In
re Fairchild Aircraft Corp. (Bankr. WD Tex. 1995) (Manville with
Standing after plane crash)
Facts:
Homeowners seek an order determining that the π’s are not bound by
reorg. Plan and to pursue prepetition claims against US Home. April
15 USH filed petitions. The court set December 23 1991 as the Bar
order for all claims to be filed. On May 24 1993 the plan was
confirmed. The homeowners hired someone who told them their houses
didn’t meet the insurance standards. On August 1996 the π’s
sent a demand letter to USH. USH responded that the confirmation
order enjoined litigation on their claims. Π’s brought this motion
because they were not given formal notice of bankruptcy. USH argues
that the creditors received constructive notice by publication and
the claims are barred under §1141(d).
Issue:
Did the claimant receive sufficient notice of the bankruptcy?
Holding:
Yes! They were unknown creditors. This case turns on the legal duty
owed by the debtor. Since there was no law they violated or
standard, they were not put on notice essential.
Analysis:
Discharge presumes that all creditors bound by the plan have been
given notice sufficient to satisfy due process. Adequate notice
depends on the facts and circumstances of each case. Due process is
met if notice is “reasonably calculated to reach all interested
parties, reasonably conveys all of the required information, and
permits a reasonable amount of time for response.” When a creditor
is unknown to the debtor, publication notice of the claims bar date
may satisfy DP. If a creditor is known to the debtor, notice by
publication is not constitutionally reasonable, and actual notice of
the relevant bar dates must be afforded to the creditor. Here, the
debtor sent out national publications as well as local. Were the
creditors known? Known = actual knowledge or reasonably ascertainable
by the debtor. Unknown = a creditor whose “interests are either
conjectural or future or, although they could be discovered upon
investigation, do not in due course of business come to knowledge of
the debtor.”
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