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Full title: Objection with Certificate of Service Filed by Official Committee of Unsecured Commercial Creditors (RE: (related document(s)927 Generic Motion filed by Creditor Committee Official Committee of Unsecured Creditors) Hearing scheduled for 7/22/2021 at 01:30 PM by SECTION A TeleConference Line: 1-888-684-8852 Access Code 9318283. (Robbins, William) (Entered: 07/15/2021)
Document posted on Jul 14, 2021 in the bankruptcy, 12 pages and 0 tables.
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the law governing a defense to a claim does not constitute “cause” to provide a blanket filing extension to certain potential claimants; (ii) an extension of the Sexual Abuse Claims Bar Date likely will lead to confusion; and (iii) potential Sexual Abuse3 claimants who may now wish to file claims already have the ability to individually request that an untimely claim be deemed timely. Additionally, Act 322 provides a three-year window for the filing of claims which had previously been time barred by application of the ten-year liberative prescriptive period in La. R.S. § 9:2800.9(A), thus negating the prescription defense previously applicable to such claims.The heart of the Tort Committee’s request relies upon Act 322, asserting that in light of the recent change to liberative prescription (and waiver of prescription as to previously time-barred claims for a period of three years) additional time should be granted to allow Sexual Abuse claimants to file claims.And, it appears that many Sexual Abuse claimants filed proofs of claim despite the possibility that prescription may be applicable.When viewed in balance, the Commercial Committee respectfully suggests the appropriate path is to deny the Motion, but without prejudice to the rights of individual claimants to file requests under Bankruptcy Rules 3003(c) and 9006(b) to have such claims deemed timely filed if such claimant can show excusable neglect.
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Document ContentsUNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF LOUISIANA IN RE: CASE NO. 20-10846 THE ROMAN CATHOLIC CHURCH OF THE ARCHDIOCESE OF SECTION “A” NEW ORLEANS Debtor1 CHAPTER 11 THE OFFICIAL COMMITTEE OF UNSECURED COMMERCIAL CREDITORS’ OBJECTION TO MOTION FOR ORDER REOPENING ABUSE CLAIMS BAR DATE FOR ADDITIONAL 60-DAY PERIOD [P-927] ______________________________________________________________________________ The Official Committee of Unsecured Commercial Creditors of The Roman Catholic Church of the Archdiocese of New Orleans (the “Commercial Committee”) appointed in the above-captioned chapter 11 bankruptcy case (the “Bankruptcy Case”) of The Roman Catholic Church of The Archdiocese of New Orleans (the “Archdiocese” or “Debtor”), by and through its undersigned counsel, respectfully submits this Objection (the “Objection”) to the Motion for Order Reopening Abuse Claims Bar Date for Additional 60-day Period [P- 927] (the “Motion”). In support thereof, the Commercial Committee respectfully represents as follows: PRELIMINARY STATEMENT 1. By its Motion, the Official Committee of Unsecured Creditors (the “Tort Committee”) seeks to: (1) re-open and extend the current Sexual Abuse Claims Bar Date,2 March 1, 2021, for an additional sixty (60) days; and (2) provide for notice of such extension if granted. The Commercial Committee opposes any further revision to the Bar Date because: (i) a change to 1 The last four digits of the Debtor’s federal tax identification number are 8966. The Debtor’s principal place of business is located at 7887 Walmsley Ave., New Orleans, LA 70125. 2 As that term is defined within the Order Fixing Time for Filing Proofs of Claim; Approving Proof of Claim Forms; Providing Confidentiality Protocols; and Approving Form and Manner of Notice [P-461] (the “Bar Date Order”).
