Signifigance of New Schedule E Filing

I’ve received the following information from Blum Collins regarding why claim amounts  may have changed for some ex-Hellerites with the Amended Schedules Filing a few weeks ago.

Some folks have raised questions concerning the significance of the new Schedule E that the Heller Ehrman estate filed on about December 11, 2009, especially how it came to be that the priority amount for some employees was reduced even though the total amount available for priority payments went up.

The Blum|Collins lawyers have been in contact with Alexa Morgan, who was at Manatt until January 1, 2010 and who is continuing to advise Heller on labor law issues. Alexa has investigated the changes in Schedule E through conversations with the in-house person at Heller who made the changes. Here is what we have learned:

  • The new Schedule E was prepared and filed in order that the revised calculations are in compliance with the Bankruptcy Code (the “Code”). Most employees benefited in minor amounts from one global change, but three categories of employees may have been adversely affected by other changes.
  • First, on a positive note, the original Schedule E was prepared using December 28, 2008 (the bankruptcy filing date) as the cut off date for calculating the 180-day priority period. The Code allows that the cut-off date be the earlier of a) the last day Heller did business or b) the date of filing. The last day Heller did business was October 31, 2008 so the 180 day priority period was moved back. This change slightly benefited most Heller employees.
  • The first category of employees whose priority amount may have decreased are those who continued to work at Heller beyond October 31, 2009 (the last date Heller did business) to assist with the wind down and were paid wages that were earned before October 31 but paid after that date. The effect of these payments is to reduce the amount of the priority portion of the wage claim by the amounts paid on account of the priority portion actually paid. In addition the claims of retained employees were adjusted to accurately reflect pre-petition vacation used or paid after Heller ceased doing business. The precise calculations are more complicated than this description, but this is the substance of what happens.
  • The second category of potentially adversely affected employees are those who have sabbatical claims. Heller originally treated all sabbatical claims as priority claims but it since has learned that only sabbatical amounts that vested within 180 days of October 31, 2008 are entitled to priority status. That is consistent with the Blum|Collins construction of the Code. That change could have a significant impact on a few employees with accrued but unused sabbatical.
  • A few number of employees are in a third group that may have had small changes in their priority amounts because of the way in which claims for wage priorities integrate with claims for pension plan priorities. The Blum|Collins lawyers have not attempted to get to the bottom of this because of their understanding that not many employees are affected and that the priority amounts involved are relatively small.

The Blum|Collins lawyers will try to get more information for anyone whose priority amount was significantly reduced after you have tested the reduction against this additional information. Heller’s interest and ours is identical:  that all employees be paid what they are owed under the Bankruptcy Code and our settlement, so we will keep pushing to make sure that is happening.

© 2010, copyright Thomas MacEntee

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20 Responses to “Signifigance of New Schedule E Filing”


  1. 1 SFSecretary 6 January 2010 at 10:52 pm

    What does it indicate when a claimant wasn’t listed on the Schedule?

  2. 2 Observer 6 January 2010 at 11:27 pm

    If your name is not on the schedule (either on Sched. E or Sched. F), the debtor does not think you have a claim. In that case, you had better have filed your own claim of what you think you are owed. A filed claim replaces a scheduled claim amount, unless and until the debtor (or other party) files an objection to it.

    If you were listed on Sched. E or Sched. F. as filed in January, but are not listed now, and you did not file a proof of claim earlier (because you were relying on the debtor-scheduled amount), you would not — For A Very Short Time — have an opportunity to file your own claim even now.

  3. 3 Observer 6 January 2010 at 11:28 pm

    Question for Blum Collins:

    A few individuals are listed in amended Sched. E as having priority claims larger than the $10,950 priority claim limit. Why is that?

  4. 4 Observer 6 January 2010 at 11:30 pm

    Sorry, typo in the post about ‘not listed in the amended schedules.’ Should read “you would now — For A Very Short Time — have an opportunity to file your own claim even now.”

  5. 5 anon 6 January 2010 at 11:54 pm

    The information from Blum did not address why some total claim amounts went down. In some cases significantly. In one particular case the priority went up, but the total claim went down. It almost appears like they are disallowing the waiting time penalties. I’m sure there are more like this. Thoughts?

  6. 6 Former Secretary 6 January 2010 at 11:58 pm

    I emailed Blum Collins asking about changes in Schedule E and why some people were omitted. I received a call from Heller Ehrman, I believe her name was Stephanie, who said that the recent Amendment to Schedule E simply puts forth changes, but does not in any other way affect anyone who was on the originally filed Schedule E. Where is “Observer” getting his/her information?

