Case 14-16484-CMG Doc 330 Filed 08/05/14 Entered 08/05/14 12:52:46 Desc Main Document Page 1 of 6 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW JERSEY Caption in compliance with D.N.J. LBR 9004-2(c) SONG LAW FIRM, LLC 400 Kelby Street Seventh Floor Fort Lee, New Jersey 07024 Howard Z. Myerowitz, Esq. Kyong Chung, Esq. Telephone: (201) 461-0031 Facsimile: (201) 461-0032 E-mail: hmyerowitz@songlawfirm.com E-mail: mail@songlawfirm.com Attorneys for S.S.T.S. America Corp. In re: MEE APPRAREL LLC and MEE DIRECT, LLC Debtors-In-Possession. Chapter 11 Lead Case No.: 14-16484-CMG (Jointly Administered) Case No.: 14-16486-CMG MOTION TO DEEM LATE FILED PROOFS OF CLAIM AS TIMELY FILED COMES NOW S.S.T.S. America Corp. (hereinafter SSTS ), by and through undersigned Counsel, Song Law Firm, and files this Motion to Deem Late Filed Proofs of Claim as Timely Filed, and, in support thereof, states as follows: BACKGROUND 1. On April 2, 2014, MEE APPAREL LLC (hereinafter Mee Apparel ) and MEE DIRECT LLC (hereinafter Mee Direct ) (collectively hereinafter Debtors ) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. By order of the Court entered on April 4, 2014, the Debtors bankruptcy cases are being jointly administered under the above caption and docket. See Dkt. No. 61.
Case 14-16484-CMG Doc 330 Filed 08/05/14 Entered 08/05/14 12:52:46 Desc Main Document Page 2 of 6 2. On April 8, 2014, the Court set July 29, 2014 (hereinafter the Claims Bar Date ) as the last day to file Proofs of Claim. 3. At this time, the Disclosure Statement and Chapter 11 Plan are still awaiting confirmation hearing. NATURE OF CLAIMS 4. The Debtors, sellers of apparel and accessories to both men and women, were the primary holders of the rights to the Ecko license, an urban streetwear brand marketed through both retail and wholesale channels. 5. SSTS was a supplier of goods to the Debtors. 6. Over the course of twelve (12) separate transactions over approximately six and one-half (6½) months from December of 2012 to June of 2013, SSTS sold the Debtors Ecko brand merchandise, payment for which was due in the amount of $463,911.35. Subsequent inquiries have yielded that Mee Apparel owes SSTS $203,222.55, whereas Mee Direct owes SSTS $260,688.80. owed to SSTS. 7. The Debtors breached their contract with SSTS and have not paid the amount 8. On April 2, 2014, the undersigned Counsel for SSTS, not knowing that the Debtors intended to file their voluntary bankruptcy Petitions, finalized and mailed to the Superior Court, Bergen County a Complaint on behalf of SSTS to hold the Debtors responsible for their breach of contract (hereinafter the State Court Action ). After processing, the Complaint was officially registered as filed by the Court on April 7, and the State Court Action was stayed pursuant to the automatic stay instituted by the filing of the instant petitions. 9. A copy of the Complaint in the State Court Action, which repeatedly states the specific dollar amounts claimed by SSTS as against the Debtors and which includes an accounts
Case 14-16484-CMG Doc 330 Filed 08/05/14 Entered 08/05/14 12:52:46 Desc Main Document Page 3 of 6 receivable sheet stating the dates and dollar amounts of each of the transactions in question between SSTS and the Debtors, is annexed hereto as Exhibit A. 10. After Debtors provided notice of their voluntary Petitions, SSTS voluntarily discontinued the State Court Action. million. 11. In their petitions, both Debtors listed their estimated assets as between $10-$50 12. In their petitions, both Debtors included SSTS among their twenty (20) largest unsecured creditors, but neither included SSTS among their ten (10) largest unsecured creditors. 13. SSTS is a prepetition creditor of the Debtors. PROOF OF CLAIM MAILED OUT TO COUNSEL ON TIME BUT FILED LATE 14. Due to law office failure, the Proofs of Claim were prepared more than a week in advance of the Claims Bar Date 1 but were not filed with the Court. 15. The Proof of Claim as to Mee Apparel was mailed to Debtors Counsel on the Claims Bar Date, but due to law office failure, the Mee Direct Proof of Claim was not mailed to Debtors Counsel at the same time. 2 16. The Proofs of Claim, both of which were filed with the Court within 48 hours of the Claims Bar Date, are attached as Exhibit B. BASIS FOR RELIEF REQUESTED 17. Federal Rule of Bankruptcy Procedure 9006(b) allows the Claims Bar Date to be extended where the failure to timely act was the result of excusable neglect. 1 The Proof of Claim for Mee Apparel was prepared on July 14. The Proof of Claim for Mee Direct was prepared on July 18. Counsel was called into Court on one criminal matter and was preparing for another highly publicized criminal matter set to begin on July 30. Counsel assigned the filing of the Proofs of Claim to a paralegal, not realizing that the paralegal was inexperienced in matters of bankruptcy. The paralegal failed to recognize the significance of, organize, and timely file the papers. 2 The paralegal attempted to file the Proof of Claim electronically but was stymied by the unavailability of the undersigned s ECF login information. Short of that, the paralegal did mail out the Mee Apparel Proof of Claim.