1the law governing a defense to a claim does not constitute “cause” to provide a blanket filing extension to certain potential claimants; (ii) an extension of the Sexual Abuse Claims Bar Date likely will lead to confusion; and (iii) potential Sexual Abuse3 claimants who may now wish to file claims already have the ability to individually request that an untimely claim be deemed timely. FACTUAL BACKGROUND 2. On May 1, 2020 (the “Petition Date”), the Archdiocese filed a voluntary petition for relief under chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”), commencing the above captioned Bankruptcy Case. The Archdiocese continues to operate and maintain their non-profit organization and manage their properties as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 3. On July 1, 2020, the Archdiocese filed an ex parte motion [P-200] (the “Bar Date Motion”) seeking an order establishing September 29, 2020, at 5:00 p.m. as the Sexual Abuse Claims Bar Date and approval for the Archdiocese’s proposed process for giving notice of the Sexual Abuse Claims Bar Date and Confidentiality Protocol for filing proofs of claim regarding sexual abuse. 4. On July 3, 2020, the Tort Committee filed an objection to the Archdiocese’s Bar Date Motion [P- 202], asserting numerous objections to both the period within which claims were to be filed as well as notice and confidentiality procedures. 5. The Debtor and the Tort Committee heavily negotiated a resolution of the Bar Date Motion. After several hearing continuances relating to the Bar Date Motion, this Court entered the Bar Date Order on October 1, 2020. The Bar Date Order carefully fixed both the time periods within which different types of claimants would have to timely file proofs of claim, the method 3 As defined in the Bar Date Order.
2for filing such claims, and extensive notification procedures relating to promulgation of the various bar dates set forth therein. 6. Upon information and belief, the Debtor has expended significant resources providing notice required under the Bar Date Order and in promulgating the various bar dates set forth therein. Each of the bar dates, including the Sexual Abuse Claim Bar Date have now passed. 7. On June 14, 2021, Louisiana Governor John Bel Edwards signed into law H.B. 492, now referred to as Act 322. Act 322 relates to any “action against a person for sexual abuse of a minor, or for physical abuse of a minor resulting in permanent impairment or permanent physical injury or scarring.” Previously, such claims were subject to a liberative prescriptive period of ten years from the date a claimant attained the age of majority (18). See, La. R.S. § 9:2800.9(A) (original). Under the new law, however, such claims are subject to no liberative prescriptive period. Additionally, Act 322 provides a three-year window for the filing of claims which had previously been time barred by application of the ten-year liberative prescriptive period in La. R.S. § 9:2800.9(A), thus negating the prescription defense previously applicable to such claims. OBJECTION A. Act 322 Does not Constitute “Cause” for Blanket Filing Extension 8. Upon the filing of a bankruptcy case, an estate is created. See, 11 U.S.C. § 541(a). A bankruptcy estate is then administered and distributed to allowed claims in accordance with the provisions governing distribution under the applicable chapter under which the case was filed. To determine which claims against the estate should be entitled to distribution, the Bankruptcy Code and Bankruptcy Rules establish a claims allowance process consisting of both a temporal component (i.e., timeliness) and substantive component (i.e., merit).
39. The timeliness component of the claims allowance process exists in every case filed and is colloquially known as the “claims bar date” applicable to each particular case. See, e.g., F.R.B.P. 3002(c), 3003(c). Such “bar dates” serve as a critical threshold in determining whether claims are valid and should be “allowed” against the bankruptcy estate.4 Moreover, especially in complex chapter 11 settings, a claims bar date fixes the relative universe of claims by requiring that claims, if they are to be allowed, be filed by a date certain. At which point, the claims are subject to review, dispute and resolution through the claims allowance process determining the merit of the particular claim. See, e.g., 11 U.S.C. § 502. But overall, the possible extent of claims against the estate is fixed. 10. In this case, this Court fixed the Sexual Abuse Claims Bar Date as March 1, 2021.5 The Tort Committee now seeks to have the carefully crafted, heavily publicized bar date applicable to Sexual Abuse claims extended for an additional period. The heart of the Tort Committee’s request relies upon Act 322, asserting that in light of the recent change to liberative prescription (and waiver of prescription as to previously time-barred claims for a period of three years) additional time should be granted to allow Sexual Abuse claimants to file claims. 11. The Commercial Committee notes that the Tort Committee’s request is not limited to only those claimants who claims have been affected by this recent change in Louisiana law, but rather, the Tort Committee requests that any and all Sexual Abuse claimants be allowed additional time to file claims. As such, the requested relief appears overly broad in response to the limited change in law made by Act 322.6 4 Or, in a chapter 7 case, subordinated to other allowed timely filed claims. See, 11 U.S.C. § 726(a)(3). 5 P-461, ¶ 6. 6 The Commercial Committee does not agree that the recent changes to prescriptive applicability made by Act 322 are indeed applicable to claims made against the Debtor in this case. Rights, claims and privileges are generally reviewed based upon the law in effect on the date of the filing of the bankruptcy case, i.e., the petition date. See,
