IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO (2025)

Memorandum Opinion and Order Concerning Acisclo Fossas-Marxuach's Motion for Allowance of Administrative Expense Proof of Claim and Proof of Claim No. 180850

PROMESA

Title III

(Jointly Administered)

Before the Court is the Motion for Allowance of Administrative Expense Proof of Claim Filed on February 4, 2023 Due to Lack of Notice (Docket Entry No. 24183 in Case No. 17-3283)² (the “Motion”), filed by Acisclo Fossas-Marxuach (“Movant”) with respect to Proof of Claim No. 180850 (“POC 180850”)—filed against Debtor Employees Retirement System of the Government of the Commonwealth of Puerto Rico (“ERS”)—as well as the 613th Omnibus Objection,³ filed by the the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”) as the sole Title III representative of ERS. The 613th Omnibus Objection is before the Court at this juncture solely with respect to the Oversight Board's objection to POC 180850 as a late-filed administrative expense claim.

The Court heard oral argument with respect to the Motion and the relevant aspect of the 613th Omnibus Objection at the September 10, 2025 omnibus hearing.

Movant contends that his administrative claim, which seeks recompense in connection with the postpetition termination of his employment, a matter that is the subject of a civil action pending in the United States District Court for the District of Puerto Rico, should be allowed even though it was filed after an extended deadline set for such claims in ERS's Title III case.

At the time that the Motion was filed, the Court entered a scheduling order and advised that, upon completion of briefing, “The Court will thereafter take the Motion on submission, unless the Court determines that a hearing is necessary.” (Docket Entry No. 24192 at 1.) The Motion has been fully briefed, and the Oversight Board's subsequent objection to POC 180850 in the 613th Omnibus Objection, on the same grounds argued in briefing on the Motion, along with Movant's response in opposition (Docket Entry No. 25684) (the “613th OO Response”), introduced no arguments requiring further briefing. However, the Oversight Board subsequently scheduled the response to the 613th Omnibus Objection for hearing at the November 7, 2024 Omnibus Hearing and it was thereafter adjourned several times before oral argument was scheduled in conjunction with claims asserted on similar grounds—oral argument has now been heard and the matter is ripe for decision.

The Court has carefully considered all of the parties’ arguments and related filings ⁴ and, for the following reasons, the Court denies the Motion and sustains the 613th Omnibus Objection with respect to POC 180850, and that claim is expunged in its entirety.⁵

Background

Movant is the plaintiff in a lawsuit captioned Acisclo Fossas-Marxuach v. Ret. Bd. of the Gov't of P.R. and the Judiciary, Case No. 21-01513 (CVR) (the “Postpetition Action”), pending in the United States District Court for the District of Puerto Rico (the “District Court”), in which Movant seeks damages and other monetary and equitable remedies related to his termination from his position as Examining Officer of the Retirement Board of the Government of Puerto Rico and the Judiciary (the “Retirement Board”)⁶ after the filing of the ERS Title III case. The Court takes judicial notice of the docket of the Postpetition Action.

Except where otherwise indicated, the following recitation of facts is drawn from uncontested facts in the Motion, the FOMB Objection, the Reply, the 613th OO Response, and the Complaint filed in the Postpetition Action. See Complaint, Acisclo Fossas-Marxuach v. Ret. Bd. of the Gov't of P.R. & the Judiciary, Case No. 21-01513 (CVR) (D.P.R. Oct. 21, 2021), ECF No. 1 (the “Complaint”).

A. Background of the Postpetition Action

On October 21, 2021, counsel for Movant, Attorney Andrés C. Gorbea Del Valle, commenced the Postpetition Action in the District Court on behalf of Movant. See Compl. at 11. The Complaint seeks damages and other monetary and equitable remedies related to Movant's allegedly discriminatory termination from his position as an Examining Officer of the Retirement Board of the Government of Puerto Rico and the Judiciary (the “Retirement Board”), which termination occurred on May 31, 2019. See Compl. ¶ 18.

