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In re: KIOSK BUILDING ASSOCIATES, L.P., Chapter 11, Debtor

MEMORANDUM OPINION AND ORDER

STEPHEN MITCHELL, Bankruptcy Judge

Before the court is the motion of ALI, Inc. filed March 14, 1997, to shorten notice and response times, and to set an expedited hearing on, its motion to estimate for voting purposes the claims of The Hartford Fire Insurance Company (the debtor's proposed tenant), and Gersten Commercial Realty, Julien J. Studley, Inc., and HRA Brokerage Services, Inc. (real estate brokers connected with the transaction). Hartford's claim, which is based on the debtor's agreement to indemnify against the brokers' claims, is set forth in a proof of claim filed February 12, 1997. The claims of the brokers are set forth in an amendment to the debtor's schedules that was apparently received by ALI's attorneys on January 18, 1997. The hearing on confirmation of the debtor's Third Amended Plan of Reorganization is set for March 19 and 20, 1997. The debtor has filed a Fourth Amended Plan of Reorganization which, although it improves the position of ALI (by eliminating a priming loan that had been proposed in the earlier plan) does not change the treatment of Hartford, Gersten, Studley, and HRA. The court, consistent with Local Bankruptcy Rule 3016-1(E), set March 12, 1997, as the last date for filing objections to confirmation. On motion of ALI, however, the court extended the date until March 13, 1997.

It does not appear that an objection has been filed to any of the four claims. In its motion, ALI cites to § 502(c), Bankruptcy Code, which permits the court to estimate, "for purpose of allowance . . . any contingent or unliquidated claim, the filing or liquidation of which, as the case may be, would unduly delay the administration of the case." Under the proposed plan, the three brokers would be paid in full four months after the effective date of the plan. Such payment would necessarily resolve Hartford's contingent claim, which is grounded on the debtor's undertaking in the lease to pay and to hold Hartford harmless from the claims of real estate brokers. The claims of the brokers are placed in their own class (Class 4). Hartford's claim is included in Class 5, the class of general unsecured claims. ALI's concern is apparently not focussed on the brokers' claims, as such, but Hartford's, and the possibility that its vote could be determinative of Class 5's acceptance or rejection of the plan. However, Hartford's claim was included in the class of general unsecured claims in the prior version of the plan and has been a matter of record in this case for more than a month. To wait until three business days prior to the confirmation hearing to file a motion to fix the amount of the claim constitutes unreasonable delay. Even putting aside the issue of adequate notice, to attempt to hold a claims estimation hearing in connection with a confirmation hearing already crowded with numerous legal and factual issues would disrupt the proceedings. Accordingly, the motion for an expedited hearing will be denied.

This is not to say that the issue of how Hartford's claim has been classified may not present a confirmation issue. Where a claim is based on the debtor's duty of indemnity, to place that claim in one class while the claims indemnified against are placed in another class is somewhat puzzling. In any event, the court's ruling denying an expedited hearing on the motion to estimate Hartford's indemnity claim is not intended to foreclose inquiry at the confirmation hearing on the question of whether that claim has been properly included in the class of general unsecured creditors.

ORDER

For the foregoing reasons, it is

ORDERED:

1. The motion for expedited hearing is denied. The underlying motion to estimate claims, to the extent it is still an issue after the confirmation hearing, may be set on, and noticed for, any regular motions day.

2. The clerk will mail a copy of this order to counsel for the debtor, counsel for ALI, Inc., and the United States Trustee.

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IN RE KIOSK BUILDING ASSOCIATES, L.P., (Bankr.E.D.Va. 1997)
(Mar 17, 1997)