412. Under 11 U.S.C. § 101(5)(A), a “claim” is defined as a right to payment whether disputed, unliquidated, or contingent. Act 322 does not establish a new right or claim, previously unrecognizable at law or equity, or revive a previously extinguished “right to payment.” What Act 322 does is remove a defense (prescription) to an already existing type of claim. Prescription, as opposed to peremption, does not extinguish a claim. The claim, or right to payment, exists regardless of whether a liberative prescriptive period has passed. 13. Moreover, prescription is a defense personal to the defendant (i.e., the Debtor in this case) and may not be interposed by a court. See, La. Code Civ. Proc. Art. 927(B). Peremption, on the other hand, may be noticed by the Court on its own and a defendant need not specifically plead such as a defense. Id. The point being, claims for which a liberative prescriptive period have passed are still rights to payment. Rights which may ultimately be denied because a defendant chooses to interpose the liberative prescription defense, but rights to payment (or “Claims” as defined by the Bankruptcy Code) nonetheless. In contrast, a claim subject to peremption no longer exists, and as such, no right to payment (or “Claim”) exists. 14. Act 322 does not create new claims or remove a pre-existing bar to the assertion of claims. What Act 322 does is limit the applicability of a defense to such claim – a defense which can only be raised by the Debtor. Here, the Sexual Abuse Claims Bar Date passed on March 1, 2021. Nothing prevented Sexual Abuse claimants from filing claims, whether prescribed or not. Indeed, it appears from filings in this case that many, if not most, of the Sexual Abuse claims filed in this case may be facially prescribed.7 Act 322, if it applies at all (see, n.6, supra), at most generally, In re DLC, Ltd., 295 B.R. 593, 605 (B.A.P. 8th Cir. 2003) (“The date of the filing of the petition is important because it generally fixes the rights of the estate and other parties in interest.”). The Commercial Committee reserves all rights with regard to whether Act 322 has any application to the allowance of Sexual Abuse claims made against the Debtor. 7 The Tort Committee notes in its Motion that the Debtor has taken the position that most of the Sexual Abuse claims filed in this case to date appear to be facially prescribed. See, Motion [P-927], p. 5, ¶¶ 16-17. The Commercial
5eliminates a defense to the claim under 11 U.S.C. § 502(b)(1); it did not, however, lift a bar to the assertion of a claim. B. Extending the Bar Date Likely Will Cause Confusion and Unnecessary Additional Administrative Expense 15. As noted above, the Bar Date Order represented a heavily negotiated, carefully crafted and widely published order which balanced granting sufficient time for the Debtor to notify potential claimants with the need for finality to allow the case to progress as expeditiously as possible. The Debtor, it appears, expended significant resources promulgating notice of the Bar Date Order and relevant deadlines set for therein. This Court found that the notice provided under the Bar Date Order “fulfills the notice requirements of the Bankruptcy Rules and is reasonably calculated under the circumstances to apprise both known and unknown creditors of the Debtor and the need to file a proof of claim, consistent with the due process rights of all parties under the standards established in Mullane v. Central Hannover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652 (1950).”8 16. The Tort Committee’s request is likely to result in significant confusion on the part of creditors. The extensive publication efforts engaged in by the Debtor to date have likely imprinted the Sexual Abuse Claims Bar Date on the minds of the public at large and possible claimants. An additional extension with new notice has the potential effect of creating unnecessary claim filings by non-Sexual Abuse claimants and confusion over which date is the real deadline. Committee has not been provided access to any Sexual Abuse claims filed in this case due to several confidentiality and protective orders previously entered by the Court. The Commercial Committee is left to infer from the conduct and statements of the Debtor and the Tort Committee that at least some of the Sexual Abuse claims filed prior to the Sexual Abuse Claims Bar Date may have been subject to a liberative prescription defense. 8 P-461, ¶ 24.