On March 7, 2022, ERS filed a motion to dismiss the Complaint on several grounds. Fossas-Marxuach, Case No. 21-01513 (CVR) (D.P.R. Mar. 7, 2022), ECF No. 8. After the completion of briefing on April 12, 2022, the motion to dismiss remained under advisement with no further substantive motion practice until the District Court, sua sponte on October 31, 2022, ordered the motion to dismiss held in abeyance and ordered the parties to file, by November 28, 2022, memoranda of law explaining whether the case should be subject to the automatic stay under PROMESA pursuant to sections 362 and 922 of the Bankruptcy Code.⁷ Fossas-Marxuach, Case No. 21-01513 (CVR) (D.P.R.), ECF Nos. 20-26.

After briefing and a transfer of the case to another District Court judge, on January 27, 2023, the District Court stayed the Postpetition Action. Fossas-Marxuach, Case No. 21-01513 (CVR) (D.P.R.), ECF Nos. 27-37. Movant filed POC 180850 on February 4, 2023, well after the June 13, 2022, deadline to file proofs of administrative expense claims in the ERS Title III case (the “Administrative Expense Bar Date”).

On April 27, 2023, the District Court—responding to a contention from the defendant Retirement Board (Fossas-Marxuach, Case No. 21-01513 (CVR) (D.P.R.), ECF No. 32 at 5) that the Postpetition Action should be dismissed because of the late filing—ordered Movant to show cause why the Postpetition Action should not be dismissed with prejudice because Movant had failed to preserve his claim against ERS by timely filing an administrative expense proof of claim in the ERS Title III case. Fossas-Marxuach, Case No. 21-01513 (CVR) (D.P.R.), ECF No. 38.

On May 12, 2023, immediately after filing the instant Motion, Movant informed the District Court of its pendency and asked that the District Court refrain from dismissing the District Court case before this Court could decide whether to allow his late-filed administrative expense claim or to lift the automatic stay to permit the Postpetition Action to proceed. See Fossas-Marxuach, Case No. 21-01513 (CVR) (D.P.R.), ECF No. 39-40.⁸ There have been no further proceedings of note in the Postpetition Action.

B. Title III Cases – Bar Dates

On May 21, 2017 (the “Petition Date”), having previously filed a petition for relief on behalf of the Commonwealth of Puerto Rico (the “Commonwealth”), the Oversight Board commenced the Title III case on behalf of ERS. (Docket Entry No. 1 in Case No. 17-3566.)

On February 15, 2018, the Court issued its Order (A) Establishing Deadlines and Procedures for Filing Proofs of Claim and (B) Approving Form and Manner of Notice Thereof (Docket Entry No. 2521) (the “Initial Bar Date Order”), setting May 29, 2018, as the deadline for filing proofs of claim concerning claims (as defined in section 101(5) of the Bankruptcy Code, 11 U.S.C. § 101(5)) against ERS that arose prior to the Petition Date. On May 25, 2018, the Court extended that deadline to June 29, 2018 (the “Prepetition Bar Date”). (See Order (A) Extending Deadlines for Filing Proofs of Claim and (B) Approving Form and Manner of Notice Thereof, Docket Entry No. 3160 (the “Bar Date Extension Order” and, together with the “Initial Bar Date Order,” the “Bar Date Orders”).) The Debtors undertook broad publication of notice of the Commonwealth's Prepetition Bar Date pursuant to the Bar Date Orders, including publishing notice of the Bar Date in English- and Spanish-language publications circulating in Puerto Rico and the mainland United States, as well as running radio advertisements throughout Puerto Rico. (Initial Bar Date Order ¶¶ 17-22; Bar Date Extension Order ¶¶ 3-4.)

On January 18, 2022, the Court confirmed the Modified Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, et al. (Docket Entry No. 19784) (the “Plan”), with “et al.” including ERS. (See Order and Judgment Confirming Modified Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Puerto Rico Public Buildings Authority, Docket Entry No. 19813 (the “Confirmation Order”).)

The Confirmation Order provided that “[t]he last day to file proof of Administrative Expense Claims shall be ninety (90) days after the Effective Date, after which date, any Administrative Expense Claim, proof of which has not been filed, shall be deemed forever barred, and the Debtors and Reorganized Debtors shall have no obligation with respect thereto ․” (Confirmation Order ¶ 44.)

