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In re Todd T. Malmborg

22 BK 06603
After the claims bar date in a Chapter 13 case, an unscheduled creditor moved to vacate a confirmation order under Bankruptcy Rule 9024, arguing his due process rights were violated because he was not given notice of the bankruptcy.
Pre-petition, the creditor had sued the Debtor (his former domestic partner) in state court seeking reimbursement for payments he had made toward the Debtor’s mortgage, condominium assessments, and other home-related expenses, which he allegedly made based on Debtor’s unfulfilled promise to add creditor to the title of the condominium.  The state court case has not concluded and the Debtor disputes the creditor’s claim as to liability and damages.
The court denied the creditor’s motion, finding that his due process rights were not violated because his claim was not reduced or delayed by operation of the Bankruptcy Code.  The confirmed plan did not cover creditor’s claim, which the Debtor prefers to handle outside of bankruptcy. The court reasoned that even if the creditor had timely filed a timely proof of claim, it would permissively abstain from hearing objections to it due to concerns about the entry of conflicting judgments, forum shopping, and applying and respecting Illinois state law on domestic partnerships.  Additionally, the court reasoned that unnoticed creditors’ rights were protected in other ways, including stay relief and exception to discharge.

Thursday, May 4, 2023