617. Furthermore, by extending the Sexual Abuse Claims Bar Date, the Debtor will necessarily be required to expend further significant estate assets to provide the new notice and deal with the influx of newly filed claims. Extension of the Bar Date will have a demonstrable effect of delaying the progress of the case. Creditors who have already filed proofs of claim will face unnecessary delay to the ultimate resolution of their claims. Each additional month this case is pending will result in the Debtor’s estate incurring significant additional costs, thus depleting the assets potentially available for allowed claims. C. Potential Claimants Have the Ability to Have Untimely Claims Deemed Timely 18. The Commercial Committee notes that the Bankruptcy Rules already establish a process for a claimant to have a claim deemed timely, even if untimely filed. Rules 3003(c) and 9006(b) authorize this Court to enlarge the period of time within which a claimant may timely file a proof of claim in a chapter 11 case. See, Pioneer Inv. Servs. v. Brunswick Assocs, Ltd. P’ship., 507 U.S. 380, 113 S.Ct. 1489 (1993). A potential claimant may, under the “excusable neglect” standard, seek to have this Court deem a claim timely filed. 19. The Tort Committee’s request for a global enlargement of the Sexual Abuse Claims Bar Date would mean any Sexual Abuse claim filed prior to the to-be-extended deadline would be timely, regardless of whether the claimant could individually show excusable neglect. Perhaps believing that filing a claim would be a futile exercise could be grounds for “excusable neglect,” perhaps not. Perhaps other factors were at play in a given decision not to file a proof of claim before the extensively noticed deadline. This Court should decide each untimely filed claim on the merits of “excusable neglect” individually rather than imposing a blanket extension as requested by the Tort Committee.
7D. Other Courts Have Refused to Extend the Bar Date in Similar Circumstances 20. Several other church and mass tort cases have confronted the issue of whether to extend a bar date in response to a change in the law. For example, in The Diocese of Rochester,9 the Court denied the Committee’s Request for a blanket five-month extension of the claims bar date on the ground that the COVID-19 pandemic, combined with an extension of New York’s Child Victims Act, did not justify an extension of the bar date from August 13, 2020, to August 14, 2021.10 According to the Rochester Court, the noticing protocol approved by the Court was “negotiated and carefully crafted by the Diocese, the Committee and the insurance carriers to maximize the reach of notice of the claims bar date.”11 The Court reasoned that TV commercials had been playing daily on the local news, reminding victims of sexual abuse that the deadline for filing a proof of claim in the case was August 13, 2020, for a number of weeks and, thus, the Debtor had provided extensive notice.12 The Court held that extending the bar date further would only cause confusion.13 21. Similarly, in Diocese of Syracuse,14 the Committee of Unsecured Creditors moved the Court to extend the deadline to file claims by approximately four months.15 The Committee argued that the Court should move the bar date due to later developments.16 After a hearing on the 9 In re Diocese of Rochester, N.Y. Case No. 2-19-20905 (Bankr. W.D.N.Y. Sept. 12, 2019). 10 Id. at [P-700]. 11 Id. at [P-700], pg. 6. 12 Id. at [P-700], pg. 4. 13 Id. at [P-700], pg. 7. 14 In re Diocese of Syracuse, N.Y. Case No. 20-30663-5-wak (Bankr. N.D.N.Y. 2020). 15 Id. at [P-363]. 16 Id. at [P-363], ¶ 4.
