Susan N.K. Gummow Secures Victory in a Second Circuit Bankruptcy Appeal

Shareholder Susan N.K. Gummow secured a win for her insurer client in the Second Circuit Court of Appeals in a case that arose out of a plaintiff seeking to pursue a personal injury lawsuit against a company in bankruptcy in order to collect from insurance proceeds.

The court affirmed the lower court’s ruling regarding the timeliness of personal injury claims brought in a complex Chapter 11 bankruptcy. The court agreed that the statute of limitations had already run, and the plaintiff, after obtaining termination of the automatic stay, failed to file her complaint on time pursuant to 11 U.S.C. §108(c) of the Bankruptcy Code.

Initially, the claimant-appellant received relief from the automatic stay to pursue a personal injury claim in state court and collect from available insurance proceeds. Having failed to timely bring the claim in state court within the time permitted under 11 U.S.C. § 108(c), the claimant returned to the Bankruptcy Court for the Southern District of New York in an attempt to revive the time-barred claim. The Bankruptcy Court denied the relief sought. Susan moved on behalf of the client, an insurer of the debtor company, to dismiss the plaintiff’s late-filed lawsuit seeking to collect against the debtor’s insurance policies.

The Bankruptcy Court for the Southern District of New York ruled in the insurer’s favor, adopting Susan’s arguments relating to the procedural aspects of the case, including service and notice, as well as failure to comply with section 108(c). The plaintiff appealed to the District Court, arguing excusable neglect based on her counsel not receiving proper notice from the Bankruptcy Court, thus necessitating an allowance for the late filing of her complaint. The District Court considered the arguments and ruled in the insurer’s favor, finding that there was more than enough evidence to establish a presumption that notice was proper.

The plaintiff appealed to the Second Circuit Court of Appeals, making the same arguments regarding notice. The Second Circuit held Susan’s argument that the matter was procedurally proficient, and any harm suffered by the plaintiff was due not to the debtor or defendant, but rather the actions of plaintiff, therefore affirming the ruling of the District Court.

Susan focuses her practice on insurance coverage and bankruptcy. She specializes in representing insurance companies confronted with bankruptcy issues.

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