Third Circuit — Non-Confirmation Date Checks, Pre-Effective Date Claims

Except in very limited circumstances, a creditor of a bankrupt debtor must file a claim in order to ensure any chance of collection. The decision to file, however, is fraught with strategic considerations, including whether it will subject the creditor to the jurisdiction of the bankruptcy court, thus limiting where the litigation of the claim will take place. A recent first impression case from the United States Court of Appeals for the Third Circuit provides insight into this important decision for claims that arise in the period between the plan’s confirmation and the plan’s effective date. . See Ellis v. Westinghouse Electric, 2021 US App. LEXIS 26092 (3d Cir. August 30, 2021).

In Westinghouse, the debtor’s recovery plan set a statute of limitations which provided that holders of post-confirmation administrative expense reimbursement requests, who had not submitted payment requests on time, were forever prevented from asserting such claims. claims against the debtor and that these claims were paid on the effective date of the plan Date. The plan was confirmed by the bankruptcy court on March 28, 2018, but did not come into effect until August 1, 2018. On the effective date, the debtor notified the creditors, informing them that the deadline administrative complaint was August 31. , 2018, and that any complaint not filed on time would be canceled.


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