ELIZABETH PERRIS, Bankruptcy Judge
Debtors object to the trustee's motion for authorization to send a notice of surplus assets. The trustee is anticipating receipt of an approximately $9,000 tax refund to the estate. The estate will then have a surplus after payment to claimants holding allowed claims of between $20,000 and $25,000. The trustee seeks authority to send a notice to creditors advising them of their rights to possible distribution under section 726(a)(3). Debtors argue that the local rule providing for such a notice is invalid as contrary to the Bankruptcy Code and Rules, and that, even if it is valid, the trustee has not met the requirements set out in the rule for providing the notice.
Local Bankruptcy Rule 3002-1.A.1.d., as amended by General Order 98-1, provides:
"If the trustee concludes a case has surplus assets, the trustee may file a motion for authorization to send notice of such surplus to creditors who have not filed a claim. The court may then, for cause shown in an individual case, authorize the clerk to send a surplus asset notice in that case. If such notice is authorized, and is sent after the filing deadline for tardy claims set forth in LBR 3001-1.A.1.c.,
the deadline for filing tardy claims shall become that set in the notice."
Debtors argue that the rule is invalid, because Bankruptcy Rule 3002(c)(6), which allowed a granting of an extension of time for filing claims in the event of a surplus, was deleted in the 1996 amendments, and therefore there is no authorization for a local rule allowing an extension of time.
Collier on Bankruptcy explains the abrogation as follows:
"As a result of the addition of section 502(b)(9) and changes to section 726(a) of the Code, Rule 3002 was significantly amended in 1996. Language requiring that proofs of claim or interest be `filed in accordance with this rule' was eliminated because Rule 3002 governs timeliness only and late filed claims will be dealt with pursuant to section 726 of the Code. Similarly, the language of Rule 3002(c) was changed to clarify that the rule governs timeliness rather than operating to absolutely prohibit late filings of claims and interests."
9 Collier on Bankruptcy ¶ 3002.RH[3] (15th ed rev 1996) (footnotes omitted).
The local bankruptcy rule is not inconsistent with the deletion of Rule 3002(c)(6). LBR 3001-1.A.1.d. deals not with timeliness, but instead with notice. It merely allows the trustee to ask the court to send notice to creditors who have not filed claims that they may be entitled to a distribution even if they file tardy claims. There is nothing that prohibits the court from sending notice that the circumstances of the case are such that a creditor may want to preserve its rights under section 726(a)(3). If a court may not send such a notice, the next issues will be whether, in the case of a surplus, a trustee may send such a notice or whether a trustee would be obligated to file claims under section 501(c) for creditors who did not file timely claims.
In this case, the sending of the notice will not delay the administration of the case and its closure. The trustee represented that he was not sure whether he would have already filed a final account but for this motion and objection. Even if he would have filed the final account, the process for distribution and closure would not yet have been completed. Therefore, the sending of a notice in this case will not delay distribution or closure.
The next question is whether the trustee has shown "cause" as required by the local rule. I conclude that he has. The surplus in this case is quite large, between $20,000 and $25,000. Although the mere fact of a surplus cannot, without more, constitute cause, I think that the magnitude of the surplus can, especially where there is no delay in the administration of the case caused by the sending of the notice.
In addition, the order and notice to file claims that was sent to creditors was potentially misleading. It stated, in part:
"1. In order to have a claim allowed and possibly share in
any distribution from this estate, a creditor must file a proof of claim within 90 days of the above `filed' date or it will not be allowed except as otherwise provided by law (e.g., if case filed after 10/21/94, governmental units may file within 90 days of the above `filed' date, or before 180 days after the date relief was ordered, whichever is longer).
"2. You must send the claim to the address shown below.
"3. Any surplus of funds remaining after payment of filed claims will be returned to the debtor(s)."
A creditor reading the order could logically conclude that failure to file a claim within the time permitted would bar any distribution. Creditors are not informed that, if they file a late claim, they will receive a distribution before any surplus is returned to the debtor. Lack of clarity in notification of claims deadlines can be cause for relief. See Pioneer Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380, 398-99 (1993).
Pioneer Investment is distinguishable in that it was a Chapter 11 case that addressed whether cause existed to extend the claims bar date. It recognized that such extensions are not permitted in Chapter 7 cases. 507 US at 389 n4. The issue in this case is whether cause exists to send an informational notice, not whether cause exists to extend the bar date.
Debtors' objection will be overruled and the trustee's motion for authorization to send a surplus asset notice granted. The United States Trustee will submit the order.