Class Proof of Claim Addendum

Summary

This class proof of claim addendum is for use by a class representative asserting a class action in a bankruptcy case. This template includes practical guidance, drafting notes, and alternate and optional clauses. Bankruptcy courts disagree as to whether a proof of claim may be filed on behalf of a class in a class action suit. The majority of courts, including the Fourth, Sixth, Seventh, Ninth, and Eleventh Circuits, hold that class proofs of claim are permitted. In re Quick Cash, Inc., 2015 Bankr. LEXIS 3852, at *12 (Bankr. D.N.M. Nov. 10, 2015) (collecting cases). These courts partially base their holdings on Bankruptcy Rule 3001, which allows agents to file claims on behalf of creditors (despite agents not being listed in Section 501). This interpretation gives effect to the court's discretionary authority under Bankruptcy Rule 9014 to apply Bankruptcy Rule 7023 to contested matters (i.e., absent this interpretation, the provision in Bankruptcy Rule 9014 that allows the application of Bankruptcy Rule 7023 to contested matters would be rendered meaningless). Some courts also reason that the terms "claims" and "creditors" should be read expansively to include class action claims and putative class representatives, respectively, to effectuate the bankruptcy purpose of reaching as many claimants as possible to ensure participation in the estate and the discharge of claims. In re Craft, 321 B.R. 189, 195 (Bankr. N.D. Tex. 2005). In jurisdictions that allow class proofs of claim, the putative class representative must convince the court to apply Bankruptcy Rule 7023 to the contested matter. Many courts conduct a two-step inquiry: (1) whether to use their discretion to apply Bankruptcy Rule 7023 to the contested matter and (2) whether the class meets the requirements for class certification under Federal Rule 23. Courts that allow class proofs consider several factors when deciding whether to apply Federal Rule 23 to a class proof of claims, including: • Whether the class was certified pre-petition • Whether the members of the putative class received notice of the bar date • Whether class certification will adversely affect the administration of the case, especially if the proposed litigation would cause undue delay Courts also consider the benefits and costs of class litigation to the estate against the efficiency of the claims resolution process. The facts of the case determine the relevance of each of these factors. In re Chaparral Energy, Inc., 571 B.R. 642 (Bankr. D. Del. 2017). A minority of courts find that the Bankruptcy Code and Bankruptcy Rules do not permit class proofs of claim. According to these courts, the putative class representative cannot be considered an agent because the principals (i.e., the class members) are not instructing the representative to file the claim. Such creditors must give agency authority prior to the filing (or ratified thereafter) and, therefore, filing a claim and then informing class members is inconsistent with agency principles. Kahler v. FirstPlus Fin., Inc. (In re FirstPlus Fin., Inc.), 248 B.R. 60, 68 (Bankr. N.D. Tex. 2000). Check your local case law to determine whether your jurisdiction permits class claims. For a full listing of key content that provides an overview of important topics when litigating disputes in bankruptcy cases, see Bankruptcy Litigation Resource Kit. For general information on proof of claims, see Proofs of Claim in Bankruptcy. For information on class actions in bankruptcy, see Class Action Certification in Bankruptcy.