Legal Question in Bankruptcy in Maryland

Proof of Claim Transfers

Where a company has been in Chapter 11 for 15 months and sees 80% of transfers of proof of claims occuring in the past 6 weeks and the company has not yet filed its reorganization plan, what red flags would this activity raise for investors and customers of the company?


Asked on 9/09/03, 5:14 pm

2 Answers from Attorneys
Carolyn Gilden Krohn Law Offices of Carolyn Gilden Krohn

Re: Proof of Claim Transfers

I am unsure what you mean by transferring proofs of claim. Please post your question again with an explanation. Unfortunately, it is not that unusual for a company to be in a Chapter 11 for over a year and not having filed a plan. If it is a small business Chapter 11, then usually the plan is filed much sooner than a more complex Chapter 11. A creditor can file a motion to compel the filing of the plan if the delay is unreasonable and it is causing harm. Also, a creditor can write a letter to the assigned trustee asking him to look into why a plan has not been filed.

Carolyn G. Krohn

60 West Street, Suite 220

Annapolis, MD 21401

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Answered on 9/10/03, 9:44 pm
Carolyn Gilden Krohn Law Offices of Carolyn Gilden Krohn

Re: Proof of Claim Transfers

Do you mean that the company is selling its proofs of claim to another creditor? If that is what you mean, and it is one particular creditor who is buying the claims then the red flag is that the creditor is trying to get control of the Chapter 11 and secure a majority of the voting rights. If that is not what you meant, then please re-post with an explanation.

Carolyn G. Krohn

60 West Street, Suite 220

Annapolis, MD 21401

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Answered on 9/11/03, 8:44 am


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