Seventh Circuit Court of Appeals Holds that Bankruptcy Rule 3002(c)’s deadline for creditors to file a proof of claim applies equally to secured and unsecured creditors

In re Pajian, 785 F.3d 1161 (7th Cir. May 11, 2015) is an appeal from a Bankruptcy Court order allowing a secured creditor’s proof of claim filed after the 90 day deadline imposed by Fed. R. Bankr. Proc. 3002(c) but before the Debtor’s plan was confirmed. The issue on appeal was whether the deadline only applies to unsecured claims. The Bankruptcy Court allowed the claim and Debtor took a direct appeal to the 7th Circuit to resolve conflicting decisions among the bankruptcy courts as to whether rule 3002(c) deadline apply to secured claims. The Court observed that conflict in the bankruptcy courts results from the way rule 3002 was drafted. The first part of the rule applies specifically to unsecured creditors without mentioning secured creditors. Fed. R. Bankr. Proc. 3002(a). The omission of secured creditors from this provision led some courts to hold that the entirety of rule 3002 applies only to unsecured lenders. The 7th circuit disagreed with this reading because 1) on its face the rule applies to any proof of claim and the code defies a claim as any right to payment whether secured or unsecured; 2) rule 3002(a) deals with a different topic than the deadline to file a proof imposed by 3002(c and 3) Rule 3002(c) makes a differentiation between secured and unsecured claims. Thus, it is a mistake to read the Rule as applying only to unsecured claims. It applies to both kinds.

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