In the case of In re Nortel Networks, Inc. et al., Case No. 09-10138 (KG) (Del. Bankr. Ct. May 21, 2015), Judge Gross considered a motion filed by the “Ad Hoc Committee of Canadian Employees Terminated Pre-Petition” seeking leave to file proofs of claim after the expiration of the Bar Date applicable to Nortel’s U.S. Debtors.
The Canadian Employees are a self-styled “Ad Hoc Committee” of approximately 1705 former employees of the Canadian Debtors. They were not employees of any of the U.S. Nortel debtors. Prior to the Petition Date, each of the Canadian Debtors terminated the employment of the Canadian Employees who received a termination letter from the Canadian Debtors which, as is relevant here, proposed a severance payment in return for releases benefiting the Nortel Entities.
The Canadian employees were exempt from the Canadian claims process, but not the U.S. Debtors claims process. The applicable bar date against the U.S. Debtors was in 2009, however it was not until 2012 that they believed they may have a claim against the U.S. Debtors when their law firm advised that they should file a claim against the same.
The Canadian employees asserted, in support of their motion, that a) notice of the bar date of the U.S. Nortel debtors was defective, given that the publication was confusing, and b) even if they received proper notice, they should be allowed to file claims based upon the theory of excusable neglect.
The Court found that the publication of the Bar Date was not intentionally misleading or confusing. Because the Court viewed the Canadian Employees as unknown creditors, it also found that publication was effective, and satisfied the requirements of due process with respect to unknown creditors.
Further, the Court found the Canadian Employees’ excusable neglect assertion unavailing. As stated by the Court: “[s]imple ‘[i]gnorance of one’s own claim does not constitute excusable neglect.’” Jones v. Chemetron Corp., 212 F.3d 199, 205 (3d Cir. 2000).
This decision is important for any party seeking to file an untimely proof of claim against a debtor’s estate. As demonstrated by this decision, parties and counsel should act quickly to identify which debtors – whether U.S. debtors or otherwise – they possess claims, and to timely file the claims in advance of the applicable bar date.
Carl D. Neff is a bankruptcy attorney with the law firm of Fox Rothschild LLP. Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272 or at firstname.lastname@example.org.