Stratesec, Inc.

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
STRATESEC, INC.,
Debtor.
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Case No. 04-00696
(Chapter 11)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION RE OBJECTION TO CLAIM
OF COMMONWEALTH OF VIRGINIA, DEPARTMENT OF TAXATION
A hearing was held today on the objection to the claim of
the Commonwealth of Virginia, Department of Taxation. 	No one
appeared on behalf of the Department, and the claim remains
untimely such that the objection must be sustained.
Even though the opposition to the objection to the claim can
be viewed as embodying a belated motion (filed months after the
filing of the claim) seeking under Rule 9006 to enlarge the time
for filing the claim, the Department bore the burden of proof to
justify such an enlargement and failed to appear at the hearing
to present evidence. 	For example, it failed to adduce evidence
addressing whether the estate would be prejudiced in attempting
at this late date to gather evidence to address the merits of the
proof of claim, whether resolution of the merits of the claim
The document below is hereby signed.
Signed: April 07, 2009.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 	Nor did it present argument regarding the prejudice to
creditors in having accepted a plan pursuant to a disclosure
statement that did not take into account the claim.
2
would entail prejudicial delay, and the reason for the
substantial delay. 	Its attorney’s statements are not evidence. 1
Accordingly, I did not need to address the effect of the
plan’s being a liquidating plan on the prejudice issue. 	Nor did
I need to address the division in decisions as to what weight is
to be accorded the various factors considered pursuant to Pioneer
Investment Services Co. v. Brunswick Associates L.P., 507 U.S.
380 (1993), in deciding whether excusable neglect exists.
Compare Midland Cogeneration Venture Ltd. P’ship v. Enron Corp.
(In re Enron Corp.), 419 F.3d 115, 123 (2d Cir. 2005) (“[T]he
four Pioneer factors do not carry equal weight; the excuse given
for the late filing must have the greatest import. 	While
prejudice, length of delay, and good faith might have more
relevance in a close[ ] case, the reason-for-delay factor will
always be critical to the inquiry.” (citation omitted)), with In
re Sacred Heart Hosp. of Norristown, 186 B.R. 891, 895 (Bankr.
E.D. Pa. 1995) (“[A] long and logically unjustified delay which
nevertheless has no significant impact on the debtor's case
should . . . often be deemed excusable.”). 	The claim remains
untimely, and an order follows sustaining the objection to the
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2 	At the hearing, I erroneously assumed (based on faulty
recollection as to when I had confirmed the plan) that the plan
had been confirmed long before the claim was filed, and that
distributions had commenced under the plan to other priority
creditors prior to the filing of the claim. 	But, instead, the
claim was filed shortly before confirmation. 	Accordingly, had
the case been one under chapter 7 on the plan’s effective date
instead of one under chapter 11, the claim might have been timely
under 11 U.S.C. § 726(a)(1), and if the allowed claims utilized
in applying the hypothetical test of 11 U.S.C. §
1129(a)(7)(A)(ii) are those that have been allowed in the chapter
7 case as of the effective date, § 1129(a)(7)(A)(ii) would not
furnish an argument against allowance of the claim in the chapter
11 case.
Moreover, § 1129(a)(7)(A)(ii) does not furnish an argument
against allowance of a claim filed after the effective date. 	The
hypothetical test of § 1129(a)(7)(A)(ii) assumes a hypothetical
distribution on allowed claims, but Rule 9006 addresses what the
allowed claims will be in the chapter 11 case to which the
hypothetical chapter 7 test will be applied. 	By way of analogy,
however, § 726(a)(1) does suggest that once distributions have
begun, it is unwise to inject into the mix another claim, when
that will require re-calibration of distributions, by allowing a
late claim that was filed after distributions began.
3	O:\TEEL\Judge Temp Docs\Stratesec - Mem Decsn re Objn to Commonweallth of Va Claim.wpd
claim. 2
[Signed and dated above.]
Copies to: Entities listed on the order sustaining the objection.
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