The Plan became effective on March 15, 2022 (the “Effective Date”) whereupon notice of the Effective Date—including explicit notice of the deadline of June 13, 2022, to file administrative expense proofs of claim (the “Administrative Claim Bar Date”)—was distributed by mail pursuant to the Confirmation Order and Bankruptcy Rules 2002 and 3020(c). (See Notice of (A) Entry of Order Confirming Modified Eighth Amended Title III Plan of Adjustment of the Commonwealth of Puerto Rico, et al. Pursuant to Title III of PROMESA and (B) Occurrence of the Effective Date, Docket Entry No. 20349 (the “Effective Date Notice”) at 2; Confirmation Order ¶ 94.)

However, the Administrative Claim Bar Date was thereafter extended through 4:00 p.m. (Atlantic Standard Time) on January 18, 2023 (the “Extended Administrative Claim Bar Date”), solely with respect to any claim or cause of action:

(A) asserted in a litigation or action against the Commonwealth, PBA, or ERS commenced from and after the respective petition date and prior to the Effective Date and relating to an action or event occurring from and after the respective petition date and prior to the Effective Date, or (2) not subject to a pending litigation or action, but arising from actions or events occurring from or after the respective petition date and prior to the Effective Date, and

(B) the holder of such claim did not receive service of the Effective Date Notice as documented in a Certificate of Service ․

(Order Extending Administrative Claim Bar Date for Certain Parties and Modifying Discharge Injunction, Docket Entry No. 22650 (the “Administrative Bar Date Extension Order”) ¶ 2 (emphasis added).) The Extended Administrative Claim Bar Date was also widely published, pursuant to Court order. (See Administrative Bar Date Extension Order ¶ 7.)

Discussion

As noted above, Movant filed POC 180850 on February 4, 2023, well after the June 13, 2022, Administrative Claim Bar Date applicable to claimants who received the Effective Date Notice and after the January 18, 2023, extended bar date had passed as well. Under the Administrative Bar Date Extension Order, the Extended Administrative Claim Bar Date of January 18, 2023, applied only to claimants who had not received “Service of the Effective Date Notice as documented in a Certificate of Service[.]” (See Administrative Bar Date Extension Order ¶ 2.)

Movant filed the instant Motion on May 10, 2023, to which the Oversight Board filed the FOMB Objection on May 24, 2023, and the Movant filed its Reply on May 31, 2023. (See Docket Entry Nos. 24183, 24307, 24380.) On August 31, 2023, the Oversight Board filed the 613th Omnibus Objection, to which Movant filed an opposition on November 20, 2023. (Docket Entry Nos. 25070, 25684.) The Oversight Board filed its reply to the opposition, the FOMB 613th OO Reply, on June 4, 2025. (Docket Entry No. 29449.) The Oversight Board's submission in support of its objection provides evidence that Movant's counsel received timely, formal, actual notice via regular mail and email of the Administrative Expense Bar Date. (FOMB Obj. ¶ 16.) In its motion and its opposition to the 613th Omnibus Objection, Movant, who is represented on these contested matters by the same counsel representing him in the Postpetition Action, asserts a number of arguments why the Court should accept the late-filed proof of claim, chief among them that Movant received “no notice or instructions of anything he needed or needs to do, nor of any order or notice issued by this Court in the Commonwealth of Puerto Rico's or the ERS’ Title III proceedings” because such notice was provided to Movant's Postpetition Action counsel rather than directly to Movant or by naming Movant as the specific relevant client. (Mot. ¶ 5 n.5; Reply ¶ 5.)

On November 6, 2024, before the Oversight Board filed its reply in support of the 613th Omnibus Objection, the Court issued its Order Concerning the 613th Omnibus Objection to Late-Filed Administrative Claims (Docket Entry No. 28394) (the “Order re 613th OO”) in which this Court alerted Movant to several notices sent to Movant Fossas-Marxuach directly to or to the attorney representing Movant in the Postpetition Action:

The responses to the 613th Omnibus Objection filed on behalf [Movant by his] attorney (Andrés C. Gorbea-Del Valle) [assert] that [he] “received no notice of the deadline to file administrative expenses proofs of claims, nor of any matter related to the ERS’ and/or the Commonwealth of Puerto Rico's Title III cases.” (Docket Entry No. 25684 ¶ 14 [ ].) However, certificates of service filed in the Commonwealth and ERS cases appear to reflect multiple notices sent to the [Movant] or to Attorney Gorbea-Del Valle with respect to the commencement of the ERS Title III case, the prepetition bar date notice, scheduled employee obligations with respect to each claimant, and the Administrative Claim Bar date.

