FOR THE NORTHERN DISTRICT OF CALIFORNIA
K&M GLASS CO., INC., No. 1-86-01074
Memorandum of Decision
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.
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
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.
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 _______________________