Case 14-16484-CMG Doc 330 Filed 08/05/14 Entered 08/05/14 12:52:46 Desc Main Document Page 4 of 6 18. In Pioneer Inv. Servs. v. Brunswick Assocs. Ltd. P'ship, the United States Supreme Court, taking note of the language of the Rule [and] the evident purposes behind it, articulated the standard for what constitutes excusable neglect on an untimely filed Chapter 11 Proof of Claim. 507 U.S. 380, 388 (1993). 19. The Court found that Congress plainly contemplated that the courts would be permitted, where appropriate, to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances beyond the party's control. Id. 20. The Court contrasted a Chapter 11 claim with a Chapter 7 claim, finding that the aim of Chapter 11 is to rehabilitat[e] the debtor and avoid[] forfeitures by creditors, that the emphasis of the Court is not as much on prompt closure as with Chapter 7 claims, and that adopting a flexible understanding of excusable neglect is in full accord[] with the policies underlying Chapter 11 and the Bankruptcy Rules. Id. at 389. 21. The Court adopted a four-part test for determining the existence of excusable neglect, noting (a) the danger of prejudice to the debtor; (b) the length of the delay and its potential impact on the judicial proceedings; (c) the reason for the delay, including whether it was within the reasonable control of the movant; and (d) whether the movant acted in good faith. Id. at 395. 22. The Court stressed, however that the determination is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission. Id. See also Chemetron Corp. v. Jones, 72 F.3d 341, 349-350 (3d Cir. 1995) (stressing that the totality of the circumstances must be examined in the excusable neglect inquiry). 23. Furthermore, [a]ll [of the four] factors must be considered and balanced; no one factor trumps the others. Hefta v. Official Comm. of Unsecured Creditors (In re Am. Classic Voyages Co.), 405 F.3d 127 (3d Cir. 2005) (citing George Harms Constr. Co. v. Chao, 371 F.3d 156, 164 (3d Cir. 2004)).
Case 14-16484-CMG Doc 330 Filed 08/05/14 Entered 08/05/14 12:52:46 Desc Main Document Page 5 of 6 THERE WAS NEITHER PREJUDICE TO THE DEBTORS NOR LENGTHY DELAY 24. Here, there was no prejudice whatsoever to the Debtors caused by the untimely filing of the Proofs of Claim. One of the Proofs of Claim was timely mailed to Debtors. Both Proofs of Claim at issue were filed within 48 hours of the Claims Bar Date, an exceedingly short delay. 25. Similarly, there is no way the Debtors can claim that they had inadequate notice of the claims against them. The Debtors, having been in receipt of SSTS Complaint in the State Court Action for more than three and one-half (3½) months, were well aware of the extent of the claims by SSTS (including the exact dollar amount claimed and the twelve (12) different transactions over the course of over six (6) months upon which those claims were based). 26. Simply put, there has been neither prejudice to the debtor nor lengthy delay. In fact, quite the opposite is true. SSTS has the first two Pioneer factors strongly in its favor. THOUGH IT INADVERTENTLY ERRED, SSTS ACTED IN GOOD FAITH 27. Though the ability to timely file was within SSTS control, a fact which SSTS does not deny, SSTS acted here in good faith. 28. The failure to timely file the Proofs of Claim resulted from law office failure, certainly not any malicious action by SSTS or Counsel. On the contrary, SSTS and Counsel have acted consistently to provide notice to the Debtors of the claims against them. 29. Moreover, once the late filing was discovered by Counsel, Counsel promptly sought leave, in the form of the instant motion and within a week of the Claims Bar Date, to permit the Proofs of Claim in question to be deemed timely filed.
Case 14-16484-CMG Doc 330 Filed 08/05/14 Entered 08/05/14 12:52:46 Desc Main Document Page 6 of 6 30. It is respectfully submitted that based upon the foregoing, there is sufficient cause for the Court to find excusable neglect on the part of SSTS and for the Court to deem SSTS Proofs of Claim as to the Debtors timely filed. WHEREFORE, SSTS seeks the entry of an Order granting the instant Motion, deeming their Proofs of Claim as timely filed, and granting such other and further relief as the Court deems just and equitable. Dated: August 5, 2014 Respectfully Submitted, By: /s/ Kyong Chung Kyong Chung, Esq. Kchung@SongLawFirm.com 400 Kelby Street, 7 th Floor Fort Lee, New Jersey 07024 201-461-0031 (Phone) 201-461-0032 (fax) Attorneys for Creditor S.S.T.S. America Corp.
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Case 14-16484-CMG Doc 330-3 Filed 08/05/14 Entered 08/05/14 12:52:46 Desc Proposed Order Page 1 of 1 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY In re: MEE APPRAREL LLC and MEE DIRECT, LLC Debtors-In-Possession. Chapter 11 Lead Case No.: 14-16484-CMG (Jointly Administered) Case No.: 14-16486-CMG PROPOSED ORDER This matter having come before this Court upon a Motion to Deem Late Filed Proofs of Claim as Timely Filed, and upon all submissions and proceedings heretofore had herein, and This Court being satisfied that the late filing of S.S.T.S. AMERICA CORP. s Proofs of Claim as to Debtor-in-Possession MEE APPAREL LLC and Debtor-in-Possession MEE DIRECT LLC (the Debtors ) was the result of excusable neglect; NOW, THEREFORE, IT IS HEREBY ORDERED that, pursuant to Federal Rule of Bankruptcy Procedure 9006(b), S.S.T.S. AMERICA CORP. s Proofs of Claim as to the Debtors are deemed timely filed. Dated: August, 2014 CHRISTINE M. GRAVELLE, U.S.B.J UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY