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IN RE ZECKENDORF

January 16, 1973

In the Matter of William ZECKENDORF, a/k/a William Zeckendorf, Sr., Debtor

Gurfein, District Judge.


The opinion of the court was delivered by: GURFEIN

GURFEIN, District Judge.

This is a petition by William Zeckendorf ("Zeckendorf"), the debtor, to review a determination by the Hon. Asa S. Herzog, Referee in Bankruptcy, that the claims of Harry Lewis ("Lewis") as Chairman of the Webb & Knapp 5% Sinking Fund Debenture Protective Committee ("Claim 102") and of the Estate of David Williams ("Claim 100") were timely filed in the arrangement proceeding of the debtor pursuant to § 355(1) of the Bankruptcy Act, 11 U.S.C. § 755a(1).

 On August 29, 1968 Zeckendorf filed a petition for an arrangement pursuant to Chapter XI, Section 322 (11 U.S.C. § 722). He also filed a proposed arrangement which was altered and modified with leave of Court. The part of the schedules filed by Zeckendorf as debtor setting forth the Lewis claim and the Williams claim read as follows: Whether claim is contingent, un- Amount due "Names of When and Where liquidated or or claimed (illegible) Residences Contracted disputed * Harry 845 3rd Ave. 4,298,200.00 Lewis, as Chairman, etc. * Estate 230 Park Ave. 25,000.00 of David Williams

 The arrangement was confirmed on May 2, 1972. No claims had been theretofore filed by either Lewis or the Williams Estate.

 Notice of the confirmation of the arrangement was sent to scheduled creditors who had not filed proofs of claim prior to confirmation, pursuant to Section 355 of the Bankruptcy Act (11 U.S.C. § 755a). Within thirty days from the mailing of the notice Lewis filed proof of claim No. 102 in the amount of $4,298,200, and Williams filed proof of claim No. 100 in the amount of $37,500 (instead of the $25,000 shown on the schedule by the debtor).

 Objections to both claims were filed by the debtor on June 15, 1972, contending that since these claims had not been filed before the confirmation of the arrangement, they were time-barred as a matter of law under Section 355 of the Bankruptcy Act.

 Lewis' claim was based on alleged securities violations arising from alleged misconduct by the debtor under a Webb & Knapp Trust Indenture. His action has been pending in this Court for four years, since before the petition for the arrangement, and has not been stayed. Williams' claim was for real estate broker's commissions for which an action was begun after Williams' death and before the petition; it has been stayed by the instant proceedings in the Bankruptcy Court.

 The objections were heard by the learned Referee on June 26, 1972. He thereafter ruled that these claims were not time-barred by Section 355. The debtor then petitioned this Court to review that portion of the Referee's decision and the order entered thereon.

 The question is conceded to be one of first impression in a District Court.

 Section 355 of the Bankruptcy Act (11 U.S.C. § 755a) provides:

 
"Creditors, including the United States, any State, and any subdivision thereof, shall file their proofs of claim before confirmation except as follows:
 
(1) if scheduled by the debtor, a claim may be filed within thirty days after the date of mailing notice of confirmation to creditors but shall not be allowed for an amount in excess of that set forth in the debtor's schedules; and
 
(2) a claim arising from the rejection of an executory contract of the debtor may be filed within such time as the court may direct."

 On its face the statute permits an exception to the requirement that proofs of claim be filed before confirmation "if scheduled by the debtor," with a further exception, however, that the claim "shall not be allowed for an ...


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