When a creditor files a proof of claim, it can often take months or even years before they hear anything about it. Then, suddenly, they may face an objection to their claim, potentially on multiple grounds, with a limited window to respond. This situation can prompt several important strategic considerations for crafting the most effective response.

Key issues to consider include anticipating the objection by reviewing the debtor’s schedules, monitoring for the objection due to the prolonged process of claims administration in a Chapter 11 case, understanding the basis of the objection, and evaluating the objection to decide the most appropriate response. The response could range from filing a formal response and potentially litigating the claim to negotiating with the debtor, trustee, or plan administrator to resolve the objection.

The claims administration process is multifaceted and nuanced. Real value in a creditor’s claim can be lost due to improper responses to claim objections. Conversely, a creditor could risk wasting resources litigating an objection that would be better negotiated or simply ignored. Experienced bankruptcy counsel can ensure that a creditor takes the best value-maximizing approach when faced with an objection to its claim. Read the full article here.