As Ponzitracker reported yesterday, the court-appointed bankruptcy overseeing the TelexFree bankruptcy has filed a motion to invalidate the current Proof of Claim deadline of August 20, 2014, arguing that a variety of reasons render the establishment of a deadline as premature. Stephen Darr, the court-appointed trustee for TelexFree, LLC, TelexFree, Inc., and TelexFree Financial Inc. (collectively, "TelexFree"), filed a motion (the "Motion to Vacate") through his attorneys today seeking to vacate the docket entries establishing the current deadline and stating that a Proof of Claim deadline was appropriate only after addressing various deficiencies in TelexFree's bankruptcy filing and the determination of a proper procedure to administer any claims process.
Rule 3002 of the Federal Rules of Bankruptcy Procedure provides that a proof of claim is timely filed when done so within 90 days after the first date of the meeting of creditors known in Bankruptcy parlance as the "341 Meeting." Shortly after TelexFree's April bankruptcy filing, a notice appeared on the court docket setting the 341 Meeting for May 15, 2014 and providing that the Proof of Claim filing deadline was 90 days after that date - resulting in a claim deadline of August 13, 2014. A subsequent notice on April 24, 2014, rescheduled the 341 Meeting for May 22, 2014 - thus resulting in a rescheduled Proof of Claim deadline of August 20, 2014.
However, the rescheduled 341 Meeting was never held, as a Court ordered the transfer of the proceedings to a Massachusetts Bankruptcy court on May 6, 2014. Prior to the filing of the Motion to Vacate, Ponzitracker spoke with an attorney for the Trustee, who confirmed that the current bar date could be disregarded.
In the Motion to Vacate, the Trustee identified several bases for his request. First, he argued that TelexFree had not yet filed its financial schedules or statements, nor had it submitted a complete matrix of creditors. After he is able to determine the pool of potential claimants, the Trustee indicated that he intended to develop a protocol for the filing and administration of claims. Hinting that the number of parties that could potentially assert claims against TelexFree could exceed 1,000,000, the Trustee indicated that administration of the claims process was likely to be a "significant undertaking" and that he was currently accepting proposals for a claims and noticing agent to assist. Finally, the Trustee cited due process concerns, noting that there was no way to determine whether all of the potential affected parties had received notice of the impending deadline.
Ponzitracker will report on when a new bar date is made public, and will provide a detailed instruction guide for understanding and completing the Proof of Claim form at an appropriate time.
Previous Ponzitracker coverage of TelexFree is here.
Motion to Vacate
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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