Navigating the complexities of United States bankruptcy law is a challenge. Creditors must focus on even the most minor of details. Take, for example, the bar date. Why is this single date so important?
Simply stated, the bar date is the last day for a creditor to file a claim against a debtor in bankruptcy. If creditors miss the bar date, they have usually missed the chance to get what they are owed. Based on the nature of the creditor’s claim, there are different bar dates. Often Government Claims have the longest period to file.
Setting the Bar Date
Some bar dates are set quickly by the court. Other bar dates can take months (and months) to appear on the docket.
Late last year, the green home improvement lender, Renovate America filed for bankruptcy on December 21, 2020, only to have the bar date set almost four months later for May 7, 2021.
The Singapore-based Eagle Hospitality Trust declared bankruptcy on January 18 this year, but as of yet, no bar date has been set. But, that’s not the case for the paparazzi news photo agency, Splash News, who filed for Chapter 11 on March 23 this year and already has a bar date of June 2.
Beating the Bar Date Clock
Generally, timely filed proofs of claim can be amended at a later time. However, claims filed after the bar date are usually disallowed entirely.
Case law outlines, that new claims filed after the claims bar date “will ordinarily be denied, even absent prejudice, unless the reason for the delay is compelling.” Midland Cogeneration Venture Ltd. P’ship v. Enron Corp. (In re Enron Corp.), 419 F.3d 115, 134 (2d Cir. 2005). In contrast, no such limitation exists for amendments to proofs of claim. Therefore, courts carefully scrutinize post-bar date amendments. This ensures that there was no attempt to file a new claim under the guise of amending the originally filed claim.
If a creditor files an amendment after the bar date that is challenged by the debtor, the bankruptcy court will carefully consider whether the amendment is truly a modification of an existing claim or whether it actually should be deemed a new claim and should be disallowed.
In some cases, the actual amount, priority, or some other portion of the claim is not accessible prior to the bar date. For instance, the claim may be based on contingent and/or unliquidated claims. In these cases, the creditor must indicate that it holds such claims in the proof of claim form and file these claims before the bar date.
The bottom line: file something before the Claims Bar Date. Otherwise, you risk the near-certain loss of any chance of recovery for funds owed to you or your business.