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SCO Asks Bankruptcy Court to Set April 10 as "Bar Date" For Proofs of Claims

By Pamela Jones et al.

More filings in the SCO bankruptcy. SCO would like to set a deadline of April 10 for all claims to be filed for prepetition claims, so it's filed a motion asking for that relief. There will be a hearing on this motion on March 7, 2008 at 2:00 PM. And two of SCO's lawyers filed documents regarding their bills, looking to be paid. Also, in the SCO v. Novell case in Utah, the parties have stipulated that Novell has until February 19 to file its response to SCO's opposition to Novell's Motion for Summary Judgment on its 4th Claim for Relief.

You'll see SCO talking about a bar date. No. Not that kind of date. It means a legal deadline after which you can't file any more:

In every business bankruptcy case where assets are available for distribution there is a deadline for filing proofs of claim. In legal parlance this is referred to as the “bar date”. ...

In Chapter 11, if the bankrupt has not listed the creditors claim, listed it incorrectly, listed it as disputed or contingent then the creditor must file a proof of claim if they want to participate in any distribution of assets from the bankruptcy.... Failure to file the proof of claim by the bar date can result in disallowance of the claim.

The Code permits the debtor and “any party of interest” to object to the proof of claims filed and the Bankruptcy Court may allow or disallow claims regardless of authenticity. This means that the Court may allow contingent claims. If objected to, the Court determines the amount of the claim.

It's up to the Court to set a bar date in Ch. 11. And it's a serious cutoff. You noticed it said if you miss the deadline, it "can result in disallowance." Sounds a bit squishy. But to give you an idea of how it plays out in real life, you'll find two contrasting cases in this recent Morris James' Delaware Business Bankruptcy Report, one where creditors lost out by missing the deadline and one where a failure was excused. Here's the section of the US Bankruptcy Code about claims, and if you scroll down to section 507, you'll find "Priorities".

Full post as published by Groklaw on February 09, 2008 (boomark / email).