(Order re 613th OO at 2.) In the footnote immediately following the quoted passage, the Court pointed Movant to: Docket Entry No. 193 in Case No. 17-3566 Ex. B at 20 [ERS commencement of case certificate of service]; Docket Entry No. 830 in Case No. 17-3283 Ex. A1 at 38 [creditor matrix]; Docket Entry No. 1316 in Case No. 17-3283 Ex. A(ii) at 5 (Schedule C at 1) [ERS creditor schedules]; Docket Entry No. 20511 in Case No. 17-3283 Ex. A at 1, Ex. B at 1 [Effective Date Notice certificate of service]. (See Order re 613th OO at 2 n.4.) Movant also appears in Docket Entry No. 2712 in Case No. 17-3283 at page 5 of Exhibit E, showing that he received direct notice of the Prepetition Bar Date. Most importantly, Docket Entry No. 20511 in Case No. 17-3283 is the certificate of service for the Effective Date Notice, and counsel for Movant is listed as having received the notice by both mail and email as a “Notice Party”—i.e., a party designated to receive notice, not necessarily as the claimant. Docket Entry No. 20511 Ex. A at 1, Ex. B at 1.

The Court further noted that, “on April 5, 2022, in the Postpetition Action that is the basis for POC 180850, Attorney Gorbea-Del Valle requested on behalf of claimant Fossas-Marxuach that the court take judicial notice of the ERS Title III case. Acisclo Fossas-Marxuach v. Ret. Bd. of the Gov't of P.R. & the Judiciary, Case No. 21-01513 (CVR) (D.P.R. Apr. 5, 2022), ECF No. 15 at 9.” (Order re 613th OO at 3 n.6.) Movant's submissions do not explain why, if Movant and Movant's counsel received actual notice of the confirmed Commonwealth and ERS Plan by April 5, 2022, the more than two months of time remaining before the initial Administrative Claim Bar Date were insufficient to enable them to investigate the necessity of and file timely an administrative proof of claim. As further explained below, the record demonstrates that Movant—directly or through his counsel—received actual, direct, formal, court-approved notice of the commencement of the case, the Prepetition Bar Date, and the Administrative Claim Bar Date, all through the correct channels, in addition to publication notice. The Court-authorized service on Movant's counsel provided the requisite actual, direct notice of the Administrative Claims Bar Date. Publication notice, as authorized by the Court, also provided interested parties with notice of the relevant events and deadlines. Movant and any counsel representing Movant had the affirmative duty to investigate whether the case deadlines they were receiving notice of applied to Movant, and apparently neither Movant nor his counsel did so. Accordingly, Movant has presented neither viable factual nor legal grounds for recognition of the late-filed claim or overcoming the FOMB's objection.

A. The Oversight Board's Court-approved noticing procedures were sufficient at all times to overcome any due process concerns.

Movant's argument that it has been denied due process is unavailing. “Due process does not require that a property owner receive actual notice before the government may take his property.” Jones v. Flowers, 547 U.S. 220, 226 (2006) (citation omitted). Instead, notice must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Central Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950). Here, Movant and/or Movant's counsel received actual notice of both the pendency of the Title III cases and the Prepetition Bar Date, and specific actual notice of the Administrative Claim Bar Date, and so there has been no due process violation.

Generally, under Rule 5 of the Federal Rules of Civil Procedure made applicable by Bankruptcy Rule 9014(b)(3),⁹ with respect to service of a motion, “if a party is represented by an attorney, service under this rule must be made on the attorney unless the court orders service on the party.” Fed. R. Civ. P. 5(b)(1) (emphasis added). Service can then be accomplished by “mailing [service] to the person's last known address—in which event service is complete upon mailing.” Fed. R. Civ. P. 5(b)(2)(C) (emphasis added).¹⁰ These rules establish that the baseline of dropping a notice into first-class mail to a party's attorney is generally sufficient, restating the common “mailbox rule,” and applies to the circumstances at issue here, where the “motion” in the Bankruptcy Rule 9014 contested matter was the motion for approval of the Commonwealth Plan and the Effective Date Notice is a “Later Filing” under Bankruptcy Rule 9014(b)(3) that must be served pursuant to Federal Rule 5.

Bankruptcy Rule 2002 is also instructive. It provides in pertinent part as follows:

(g) Addressing Notices.

