Ellis v. Westinghouse Elec. Co., LLC

Dates matter in bankruptcy proceedings. Ellis worked for Westinghouse. About two months after the New York Bankruptcy Court confirmed Westinghouse’s Chapter 11 plan of reorganization (“the Plan”), Westinghouse terminated Ellis’s employment, explaining that his department was being restructured. Ellis believed he was unlawfully fired due to his age. So, he filed a charge with the federal Equal Employment Opportunity Commission. The parties agreed that Ellis’s employment discrimination claim “arose” when he was terminated, so it was a claim after confirmation of the Plan but before its Effective Date. During its bankruptcy case, Westinghouse served Ellis with three notices: the first about the General Bar Date, the second about the Plan objection and voting deadlines, and the third about the Effective Date and the Administrative Claims Bar Date. He never took any action in the New York Bankruptcy Court to assert his employment discrimination claim. Instead, Ellis filed suit in the Western District of Pennsylvania District Court against (the now reorganized) Westinghouse. Westinghouse filed a motion for summary judgment, arguing that Ellis’s claim, as an administrative expense claim not timely filed by the Administrative Claims Bar Date, was discharged by the Plan and the order confirming it. The District Court denied Westinghouse’s motion and granted summary judgment in favor of Ellis as to the bankruptcy discharge issue. But the District Court recognized the novel and complex legal questions involved and certified the issues to the Third Circuit for immediate interlocutory appeal. The Third Circuit agreed to hear the appeal and reversed. The Court held that Sections 503 and 1141 of the Bankruptcy Code authorize bankruptcy courts to set and enforce bar dates for administrative expense claims, including claims arising after confirmation of a plan but before its effective date. The holder of a post-confirmation administrative expense claim cannot choose to bypass the bankruptcy process, so if the claim is not timely filed by the bar date, it faces discharge like a pre-confirmation claim.

Ellis