Document Type
Research Memorandum
Publication Date
2024
Abstract
(Excerpt)
In large chapter 11 cases, the number of creditors or claimants may exceed two hundred. Under the Federal Rules of Bankruptcy Procedure, creditors are entitled to notice. It is the role of the Clerk of Court to manage claims and provide notice to creditors. However, due to the notice requirement’s twenty-one-day deadline, it may become burdensome on the Clerk of Court to process claims and provide notice in a timely manner. Therefore, in these large chapter 11 cases, a Claims and Noticing Agent ("Claims Agent") is retained to relieve the clerk of court from claims-management work.
Claims Agents are often retained in cases filed in the U.S. Bankruptcy Courts for the Southern District of New York ("S.D.N.Y.") as well as the District of Delaware, which both have different requirements for retaining a Claims Agent.
A Claims Agent may be retained in a bankruptcy case under two separate federal laws which provide different duties and fee allocations. The issue is the duties Claims Agents retained under 28 U.S.C.§ 156(c) are entitled to perform, and what fees they are entitled to collect
To address this issue, this memorandum will discuss the differences in compensation of Claims Agents depending on the statute under which they are retained. This memorandum will also discuss the scope of duties of a Claims Agent and the legal or ethical consequences that may arise out of a Claims Agent operating beyond the scope of such duties.