(1) In General. A notice mailed to a creditor, indenture trustee, or equity security holder must be addressed as the entity or its authorized agent provided in its last request filed in the case. The request may be:

(A) a proof of claim filed by a creditor or an indenture trustee designating a mailing address (unless a notice of no dividend has been given under (e) and a later notice of a possible dividend under Rule 3002(c)(5) has not been given); ․

(2) When No Request Has Been Filed. [ ] [I]f a creditor or indenture trustee has not filed a request under (1) or Rule 5003(e), the notice must be mailed to the address shown on the list of creditors or schedule of liabilities, whichever is filed later․

Fed. R. Bankr. P. 2002 (boldface emphasis added highlighting language showing that “mail” to an authorized agent such as an attorney is an appropriate method of service).

Under Bankruptcy Rule 2002, this Court approved notice of the prepetition bar date “by mail.” (Initial Bar Date Order ¶ 18 (emphasis added); Fed. R. Bankr. P. 2002.) Notably, the Plan enjoins further actions on discharged and/or barred claims, including untimely Administrative Expense Claims, and, under Bankruptcy Rule 3020(c), a confirmation order must be “mailed” to “other parties in interest; and [ ] if known, identified entities subject to an injunction” such as the injunctions contained in the Commonwealth plan of adjustment. Fed. R. Bankr. P. 3020(c)(1)-(2) (emphasis added). (See, e.g., Plan ¶¶ 92.2, 92.3, 92.11, 92.25.) Accordingly, service by first-class mail directly to Movant was appropriate under these circumstances to give notice to Movant of the commencement of the case and of the Prepetition Bar Date, and, subsequent to Attorney Gorbea Del Valle's appearance on behalf of Movant in the Postpetition Action, service to Movant's counsel by first-class mail and email was appropriate to him as Movant's agent/attorney in the Postpetition Action with respect to the Administrative Claim Bar Date and the injunctions contained in the Plan.¹¹

Attorney Gorbea Del Valle argues that Movant only received publication notice. (See, e.g., Reply ¶¶ 7-8.) However, this is not so: the Oversight Board provided direct notice to Movant of the commencement of the case and the Prepetition Bar Date as detailed in the Order re 613th OO, and such service was complete upon mailing under Federal Rule 5(b)(2)(C). (Order re 613th OO at 2.) Movant also received notice through his attorney in the Postpetition Action, Attorney Gorbea Del Valle, of the Administrative Claim Bar Date. Indeed, Attorney Gorbea Del Valle acknowledges that notice “directly or through counsel” is sufficient to satisfy due process concerns (Reply ¶ 11; 613th OO Resp. ¶ 21 (emphasis added)).¹² Not only does Attorney Gorbea Del Valle not dispute that the Effective Date Notice was served on him, Movant's Reply directly quotes the certificate of service evidencing that he received the Effective Date Notice and admits its receipt. (Reply ¶ 5.) This acknowledgment is all that is necessary to deny any claimants the ability to avail themselves of the Extended Administrative Claim Bar Date. (Reply ¶ 5.)

Movant's counsel's principal complaint here appears to be that the notices sent to him did not include the specific names of the three of his clients who eventually filed late proofs of claim. (Reply ¶ 5 (“In both lists the undersigned's name, Andrés Gorbea Del Valle, appears in the column corresponding to the Parties’ Names, and Fossas-Marxuach is nowhere to be found.”), ¶ 6 (“[H]ow can the undersigned counsel know or identify to which client or case does a notice relates to, if the notice does not include the party's name?”).) His argument is unavailing because attorneys are expected to be aware of which cases their clients are involved in. Loubriel v. Fondo del Seguro del Estado, 694 F.3d 139, 143 (1st Cir. 2012) (citing Irwin v. Dep't of Veterans Affairs, 498 U.S. 89, 92-93 (1990)) (“In contemplation of law, notice to the attorney is notice to the claimant.”).

Further, as noted above, the record confirms that Attorney Gorbea Del Valle was aware of the interrelationship between the ERS Title III case and the District Court litigation prior to the applicable bar date. He asked the District Court to take notice of the docket in the ERS Title III case in early April after receiving the Effective Date Notice in mid-March, more than two months before the Administrative Claim Bar Date. Fossas-Marxuach, Case No. 21-01513 (CVR) (D.P.R.), ECF No. 15 at 9. Contrary to Movant's counsel's argument, at that point counsel had an affirmative duty to investigate, or at least to advise clients to investigate, what deadlines might apply to the clients who were involved in the specific cases.

