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Chemetron Corp. v. Jones

ELR Citation: 26 ELR 20364
Nos. No. 94-3371, 72 F.3d 341/(3d Cir., 12/18/1995)

The court holds that former residents of and occasional visitors to a neighborhood containing a toxic site were not known creditors, or claimants, entitled to actual written notice of the former site owner's bankruptcy filing and claims bar date. The court first holds that the bankruptcy court failed to apply the "reasonably ascertainable" standard in determining the length to which a debtor must go in determining a creditor's identity. Under this test, only those claimants who are identifiable through a diligent search are reasonably ascertainable" and, hence, "known" creditors. The bankruptcy court applied a "reasonably foreseeable" test, which is too expansive and raises causational difficulties and practical concerns. The court holds that claimants were "unknown" creditors because there was no way the debtor could identify, locate, and provide actual notice to these claimants. The court next holds that the notice of the claims bar date, which the debtor published in the New York Times and the Wall Street Journal, was sufficient. In providing notice to unknown creditors, constructive notice of the claims bar date by publication satisfies the requirements of due process, and the debtor's publication notice was reasonably designed to reach all interested parties. The court also holds that the bankruptcy court inadequately considered claimants' defense of excusable neglect of the bar date. The bankruptcy court and the district court both failed to consider the totality of the circumstances. The court remands the action to the bankruptcy court and directs it to undertake a more comprehensive and thorough determination of whether the totality of the circumstances support claimants' defense of excusable neglect. Finally, the court holds that the district court improperly reached the issue of claim discharge. Because the bankruptcy court' reserved ruling on the issue of discharge, the bankruptcy court's dismissal without prejudice was not a final appealable order under 28 U.S.C. §158(d) and, therefore, was not properly before the district court.

Counsel for Appellee
Dennis G. Terez
Squire, Sanders & Dempsey
4900 Society Ctr.
127 Public Sq., Cleveland OH 44114
(216) 479-8500

Counsel for Appellants
William Mitchell
Armstrong, Mitchell & Damiani
1725 The Midland Bldg.
101 Prospect Ave. W., Cleveland OH 44115
(216) 566-0064