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In re New Century TRS Holdings, Inc.

United States District Court, D. Delaware

August 20, 2014

In re: NEW CENTURY TRS HOLDINGS, INC., a Delaware Corporation, et al., Debtors. MOLLY S. WHITE and RALPH N. WHITE, Appellants,
v.
ALAN M. JACOBS, as liquidating trustee of the New Century Liquidating Trust, Appellee

Decided Date: August 19, 2014.

Page 252

Chapter 11. Bankr. No. 07-10416-BLS. Jointly Administered.

Molly S. White, Appellant, Pro se, Port Orange, Florida.

Ralph N. White, Appellant, Pro se, Port Orange, Florida.

Bonnie Glantz Fatell and Alan M. Root, Esquires, Blank Rome LLP, Wilmington, Delaware. Counsel for Appellee.

Page 253

MEMORANDUM OPINION

ROBINSON, District Judge.

I. INTRODUCTION

Appellants Molly S. White and Ralph N. White (" White" ) (" appellants" ) filed this bankruptcy appeal on October 18, 2013. (D.I. 1) They appear pro se. The appeal arises from an order entered by the bankruptcy court on August 30, 2013, that determined debtors complied with the bankruptcy court's order establishing bar dates for filing proofs of claim and approving the form, manner, and sufficiency of the notice as applied to unknown creditors. The court has jurisdiction to hear an appeal from the bankruptcy court pursuant to 28 U.S.C. § 158(a).

II. BACKGROUND

Appellants entered into a consumer mortgage loan transaction that closed on or about July 26,2006. White v. New Century TRS Holdings, Inc., Adv. No. 10-55357-BLS, D.I. 59.[1] In April 2007, New Century TRS Holdings, Inc. (" TRS Holdings" ) and its affiliates (collectively, " debtors" [2]) filed chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the District of Delaware (" bankruptcy court" ) in Bankr. No. 07-10416-BLS (the " bankruptcy proceeding" ). See In re New Century TRS Holdings, Inc., 407 B.R. 576 (D. Del. 2009). On June 8, 2007, debtors filed a motion pursuant to Fed. R. Bankr. P. 2002, 3003(c)(3), and 9007, asking the bankruptcy court to fix the time within which proofs of claim may be filed (" debtors' bar date motion" ).

Page 254

(Bankr. No. 07-10416-BLS at D.I. 1173) On June 28, 2007, the bankruptcy court entered an order (the " bar date order" ) that established August 31, 2007 at 5:00 p.m. (prevailing Pacific Time) as the deadline for filing proofs of claim in the chapter 11 case (the " bar date" ). ( Id. at D.I. 1721) On July 9, 2007, debtors' claims and noticing agent, Xroads Case Management Service LLC (" claims agent" ) filed a declaration of service, stating that it mailed a copy of the notice of bar date (the " bar date notice" ) and a proof of claim form substantially similar to Official Form No. 10 to " parties listed on the master mailing matrix as set forth on a list maintained by debtors' counsel." ( Id. at D.I. 1861) On August 3, 2007, the claims agent filed affidavits of publication stating that the bar date notice was published in the national edition of The Wall Street Journal and The Orange County Register on July 23, 2007. ( Id. at D.I. 2148, D.I. 2149)

On November 22, 2008, appellants filed claim 4073, and later, on or about January 21, 2009, they filed claim numbers 4074 and 4080 in debtors' bankruptcy case.[3] (Adv. No. 10-55357-BLS, D.I. 59) On November 20, 2009, the bankruptcy court entered an order confirming the modified second amended joint chapter 11 plan of liquidation that adopted, ratified and confirmed the New Century Liquidating Trust Agreement, dated as of August 1, 2008, which created the New Century Liquidating Trust and appointed Alan M. Jacobs as Liquidating Trustee of New Century Liquidating Trust and Plan Administrator of New Century Warehouse Corporation (" Trustee" ). ( Id. at 9905, 9957)

On August 13, 2010, the Trustee filed an objection to appellants' claims on the grounds they lacked merit and were filed after the bar date. (Adv. No. 10-55357-BLS, D.I. 59) On November 10, 2010, appellants filed adversary proceeding White v. New Century TRS Holdings, Adv. No. 10-55356-BLS. Disputes regarding appellants' claims and the adversary proceeding complaint were consolidated in a scheduling order that was entered in the adversary proceeding on December 13, 2010. ( Id. at D.I. 9) On June 7, 2011, the bankruptcy court granted in part and denied in part the Trustee's motion to dismiss appellant's adversary complaint. ( Id. at D.I. 59, 60) The bankruptcy court stated, " [a]lthough the [d]ebtors arguably complied with the stated minimum requirements of the [b]ar [d]ate [o]rder, without a more fully developed factual record, I am unable to determine whether the publication notice was reasonably calculated to provide notice to consumer mortgagors like the Whites. At this stage in the proceeding, the Trustee has not met his burden of proving that publication in one national edition newspaper and one local newspaper is sufficient to meet due process requirements as applied to the Whites as unknown creditors." ( Id. at D.I. 59 at 14)

In July 2011, Helen Galope (" Galope" ) filed proof of claim number 4131, objected to by the Trustee, and an evidentiary hearing was held on December 13, 2011 to determine whether the claim should be disallowed as filed after the claims bar date. (Bankr. No. 07-10416-BLS at D.I. 11256) On February 7, 2012, the bankruptcy court entered a memorandum and order that disallowed and expunged Galope's claim. ( Id. at 10725, 10726) The February 7, 2012 memorandum and order determined, in part, that debtors' publication of the bar date notice in the national edition of The Wall Street Journal, supplemented with notice in The Orange County Register, was constitutionally adequate for Galope,

Page 255

who was an unknown creditor at the time the bar date notice was served. The bankruptcy court subsequently denied two motions for reconsideration of the February 7, 2012 order filed by Galope. ( Id. at D.I. 10742, 11256)

On April 2, 2012, the Trustee flied a global constructive notice motion seeking a determination that the debtors had: (1) complied with the requirements of the bankruptcy court's June 28, 2007 order establishing bar dates for filing proofs of claim and approving form, manner and sufficiency of notice; and (2) provided constructive notice of the bar date by publication that satisfied the requirements of due process for all unknown creditors. ( Id. at D.I. 10824) The Trustee sought an order consistent with the February 7, 2012 Galope decision and first reconsideration order that concluded debtors' publication notice of the bar date complied with the requirements set forth in the bar date order and satisfied the requirements of due process for unknown creditors. On April 18, 2012, appellants (and others) filed an objection to the global ...


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