At all times, the Oversight Board followed closely the applicable rules for service, there appear to have been no mistakes, and it is unquestionable that the service was “reasonably calculated” to reach Movant. See Mullane, 339 U.S. at 314. Such notice must be deemed conclusive in this instance. “Without this legal presumption, our legal system could ‘unravel’ because any litigant could defeat a claim of service by mail with an unsubstantiated denial of receipt.” Berry v. U.S. Tr. (In re Sustaita), 438 B.R. 198, 209 (B.A.P. 9th Cir. 2010). Accordingly, notice was sufficient, and due process was not abridged in any respect in this instance.

B. Movant's other arguments concerning excusable neglect, released claims, and informal proofs of claim are rejected.

Movant offers a smattering of additional reasons why the late filing of the claim should be excused. Movant's arguments all fail for substantially the reasons set forth by the Oversight Board in the FOMB Objection and in the Oversight Board's reply in further support of the 613th Omnibus Objection. Accordingly, the Court will only touch briefly on each argument.

i. Movant has not demonstrated that the late filing was due to excusable neglect.

Subdivision 9006(b)(1) of the Federal Rules of Bankruptcy Procedure, which is made applicable to these Title III proceedings by section 310 of PROMESA, provides in pertinent part that: “[W]hen an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court, the court for cause shown may at any time in its discretion ․ on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect.” Fed. R. Bankr. P. 9006(b)(1).

The evaluation of a claim of excusable neglect involves an equitable balancing of several factors. These include “the danger of prejudice ․ the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.” See Graphic Commc'ns Int'l Union, Loc. 12-N v. Quebecor Printing Providence, Inc., 270 F.3d 1, 5 (1st Cir. 2001) (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993)). The Court must also consider whether the dilatory filing was made in bad faith with the intent to disadvantage a party in interest, and whether the circumstances were within the reasonable control of the late filer, but negligence or indifference led to the delay, or if the late filer acted in good faith but was hindered by reasonably unforeseen obstacles. See generally Pioneer Inv. Servs., 507 U.S. at 385, 395-96.

Here, Movant's counsel was served proper and adequate notice of the Administrative Claim Bar Date in mid-March 2022 and, as noted above, asked the District Court to take notice of the Title III docket in early April. Clearly, the original Administrative Claim Bar Date applies. Furthermore, Movant acknowledges that, in the Postpetition Action, the District Court ordered briefing on the applicability of the stay and discharge injunction on October 31, 2022. (613th OO Resp. ¶¶ 7-8.) Despite, then, having nearly three months until the Extended Administrative Claim Bar Date, Movant did not file POC 180850 until February 2023, four months later and several weeks late even for the extended deadline—and eight months after the original deadline.

Circumstances were within Movant and/or Movant's counsel's control and negligence or indifference led to the dilatory filing. Accordingly, Movant has failed to establish excusable neglect with respect to the late-filed administrative claim.

ii. Movant's claim is not a “Released Claim” under the Plan.

Movant argues that the underlying claim in the Postpetition Action involves gross negligence and willful misconduct and so the claim cannot be expunged because it is not a “Released Claim” within the meaning of exceptions for claims of that type under section 1.421 of the Plan. (613th OO Resp. ¶ 11 (citing Plan § 1.421).)

However, as noted by the Oversight Board, Movant's claim has not been “released,” it has been discharged, and there are no exceptions to discharge under the Plan or in Title III generally for any type of late-filed claim. (See FOMB 613th OO Reply ¶ 42.) The discharge provision of the Plan contains no references to “Released Claims,” or exceptions for willful misconduct, and the exception in the Plan pertains only to releases provided by the Commonwealth to third parties. (See Plan § 92.5.)¹³

iii. The informal proof of claim doctrine is inapplicable.

Movant requests, in the alternative, that the complaint filed in the Postpetition Action be accepted as its proof of claim under the “informal proof of claim doctrine” recognized in the First Circuit. (See, e.g., Mot. ¶ 18.)

