North Dakota v. Bala, No. 20-6002 (8th Cir. 2020)
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The Bankruptcy Court denied the State's claim filed on behalf of unnamed charities for lack of standing, and denied the State's claim on behalf of Team Makers on the equitable doctrine of laches.
The Bankruptcy Appellate Panel (BAP) held that the State failed to show the requisite injury to a substantial segment of North Dakota's population, and affirmed its ruling that the State did not have parens patriae standing to file a claim on behalf of Team Makers and other charities. While the panel agreed with the Bankruptcy Court that finality is a very important interest, particularly in a case of this duration, the panel held that laches does not apply to tardily-filed claims that are filed in time to permit distribution under Section 726(a) of the Bankruptcy Code. Accordingly, the panel affirmed in part, reversed in part, and remanded for reconsideration.
Court Description: [Dow, Author, with Nail and Shodeen, Bankruptcy Judges] Bankruptcy Appellate Panel. The bankruptcy court did not err in finding the State of North Dakota failed to show the requisite injury to a substantial segment of North Dakota's population and that the State did not have parens patriae standing to file a claim on behalf of Team Makers and other charities; however, the court erred in determining the State's attempt to assert Team Makers' claim based on a consent agreement was barred by laches because laches is not available as a matter of law to tardily-filed claims in a Chapter 7 case as long as they are filed in time to permit distribution under Section 726(a) of the Code. [ September 15, 2020 ]
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