Mark Felger, co-chair of Cozen O’Connor’s Bankruptcy, Insolvency & Restructuring Practice Group, and Barry Klayman, a member of the Bankruptcy, Insolvency & Restructuring Practice Group, discuss a recent Delaware bankruptcy decision allowing the filing of a class-based proof of claim in The Delaware Business Court Insider. In In re Pacific Sunwear of California, U.S. Bankruptcy Judge Laurie Selber Silverstein of the District of Delaware granted a motion for leave to fill a class proof of claim, rejecting an argument by the debtors that class claims are impermissible in bankruptcy cases. The case is significant for rejecting the argument that class-based proofs of claim are never permissible and for listing the factors when they will be allowed. While Pacific Sunwear is not the first Delaware bankruptcy case to allow a class proof of claim, the decision emphasizes the idea that, under certain circumstances, the class action mechanism is a “procedural device” that can be useful in the claims administration process.
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