To be accepted as an informal proof of claim a document must: “(1) have been timely filed with the bankruptcy court and become part of the record, (2) state the existence and nature of the debt, (3) state the amount of the claim, and (4) evidence the creditor's intent to hold the debtor liable.” Belser v. Nationstar Mortg., LLC (In re Belser), 534 B.R. 228, 239 (B.A.P. 1st Cir. 2015) (quoting In re Soares, 380 B.R. 109, 115 (Bankr. D. Mass. 2007)).

Here, the complaint fails the first requirement: it was filed in the District Court for the District of Puerto Rico, not on the Title III “bankruptcy” court docket, and thus it never became part of the record of the Title III case. Accordingly, and despite the fact that that the Title III case is venued in the District Court for the District of Puerto Rico, the pendency of the separate civil action in the same district was not sufficient to put ERS and its sole Title III representative, the Oversight Board, on informal notice of the claim. In light of this conclusion and the sufficiency of notice given to Movant in connection with the Title III proceedings, it is unnecessary for the Court to address the Oversight Board's argument that application of the informal proof of claim doctrine as articulated by the First Circuit would grievously hinder its restructuring efforts (FOMB Obj. ¶ 19).

Accordingly, Movant's request that the complaint in the Postpetition Action be accepted as an informal proof of claim is denied.

Conclusion

For the above-stated reasons, the Motion is denied in its entirety, the 613th Omnibus Objection is sustained with respect to late-filed Proof of Claim No. 180850, and that claim is expunged in its entirety. This Order resolves the 613th Omnibus Objection (Docket Entry No. 25070 in Case No. 17-3283) solely with respect to POC 180850, as well as Movant's response in opposition thereto. The Oversight Board is directed to submit a comprehensive proposed order once all of the matters raised in the 613th Omnibus Objection have been resolved.

This Order resolves Docket Entry No. 24183 in Case No. 17-3283.

SO ORDERED.

FOOTNOTES

2.   Unless otherwise noted, due to joint administration of the several Title III cases, all docket references herein are to Case No. 17-3283.

3.   The Six Hundred Thirteenth Omnibus Objection (Substantive) of the Commonwealth of Puerto Rico, the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Puerto Rico Public Buildings Authority to Late-Filed Administrative Claims (the “613th Omnibus Objection”) (Docket Entry No. 25070).

4.   The Court has also received and reviewed, inter alia, the Oversight Board's objection to the Motion (Docket Entry No. 24307) (the “FOMB Objection”), Movant's reply in support of the Motion (Docket Entry No. 24380) (the “Reply”), and the FOMB's reply in further support of the 613th Omnibus Objection (Docket Entry No. 29449) (the “FOMB 613th OO Reply”).

5.   The Motion itself was also filed as an administrative expense claim, Proof of Claim 180877 (“POC 180877”). POC 180877 was expunged as late-filed without opposition by the first order granting in part the 613th Omnibus Objection (Docket Entry No. 27606). The notice of presentment of the first order granting in part the 613th Omnibus Objection separated out a number of claims for future consideration, including POC 180850. (See Docket Entry No. 27009 Ex. B at 1.)

6.   Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Motion, the FOMB Objection, or in any specifically referenced filing.

7.   The Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) is codified at 48 U.S.C. § 2101 et seq. References herein to PROMESA section numbers are to the uncodified version of the legislation, unless otherwise indicated. References herein to the provisions of Title 11 of the United States Code (the “Bankruptcy Code” or the “Code”) are to sections made applicable in these cases by section 301 of PROMESA. 48 U.S.C. § 2161. The Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”)—incorporating the Federal Rules of Civil Procedure (the “Federal Rules”) where pertinent—are made applicable in these Title III cases by section 310 of PROMESA. 48 U.S.C. § 2170.

8.   Movant has not, however, requested stay relief in this Court, and the Court notes that the stay expired upon the Effective Date of the Plan (both as defined below), having been replaced by the injunctive provisions of the Plan. (See Plan §§ 92.2, 92.3). Pursuant to the Plan, with exceptions not relevant here, “all distributions and rights afforded under the Plan [are provided] ․ in complete satisfaction, settlement, discharge and release of, all Claims or Causes of Action against the Debtors ․ that arose ․ prior to the Effective Date ․” (Plan § 92.2). The discharge injunction provision provides that “all Entities who have held, hold, or in the future hold Claims ․ discharged or released pursuant to section 92.2 of the Plan are permanently enjoined, from and after the Effective Date, from (a) commencing or continuing, directly or indirectly, in any manner, any action or other proceeding ․ of any kind on any such Claim or other debt or liability that is discharged pursuant to the Plan against any of the Released Parties ․” (Plan § 92.3).