8motion, the Court entered an order preserving the original April 15, 2021, claims bar date and denying the Committee’s motion.17 Even other sexual abuse claimant committees have recognized the potential confusion an extended bar date could cause. In the USA Gymnastics18 bankruptcy case, an attempt by a potential tort claimant to extend a bar date was strenuously opposed by the committee representing sexual abuse claimants.19 In opposing the extension of the bar date in that case, the abuse claimants committee in USA Gymnastics stressed the importance the finality of a bar date has in facilitating case conclusion and characterized the request to extend the bar date as “an invitation to havoc.”20 22. In contrast, the Tort Committee cites In re PG&E Corp, Case No. 19-30088 (Bankr. N.D.Cal. November 12, 2019)21 and In re Purdue Pharma L.P., Case No. 19-23649 (Bankr. S.D.N.Y. June 3, 2020)22 as support for a global extension of a bar date. A review of the two cases cited, however, indicates that the courts in those cases were concerned with specific events which may have prevented potential claimants from obtaining documents and compiling information, or having access to facilities or equipment necessary to file their claims (wildfire in areas affecting claimants, and COVID-19 early in the pandemic). Neither court dealt with the issue of whether a post-bankruptcy legal change to a defense against a claim would be cause to extend a filing deadline affecting such claims. The only case cited by the Tort Committee which even touches on 17 Id. at [P-432]. 18 In re USA Gymnastics, Case No. 18-09108 (Bankr. S.D.Ind. Dec. 5, 2018). 19 Id. at [P-657]. 20 Id. at [P-751]. 21 In re PG&E Corp, Case No. 19-30088 (Bankr. N.D.Cal. November 12, 2019 [P-4672]. 22 In re Purdue Pharma L.P., Case No. 19-23649 (Bankr. S.D.N.Y. June 3, 2020) [P-1221].
9this issue is the Diocese of Buffalo23 case. And there, the Court did not re-open and extend an already imposed deadline, but simply agreed to a longer deadline than originally contemplated. CONCLUSION 23. The Commercial Committee believes that the better route for this Court to take is to follow the lead of the Rochester and Syracuse courts and deny a global extension of the Sexual Abuse Claims Bar Date. 24. The Commercial Committee supports the USA Gymnastics committee’s assessment that an extension of the bar date would be “an invitation to havoc” as it applies to this case. The Sexual Abuse Claims Bar Date has been extensively publicized. No claimant was prevented from filing a proof of claim due to the possibility that the Debtor may try to defend against that claim. And, it appears that many Sexual Abuse claimants filed proofs of claim despite the possibility that prescription may be applicable. 25. Here, the requested global extension of the bar date for any Sexual Abuse claims undoes all of the significant and costly efforts to date to publish notice and solicit claims. And further, the Tort Committee’s requested extension would require the Debtor to engage in expensive and extensive renotification procedures. Renotification procedures which undoubtedly will be the subject of further extensive negotiations and analysis by the Debtor, the Tort Committee, the Commercial Committee and the Office of the United States Trustee. These renotification procedures will almost certainly have the defining effect of creating unnecessary confusion as to who is eligible to file a claim and which deadline is applicable, not to mention considerable diminution of estate assets which will be used to provide such notice. 23 See, In re Diocese of Buffalo, N.Y., 620 B.R. 445 (Bankr. W.D.N.Y. 2020).
1026. While Bankruptcy Rule 3003(c) provides that a court may extend a claims bar date “for cause,” the Commercial Committee respectfully suggests that the Tort Committee has not established the requisite “cause” for a global extension. No natural disaster has affected the likely community of claimants preventing them from filing claims. The Tort Committee does not suggest that the Debtor’s notice efforts to date have not been sufficient. All that is suggested is that a recent change in Louisiana law makes it potentially more likely that a claim might be allowed. 27. When viewed in balance, the Commercial Committee respectfully suggests the appropriate path is to deny the Motion, but without prejudice to the rights of individual claimants to file requests under Bankruptcy Rules 3003(c) and 9006(b) to have such claims deemed timely filed if such claimant can show excusable neglect. Such an approach would eliminate likely confusion and significant re-noticing cost, yet preserve the ability for this Court to decide, on a case-by-case basis, whether a particular claimant should be excused from missing the well-publicized deadline. 28. For these reasons, the Commercial Committee respectfully requests that the Court DENY the Motion. Signature on Following Page
11Respectfully Submitted by: STEWART ROBBINS BROWN & ALTAZAN, LLC By: /s/ William S. Robbins Paul D. Stewart, Jr. (LA. Bar # 24661) email@example.com William S. Robbins (LA. Bar # 24627) firstname.lastname@example.org Brandon A. Brown (La. Bar #25592) email@example.com 301 Main St., Suite 1640 Baton Rouge, LA 70801-0016 Telephone: (225) 231-9998 Facsimile: (225) 709-9467 Counsel to the Official Committee of Unsecured Commercial Creditors of The Roman Catholic Church of the Archdiocese of New Orleans