Fifth Circuit Denies Late-Filed Proof of Claim

In re DLH Master Land Holding, L.L.C., Case No. 11-10781 (5th Cir. March 13, 2012)

In In re DLH Master Land Holding, L.L.C., Case No. 10-30561-hdh, the Fifth Circuit Court of Appeals recently rendered an opinion affirming the lower courts’ ruling that Bank of America did not show “excusable neglect” warranting the allowance of its late-filed proof of claim.

Generally, in order to obtain permission to file a proof of claim after the claims bar date has expired, the claimant must establish “excusable neglect” under Federal Rule of Bankruptcy Procedure 9006(b)(1). In determining whether the claimant has met its burden, the Fifth Circuit instructs that bankruptcy courts should consider the following factors: (1) the danger of prejudice to the debtor; (2) the length of the delay and its potential impact on judicial proceedings; (3) the reason for the delay, including whether it was within the reasonable control of the claimant; and (4) whether the claimant acted in good faith. See Pioneer Inv. Serv. Co. v. Brunswick Assoc., L.P., 507 U.S. 380, 395 (1993).

In the DLH case, it appears that the bankruptcy and district courts found that BOA had not met its burden. The Fifth Circuit did not disturb this finding. Attached is a copy of the opinion for easy reference.