  7. 7 Observer 7 January 2010 at 4:00 am

    “Stephanie” may know what she is talking about — or not.

    My comment is directed mainly to the possibility that somebody was listed in the schedules in January but is not listed now, and that person did not file a proof of claim by the April deadline. I haven’t gone through the 140 pages of Sched. E to determine how many people, if any, fall into that category. But if there are such people, they need to act promptly now to protect their rights.

  8. 8 SFSecretary 7 January 2010 at 7:07 am

    Thanks, Stephanie.

  9. 9 SFSecretary 7 January 2010 at 8:53 am

    I meant, “Thank you, Former Secretary.”

  10. 10 Seattle Secretary 7 January 2010 at 3:05 pm

    I am soooo confused. I haven’t received a packet or anything yet. I did file a proof of claim way back, received a bankruptcy notice that it was accepted and that was the last thing i received. I did not sign up as part of the class.

    My prior understanding from reading the occasional post here was that even though former support staff who had not signed on to the class would still be receiving a packet or proposed settlement statement from the Court and/or Blum Collins in December sometime. (I did not)

    It now appears as though some received packages and others did not and from what I can garner, some support staff are now not listed as claimants.

    I am just looking for an update and reclarification as to what I have read.

    Thanks.

  11. 11 Info from debtor's counsel 7 January 2010 at 4:34 pm

    I was on the original Schedule E but not on the amended version and emailed Pachulski, Stang, Ziehl & Jones (debtor’s counsel). Their response was that if you were not on the amended schedule, this did not mean that your claim had been removed but rather that your originally schedule claim had not changed.

  12. 12 Observer 7 January 2010 at 4:35 pm

    As far as I can tell, the only people who received the amended schedules packet are those whose claims have been changed in some respect in this batch, versus the schedules filed in January.

    For example, I can see that a couple of people who were not listed in January as having a claim are still not listed in the amended schedules.

  13. 13 Observer 7 January 2010 at 4:37 pm

    By the way, this whole discussion is a good example of why it is a good idea to file a proof of claim even when the debtor has listed you in its schedules with an acceptable claim amount. Nothing can change the status of your proof of claim except a formal objection (or settlement) process.

  14. 14 Anonymous 7 January 2010 at 5:24 pm

    Is it too late to amend my proof of claim with better documentation? Or with an additional rationale for more money?

  15. 15 Observer 7 January 2010 at 7:08 pm

    Technically, it is not too late to amend your claim. Definitely OK just to provide better documentation. But you could just wait and see if there is any objection to your claim; you can still improve the documentation when/if an objection is filed.

    You can also amend to add an additional rationale for more money. But it is a closer call whether this would survive a challenge. The standard is whether the debtor has been prejudiced by making its calculations (e.g. plan terms) on the basis of claims as filed by the April deadline. I tend to think the debtor shouldn’t succeed with that argument here, where the plan already filed is in abeyance and will be replaced (so they say) with a revised plan somewhere down the road.

  16. 16 no name 12 January 2010 at 1:53 pm

    Will you be posting the new Schedule E that the Heller Ehrman estate filed on about December 11, 2009?

  17. 17 Former Associate 12 January 2010 at 6:05 pm

    Thank you for maintaining this site. I just want to say for all the peoples out there that the following sentence in the post above is misleading:

    “Heller’s interest and ours is identical: that all employees be paid what they are owed under the Bankruptcy Code and our settlement, so we will keep pushing to make sure that is happening.”

    The estate’s interests are not identical to the creditors’. There is a lot of interpretation that goes into “what they are owed under the Bankruptcy Code.” You or I may happen to think we’re owed a lot more than Heller does. I bet that is actually true for 99% of the claims. People should think about that before they accept any settlement.

  18. 18 Past Being Frustrated 12 January 2010 at 11:33 pm

    For those of us that haven’t received any documentation since some time in early `09, could you point us to which document we should look at to confirm “priority amounts”? I think it’s not relevant due to the latest settlement discussion (I think there was somethat that said vacation and some warn act) but at this point I’m not even remotely clear on a ballpark figure of how much we’ll receive when this is wrapped up (hopefully soon).

    What I think will be even more frustrating is the state taxing and taking what they consider their percentage of the funds!

    Thanks again for keeping track of all this information.

  19. 19 Seattle Secretary 14 January 2010 at 7:34 pm

    If we did not receive a packet, will we receive a packet?

  20. 20 NY SECY 16 January 2010 at 7:27 pm

    Hi all, I did not receive anything. I have the same question as Seattle, will we get one, why didn’t we get one in the first place? Can someone please explain this. Also, I don’t understand why we/me have not heard a word from Blum Collins. Thanks!


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