liquidated in the debtors’ bankruptcy.
Owens Corning, 679 F.3d at 108.
It was not until Frenville was overturned in 2010, after confirmation of the debtors’ plan, that the plaintiffs could have reasonably understood the impact of those proceedings on their contingent and unmatured claims. According to the court, in these situations “[d]ue process affords a re-do . . . to be sure
all claimants have equal rights.” Id.
Both elements of the 3rd Circuit’s ruling
in Owens Corning are noteworthy in
their own right. The extension of the test
set forth in Grossman’s to post-petition,
preconfirmation conduct demonstrates
the 3rd Circuit’s commitment to
moving away from the oft-criticized
Frenville decision and its progeny.
Michael Klein (top) and Brent Weisenberg (bottom)
are associates in the Bankruptcy & Restructuring Group
at Cooley LLP in New York. Klein’s practice focuses
on litigation and transactional work, including the
representation of debtors, creditors’ committees in
Chapter 11, and secured creditors. He has a law degree
from the University of Pennsylvania Law School and a
bachelor’s degree from Cornell University. Weisenberg’s
practice focuses on both litigation and transactional
work, and focuses on representing creditors’
committees and debtors in Chapter 11 bankruptcy
proceedings, as well as in out-of-court restructurings
and workouts. Weisenberg holds a law degree from
Boston University School of Law and a bachelor’s
degree from the University of Wisconsin-Madison.
Moreover, the court’s holding regarding
the insufficiency of due process
underscores the difficulty that debtors
face post-Grossman’s in providing
adequate notice of key case deadlines
to all holders of claims, especially to
future unknown claimants and other
holders of contingent and unmatured
claims. As the 3rd Circuit remarked
at the conclusion of its decision
in Owens Corning, “The shadow
of Frenville fades, but more slowly
than we would like.” Id. at 109. J
1 A “right to an equitable remedy” that “gives rise
to a right to payment” also constitutes a “claim”
under Section 101( 5)(b) of the Bankruptcy Code.
See, e.g., Ohio v. Kovacs, 469 U.S. 274 (U.S.
1985) (a claim exists if a debtor can perform an
obligation only by means of paying money).
ABT-11101-2 TMAoct_final_7.125x5.0625.indd 1