United States District Court, N.D. Indiana, South Bend Division
OPINION AND ORDER
L. Miller, Jr. Judge
January 2018, Ceres Solutions Cooperative, Inc. filed a
collection action against William Voreis after he defaulted
on a promissory note for about $1.47 million that had been
secured by a real estate mortgage. Mr. Voreis filed for
bankruptcy a month later. Ceres Solutions waited until the
May 31 deadline to file a secured claim in the bankruptcy
proceedings. Mr.Voreis objected, arguing that Ceres
Solutions: (1) had overvalued its claim because it
wasn’t entitled to interest under the terms of the
promissory note; and (2) had misstated the value of the
collateral securing its claim. Mr. Voreis maintained that the
collateral had a value of $4 million (not $6.5 million, as
Ceres Solutions had claimed), and that secured claims that
were senior to Ceres’s claim totaled $4.34 million,
exceeding the value of the collateral and effectively leaving
Ceres Solutions with an unsecured claim.
Ceres Solutions didn’t file a timely response or ask
for a hearing, the bankruptcy court found that Mr.
Voreis’s objections were well-taken and modified Ceres
Solutions’ claim, eliminating the claim for interest
and allowing an unsecured claim in the amount of $1.47
million. Ceres Solutions moved to reconsider, but the
bankruptcy court denied the motion, finding that Ceres had
waived the arguments made in its motion by failing to make a
timely response to Mr. Voreis’s objections to its
claim. In re Ray, 597 F.3d 871, 876 (7th Cir. 2010).
Solution appealed, contending that the bankruptcy court erred
when it disallowed its secured claim and/or denied its motion
whether a claim is a ‘secured’ claim is entirely
separate from determining whether that claim should be
allowed.” In re Taylor, 289 B.R. 379 (Bkrptcy.
N.D. Ind. 2003). The inquiry is governed by 11 U.S.C. §
506, Bankruptcy Rule 3012, which requires a hearing upon a
request by a party interest, and Local Bankruptcy Rule
B-3007-1, which provides in relevant part:
(b) An objection to a proof of claim shall identify the
creditor by name and the claim number as assigned by the
court, and shall state with specificity the basis for
disallowance or allowance in an amount or with a priority
other than that claimed.
(c) Local Bankrupty Form 2 (LBF-2) shall be used to give the
claimant notice of the claim objection and the opportunity to
(d) The objector shall be responsible for competing LBF-2 and
serving it, along with the claim objection, and making due
(e) Unless a response to the objection is filed within thirty
(30) days following service of the notice of objection, the
court may disallow or modify the claim in accordance with the
objection, without further hearing.
with that rule, Mr. Voreis filed, and served Ceres Solutions
with, a Notice of Objection to Claim (LBF-2) and its
objections on June 5, 2018, apprising it of its duty to
respond and the time for doing so [Bkrptcy. Doc. No. 76].
Solutions bore the ultimate burden of persuasion to
demonstrate the value of the collateral that secured its
claim. See In re Southmark Storage Associates Ltd
Partnership, 130 B.R. 9 (Bkrptcy. D. Conn. 1991); In
re Grabill Corp., 121 B.R. 983 (Bkrptcy. N.D.Ill. 1990).
When Ceres Solutions didn’t file a timely response to
Mr. Voreis’s objections or request a valuation hearing,
the bankruptcy court determined that senior secured claims
exceeded the value of the collateral, so there was no value
to the lien Ceres Solutions held, and modified Ceres
Soloutions’ claim “in accordance with the
objection” and 11 U.S.C. § 506(a), eliminating the
claim for interest and allowing an unsecured claim in the
amount of $1, 472, 414.34. There was no error in that
bankruptcy court next found that Ceres Solutions waived any
arguments it might have had with respect to Mr.
Voreis’s objections when it didn’t file a timely
response to those objections, In re Ray, 597 F.3d
871, 876 (7th Cir. 2010), and denied its motion for
reconsideration. Ceres Solution has shown no error in that
ruling, either. The ruling was consistent with the rules
quoted earlier in this opinion.
court AFFIRMS the bankruptcy court’s decision, and
DENIES the motion for status ...