) (granting liquidating trust’s objections based upon lack of adequate supporting documentation). If the claimant fails to identify any evidence supporting its claim following objection, the proof of claim may properly be denied in its entirety. AFY, 374 B.R. at 845; see also In re Duke and King Acquisition Corp., Dkt. No. 571. Here, the Claim is not entitled to a presumption of prima facie validity because it fails to attach any supporting documentation or information that explains the basis for the amount

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claimed against the Debtors or corroborates the amounts. With the Claim, the Claimant submitted only two tuition statements from Rasmussen College, Inc.; the Response includes no supporting documentation. The Claimant failed to submit with either the Claim or Response any documentation of the Claimant’s damages from lost wages due either to the Debtors’ closure or their Crohn’s Disease flare up, or documentation of their medical expenses related to their Crohn’s Disease flare up. Because these are the amounts claimed by the Claimant against the Debtors and the Claimant utterly fails to provide any supporting documentation illustrating the Claimant’s entitlement to these amounts (or excuse for why such documents are unavailable), their Claim fails to conform to Official For 410 and the bankruptcy rules and therefore lacks prima facie validity. See In re Moore & Moore Trucking, LLC, No. 20-10925, 2020 WL 6122753, at *3 (Bankr. E.D. La. Sept. 14, 2020) (stating a proof of claim without supporting documentation does not receive prima facie validity); In re Brown, 603 B.R. 786, 792 (Bankr. D.S.C. 2019) (same). By now failing to supply any such support in their Response, their final filing in support of the Claim, the Claimant ultimately failed to meet their burden and the Claim should be disallowed in its entirety. CONCLUSION For all of the foregoing reasons, the Debtors respectfully request that the Court grant the relief requested in the Motion.

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Dated: June 11, 2021 /e/ Samuel M. Andre Clinton E. Cutler (#0158094) James C. Brand (#387362) Samuel M. Andre (#0399669) FREDRIKSON & BYRON, P.A. 200 South Sixth Street Suite 4000 Minneapolis, MN 55402-1425 (612) 492-7000 ATTORNEYS FOR THE DEBTORS

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EXHIBIT A

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