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In re Chicago Pacific Corp.

In re Chicago Pacific Corp.

United States Court of Appeals for the Seventh Circuit

April 10, 1985, Argued ; September 24, 1985

No. 84-2033

Opinion

 [*910]  WOOD, Jr., Circuit Judge.

Appellants, the Organization of Minority Vendors, Inc., et al. ("OMVI"), appeal from an order of the reorganization court, Chief Judge McGarr presiding, denying their requests for leave to file a proof of claim against the debtor, the Chicago, Rock Island and Pacific Railroad Company (the "Rock Island") 2 or for modification of an injunction barring them from pursuing their claims against the Rock Island in an action pending before Judge Moran. Judge McGarr concluded that the OMVI claim was barred as untimely under both Rule 8-401(b)(1) of the Bankruptcy Rules and Order No. 669 of the Reorganization Court.  [**2]  

 [*911]  I.

The procedural histories of two separate judicial proceedings are crucial to resolution of the major issue whether the reorganization court erred in denying OMVI leave to file its claim: the Rock Island reorganization proceedings and proceedings in a class action lawsuit filed by OMVI against a number of railroad companies charging them with discriminating against Black and Hispanic businesses by refusing to allow them to provide goods and services to defendant railroads and seeking injunctive and monetary relief. The details necessary to an understanding of this appeal follow.

In March, 1975, the Rock Island, in serious financial difficulty, sought reorganization under section 77 of the Bankruptcy Act of 1898, 11 U.S.C. § 205 [**3]  (1976). Although the Trustee, at the direction of the reorganization court, continued rail operations for the next four and one-half years, the losses also continued. On April 16, 1979, OMVI filed a complaint in the district court initiating the above-mentioned proceeding. The Rock Island and its Trustee were listed as defendants in the caption and the Rock Island was described in the body of the complaint. Both were served with process. On June 18, 1979, defendants filed a motion to dismiss the complaint against them, arguing that the reorganization court had exclusive jurisdiction over claims against the Rock Island.

On September 26, 1979, the Rock Island, declared cashless by the Interstate Commerce Commission, ceased operation as a rail carrier. On December 28, 1979, the Trustee filed a plan calling for a reorganization built around an operating core railroad. On January 25, 1980, the plan was rejected by Judge McGarr, who ordered the Trustee to cease his efforts to reorganize the Rock Island and to begin liquidation of the Rock Island's assets. On June 2, 1980, Judge McGarr ordered the system-wide abandonment of the Rock Island. 3 

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773 F.2d 909 *; 1985 U.S. App. LEXIS 31474 **; Bankr. L. Rep. (CCH) P70,764

In re CHICAGO PACIFIC CORPORATION, Debtor-Appellee, Appeal of: ORGANIZATION OF MINORITY VENDORS, INC., et al., Appellants

Prior History:  [**1]   Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 75 B 2697- Frank J. McGarr, Chief Judge.

CORE TERMS

reorganization, railroad, reorganization proceeding, notice, administrative expense, proof of claim, consummation, injunction, contends, untimely, amended complaint, filing proof, tort claim, abandoned, argues, enjoin, liquidation, exclusive jurisdiction, actual notice, file a claim, confirmation, counterclaim, receivership, pursuing

Bankruptcy Law, Unsecured Priority Claims, Administrative Expenses, General Overview, Examiners, Officers & Trustees, Duties & Functions, Reorganizations, Governments, Fiduciaries, Claims, Proof of Claim, Effects & Procedures, Procedural Matters, Adversary Proceedings, Bankruptcy Act of 1898 Actions, Bankruptcy, Case Administration, Examinations of Debtors, Allowance of Claims, Types of Claims, Definitions, Debtor Benefits & Duties, Debtor Duties, Reorganizations, Treatment of Securities, Judicial Review, Standards of Review, Clear Error Review, Civil Procedure, Defenses, Demurrers & Objections, Affirmative Defenses, Administrative Powers