9.   Bankruptcy Rule 9014(b) provides:Service.(1) Motion. The motion must be served within the time prescribed by Rule 9006(d) and in the manner for serving a summons and complaint provided by Rule 7004.(2) Response. Any written response must be served within the time prescribed by Rule 9006(d).(3) Later Filings. After a motion is served, any other document must be served in the manner prescribed by Fed. R. Civ. P. 5(b).Fed. R. Bankr. P. 9014(b) (emphasis added).

10.   See Goel v. Tucker (In re Tucker), No. 18-35542, 2021 WL 4901692, at *7 (Bankr. S.D. Tex. Oct. 20, 2021) (“Rule 5(b)(2)(C) leaves no room for interpretation: service is complete upon mailing to the person's last known address. Because service is complete upon mailing, service is not necessarily invalidated by the return of certified mail or a party's refusal to accept such mail.” (citations omitted)).

11.   Under the case management order in these Title III cases, “[s]ervice by email shall be effective as of the date the Document is sent to the email address provided by the party. If service is made by email, the Debtors shall not be required to serve a paper copy of the Document on interested parties and email service shall satisfy the Court's rules for service.” See, e.g., Twentieth Amended Notice, Case Management and Administrative Procedures (Docket Entry No. 29627-1 in Case No. 17-3283). Movant's counsel was also served by email.

12.   Case law in the First Circuit and elsewhere supports this conclusion. In Vicenty v. San Miguel Sandoval (In re San Miguel Sandoval), the Bankruptcy Appellate Panel for the First Circuit, collecting cases, observed that:[W]here a creditor has more than a generalized knowledge of the bankruptcy case, and where the creditor or creditor's attorney has in fact received actual notice of the pendency of the overall bankruptcy case in time to protect the creditor's rights, lack of a specific notice of the bar date has been held not to violate the creditor's right to due process.327 B.R. 493, 497 (B.A.P. 1st Cir. 2005). Here, Movant received actual direct notice of both the pendency of the case and the Prepetition Bar Date, and actual notice of the Effective Date through counsel Attorney Gorbea De Valle. In In re San Miguel Sandoval, the Bankruptcy Appellate Panel put a special emphasis on cases where an attorney for the creditor in a related case, even in state court cases related to the underlying claim, was a sufficient “nexus”:Furthermore, the overwhelming weight of authority is that, in bankruptcy cases, notice served on a creditor's counsel is presumed to satisfy both bankruptcy and due process notice requirements as to the creditor, so long as there is a nexus between the creditor's retention of the attorney and the creditor's claim against the debtor.Id. Specifically, the First Circuit Bankruptcy Appellate Panel cited with approval In re Schicke, 290 B.R. 792 (B.A.P. 10th Cir. 2003)—wherein “the attorney who received notice did not appear in the bankruptcy case, but represented the creditor with respect to pre-bankruptcy litigation against the debtor”—and In re Griggs, 306 B.R. 660, 665-66 (Bankr. W.D. Mo. 2004)—wherein the service on an “attorney who had represented the creditor in a state court collection action giving rise to the creditor's claim”—as illustrative of sufficient nexus between the claimant and the service recipient for effective service. As noted above, under Federal Rule 5(b)(2)(C) service is effective upon mailing.

13.   Movant appears to be functionally arguing that section 523(a)(6) of the Bankruptcy Code, which excepts willful misconduct liabilities from discharge under certain circumstances, precludes the discharge of his claim. However, the provisions of the Bankruptcy Code that are applicable in cases under Title III of PROMESA are enumerated in section 301(a) of PROMESA, 48 U.S.C. § 2161(a), and section 523 of the Bankruptcy Code is not included in that list. Additionally, section 523(a)(6) only applies to claims against “individuals.” 11 U.S.C. § 523(a). ERS is not an “individual,” and claims against it therefore would not fall within the scope of section 523(a)(6) even if that section were incorporated into PROMESA. Movant has therefore presented no basis for applying section 523(a)(6) of the Bankruptcy Code.

LAURA TAYLOR SWAIN United States District Judge