Memorandum of Decision Re: Late Claim

FOR THE NORTHERN DISTRICT OF CALIFORNIA In re K&M GLASS CO., INC.,                                       No. 1-86-01074      Debtor. ___________________________/
Memorandum of Decision
I. Introduction      This Chapter 11 case was commenced on July 7, 1986. A bar date for claims was set for October 31, 1986. A plan of reorganization was confirmed on May 7, 1987, and distributions under the plan began in May, 1988. Since that time, the debtor has paid almost all of its claims; full payment will be achieved within a few months.      In March of 1988, auditors for the Northern California Glaziers, Architectural Metal and Glassworkers Welfare Trust ("Trust") completed an audit of the debtor's records and determined that the debtor owed it about $60,000.00 in benefit payments, mostly prepetition. At that time, the attorney for the trust learned that the debtor was in bankruptcy. The Trust had not been scheduled as a creditor, although union officials had knowledge of the bankruptcy.      Although the Trust had full knowledge of its claim, the bankruptcy filing, and confirmation of the debtor's plan by August of 1988, due to an "oversight" in its counsel's office no action was taken for almost four years, during which time the debtor reorganized its affairs, paid its creditors, and acquired assets pursuant to its confirmed plan. The Trust's motion now before the court seeks leave to modify the plan, file a dischargeability action, and file a late claim.
II. Modification of the Plan
     There is no basis upon which a plan can be modified at the request of a creditor. Section 1127(b) of the Bankruptcy Code restricts the right to modify the plan to the plan proponent or the reorganized debtor, and provides that the plan may not be modified after substantial consummation. The Trust was not the plan proponent, and the plan has been substantially consummated. The motion to modify the plan must therefore be denied. The court notes that it is also far too late to seek revocation of confirmation pursuant to section 1144 of the Code.
III. Dischargeability Action
     The Trust's arguments regarding the statute of limitations for filing a dischargeability action are meaningless, as there is no such thing as a dischargeability action against a corporate debtor. Section 1141(d)(2), which excepts certain debts from discharge, does not apply to corporations. see Beard v. A.H. Robins, Inc., 828 F.2d 1029 (4th Cir 1987).
IV. Leave to File Late Claim
     While the court recognizes its equitable power to allow late claims in certain instances, no good cause exists to do so in this case. Had the Trust timely asserted its claim in 1988, before the debtor began performing its plan, the claim could have been litigated and allowed and the plan modified if needed. It is patently unfair to the debtor to force it to litigate the issue now, after it has paid almost all of its debts and at a time when itno longer has the power to modify the plan.      Moreover, the reasons put forward as excusing the four-year delay in bringing this matter before the court do not come close to good cause. Counsel for the Trust attempts to blame the clerk's office for only making the file available rather than copying what was already a voluminous file. She further blames the effect on her of "the internal changes resulting from the departure of two of the firm's five attorneys, and the hiring of two others." The court finds such excuses insufficient to justify the failure to act in a timely manner.
V. Conclusion
     Regardless of whether earlier knowledge of the bankruptcy proceedings can be imputed to the Trust, it clearly had knowledge of all relevant facts by August of 1988. Its failure to act in a timely and responsible manner thereafter is unjustified, and the prejudice to the debtor in allowing claims litigation to proceed at this late date would be severe. Accordingly, its motion will be denied in its entirety. Counsel for the debtor shall submit an appropriate form of order.
Dated: August 3, 1992                                                                               _______________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy