United States District Court, S.D. New York
April 8, 2005.
In re: TL ADMINISTRATION CORPORATION, et al. (f/k/a TWINLAB CORPORATION, et al.), Debtors. Pertains to 03-15564, Chapter 11 Case, Bankr. S.D.N.Y.
The opinion of the court was delivered by: JED RAKOFF, District Judge
On November 8, 2004, appellant Academy, Ltd. timely appealed
the Order of Judge Cornelius Blackshear, United States Bankruptcy
Judge, dated November 1, 2004, which denied Academy's motion to
enlarge the bar date for filing a proof of claim. By Order dated
March 10, 2005, the Court denied the appeal and affirmed Judge
Blackshear's ruling. This Memorandum Order will briefly recite
the reasons for that ruling and direct the entry of judgment.
On September 4, 2003, the debtors filed for Chapter 11
bankruptcy, and on January 7, 2004 the Bankruptcy Court set March
2, 2004 as the deadline for filing all proofs of claim against
debtors in the consolidated action (the "Bar Date"). See Order
dated January 7, 2004, No. 03-15564, Chapter 11 Case, Bankr.
S.D.N.Y.*fn1 Pursuant to that order, the debtors published,
on January 14, 2004, notices of the Bar Date in the Wall Street Journal (National Edition) and
On February 26, 2004, four days prior to the Bar Date, one
Jalena Malenica filed certain proofs of claims against the
debtor. Her claims neither specified that they were
ephedra-related nor named Academy. On July 20, 2004, however,
after all personal injury actions against debtors had been
removed to this Court, Malenica filed a formal complaint alleging
ephedra-related claims against both the debtors and Academy.
See Complaint, 04 Civ. 5639, attached as Exhibit B to Academy's
Designation of Records and Statement of Issue on Appeal. On
September 29, 2004, seven months after the Bar Date had passed
and two months after being served with the aforementioned
complaint, Academy filed a motion to extend the Bar Date and
permit the late filing of a proof of claim, so that it could seek
indemnification from debtors in the Malenica action. By Order
dated November 1, 2004, Judge Blackshear denied Academy's motion
to enlarge the Bar Date. This appeal followed.
Few large bankruptcies could ever be successfully resolved if
substantial finality were not accorded a bar date. Yet a
completely rigid adherence to bar date finality might result in
substantial inequities in certain cases. Accordingly, Rule
9006(b)(1)(2), Fed.R.Bankr.P., permits relaxation of the bar
date "where the failure to act was the result of excusable
In Pioneer Ins. Servs. Co. v. Brunswick Assocs. Ltd. P'ship.,
507 U.S. 380, 388 (1993), the Supreme Court set forth a list of factors to be considered in making the equitable determination of
whether an the neglect is "excusable," to wit, "the danger of
prejudice to the debtor, the length of the delay and its
potential impact on judicial proceedings, the reason for the
delay, including whether it was within the reasonable control of
the movant, and whether the movant acted in good faith." Id. at
395. It is for the Bankruptcy Court to weigh these and any other
factors relevant to a particular motion to enlarge the bar date,
and the Bankruptcy Court's determination will not be overturned
unless it has been abused its discretion. See id. 398-99. No
such abuse may be found where there is "any evidence of prejudice
to [the estate] or to judicial administration. . . ." Id.;
see also In re Drexel Burnham Lambert Group, Inc.,
146 B.R. 84, 87 (S.D.N.Y. 1992).
Here, it cannot be said that Judge Blackshear abused his
discretion in determining that there would be some prejudice to
the estate and to judicial administration if Academy's motion
were granted. By the time appellant filed its motion on September
29, 2004, a settlement mediation was well underway before Retired
Justice John K. Trotter of the California State Supreme Court
that included all 2002-2004 ephedra-related claims against debtor
and that shortly thereafter resulted in a global settlement.
See this Court's Order dated March 23, 2005. Far from abusing
his discretion, Judge Blackshear was right to conclude that the
addition of a new party to the negotiations could prejudice the
estate and the numerous participants to the mediation, all of
whom had met the Bar Date. Academy, moreover, could have mitigated, if not eliminated this
prejudice if it had acted more swiftly in moving to extend the
Bar Date as to its cross-claim for indemnification. Instead, it
waited two months after being sued by Malenica before filing the
instant motion months during which, as even the most modest
inquiry would have revealed, the negotiations before Justice
Trotter were reaching a critical state. A party seeking such
disruptive relief as extension of a bar date should at least
proceed with expedition if it expects to obtain equitable relief.
Accordingly, the Court hereby reaffirms its Order of March 10,
2005, denies Academy's appeal, and affirms Judge Blackshear's
order of March 1, 2004. Clerk to enter judgment.