Barbara M.
Barron
Stephen W.
Sather
Barron &
Newburger, P.C.
7320 N. Mopac
Expwy., Suite 400
Austin, TX 78701
The
goal of filing a proof of claim is to collect money. However, errors in submitting claims can
prove costly. Six different problems to
avoid are illustrated below.
Failure to
Attach Supporting Documentation
Cases Prior to
2011
B-Line, LLC v. Wingerter
(In re Wingerter),
594 F.3d 931 (6th Cir. 2010)
Creditor filed a proof of claim
without supporting documentation. The
creditor withdrew the claim after the debtor objected. The Court then issued an order to show cause
directing the creditor to explain its business practices and the handling of
this specific claim. The Court found
that B-Line violated Fed.R.Bankr.P. 9011 because it did not make a reasonable
pre-filing inquiry that the claim was valid and supported by the evidence. However, because the creditor cooperated in
response to the order to show cause, the Court did not assess sanctions. On appeal, the Court found that the
controversy was not moot even though no monetary sanctions were assessed. The Court found that the creditor could
appeal a non-monetary sanction to avoid injury to its reputation. The Court reversed the bankruptcy court’s
sanctions order. It found that because
the creditor obtained warranties from the entity from whom it purchased the
debt as to its validity and had a track record of purchasing claims from this
buyer that were not objected to 99.5% of the time, the creditor had done a
reasonable pre-filing inquiry.
