• Bar Date Notice Sent to Improper Address Still Reasonably Calculated to Apprise Creditor of Proof of Claim Deadline
  • June 26, 2012
  • Law Firm: Morris James LLP - Wilmington Office
  • In re Freedom Communications Holding, Inc. et al., Case No. 09-13046 (BLS) (May 31, 2012) (J. Shannon)

    The claim of Katherine Gibson, an ex-employee of the debtor, was deemed tardily-filed that required classification as a subordinate claim under the confirmed plan of reorganization (the “Plan”). Gibson alleged that she did not receive notice of Freedom’s bankruptcy or the claims bar date in the case. However, the Court found that the evidence showed that Freedom sent the required notice to Gibson at her last known address it had on file for her. As a result, under the circumstances, the Court found that the notice was reasonably calculated to apprise Gibson of both the Freedom bankruptcy and the claims bar date to properly classify the claim as a tardily-filed and subordinated claim under the Plan.

    From the onset of Freedom’s bankruptcy, Gibson was listed on Freedom’s schedules as holding a disputed claim. As a result, Gibson was required to file a proof of claim in order to be “treated as a creditor with respect to such claim for purposes of voting and distribution.” Fed.R. Bankr. P. 3003 (c)(2). The debtor satisfied its burden to establish constitutionally sufficient notice because although the mailing was to a typographically incorrect address, Freedom had used the last known address of Gibson for over seven years and during this time, none of the mailings had been returned as undeliverable. Moreover, Gibson did not deny receipt of the documents and had been given the opportunity to correct the erroneous address well before Freedom’s bankruptcy.

    The Court determined that Freedom could have reasonably expected that sending Gibson notices at the address in its employment files would reach her. The mailing to her last known mailing address was “reasonably calculated” to provide accurate notice of the bankruptcy and the bar date. See In re Grand Union Co., 204 B.R. 864, 870 (Bankr. D. Del. 1997) ([T]he bar date notice is presumed to have been received by the creditor when, as here, the debtor offers proof that it was timely and properly mailed by the debtor.”). Since the notice provided to Gibson was sufficient to satisfy due process, the Court held that she was bound by the terms of the Plan, under which her late-filed claim was properly classified as a Subordinate Claim.