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Avnet, Inc v. Maxwell

May 25, 2006

AVNET, INC. APPELLANT,
v.
ANDREW J. MAXWELL, AS TRUSTEE FOR THE CHAPTER 7 ESTATES OF MARCH FIRST, INC. ET AL. APPELLEE.



The opinion of the court was delivered by: Matthew F. Kennelly United States District Judge

MEMORANDUM OPINION AND ORDER MATTHEW F. KENNELLY, District Judge:

Avnet is an unsecured creditor of marchFIRST, Inc., which has filed for bankruptcy protection. Avnet submitted a proof of claim in the marchFIRST bankruptcy, but the bankruptcy court, concluding that the claim was untimely, subordinated it under 11 U.S.C. § 726(a)(3).*fn1

Avnet has appealed from the bankruptcy court's decision. For the reasons stated below, the Court affirms the decision of the bankruptcy court.

Facts

On April 21, 2001, marchFIRST filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the District of Delaware. On April 26, the bankruptcy court converted marchFIRST's voluntary Chapter 11 petition to an involuntary Chapter 7 petition. On June 14, the bankruptcy court approved a composite notice for matchFIRST's creditors entitled "Notice of Chapter 7 Bankruptcy Case, Notice of Meeting of Creditors, and Deadlines." The notice stated:

DEADLINE TO FILE A PROOF OF CLAIM

Proof of Claim must be received by the bankruptcy clerk's office by the following deadline:

For all creditors (except a governmental unit): October 11, 2001 For a governmental unit: October 11, 2001 The addresses for filing proofs of claim are as follows: If proof of claim is sent by mail, send to: If proof of claim is sent by overnight courier, or by hand, send to: Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc. as agent for the United States as agent for the United States Bankruptcy Court Bankruptcy Court re: marchFIRST, Inc., et al. re: marchFIRST, Inc., et al. P.O. Box 2010, Murray Hill Station 419 Park Avenue South, Suite 1206 New York, NY 10156 New York, NY 10016 (212) 481-1411 (212) 481-1411 R. 3, Ex. A. During the time period when claims were to be submitted to the claims agent, the the case was transferred to the United States Bankruptcy Court for the Northern District of Illinois. The venue change, however, did not affect how or when creditors were to submit their claims.

On June 22, Donlin, Recano & Company, the claims agent for the case, mailed the notice described above to potential creditors, along with a claim form that included the name and address of the recipient creditor, the provisions of the notice approved by the bankruptcy court, and an additional time deadline for receiving claims:

THE ORIGINAL OF THIS PROOF OF CLAIM MUST BE SENT SO THAT IT IS RECEIVED ON OR BEFORE 4:00 P.M., EASTERN TIME, ON OCTOBER 11, 2001.

Id., Ex. B.

The United States Trustee asserts that the notice and claim form were sent to two addresses for Avnet in Peabody, Massachusetts and Tempe, Arizona and to two addresses for Avnet's affiliate Hallmark in Kansas City, Missouri and Dallas, Texas. Id., Ex. C. Avnet claims that it only received the notice and claim form at its Hallmark affiliate's Dallas, Texas address, which is not the company's main address. R. 2, Ex. B.

On October 11, 2001 at 4:43 p.m. Eastern Standard Time, Avnet faxed a claim for $756,149.65 to the claims agent. The claim was made on a claim form that the claims agent had sent to Avnet's Peabody, Massachusetts address. Avnet, however, had crossed out this address and listed its Tempe, Arizona address, which was the address from which Avnet faxed the claim. Avnet also attached to its faxed claim a cover letter in which it stated that the original of the claim would be delivered to the claims agent by courier the next morning. Id.

On June 10, 2005, the Trustee filed its objection to late claims. The Trustee argued that Avnet's claim was late because it had improperly faxed its claim on the bar date and because it did not send its claim by courier to the claims agent until the day after the bar date. Avnet contended that the bankruptcy court should treat its faxed claim as timely or that the court should treat its couriered claim as timely based on equitable considerations. Relying on In ...


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