## Facts

- Majestic Holdco, LLC and affiliated debtors filed Chapter 11 petitions in the Bankruptcy Court for the District of Delaware on November 23, 2009.
- An affiliate operated a Mississippi casino that purchased electric power from Entergy Mississippi, Inc. (Entergy).
- Entergy had installed and used an electric meter at the casino beginning in April 2003 and monitored the casino’s usage through that meter for about nine years.
- During the Chapter 11 case, Entergy continued to provide post-petition utility service pursuant to an adequate-assurance arrangement.
- The bankruptcy court established a bar date for filing prepetition proofs of claim (January 4, 2011). Entergy received notice of the bankruptcy and the bar dates.
- The court confirmed the debtors’ Chapter 11 plan in March 2011. The plan became effective on December 1, 2011.
- The confirmed plan required administrative expense claims to be filed within a set period after the effective date; that deadline was later extended to January 18, 2012.
- In 2012, Entergy discovered that the meter was defective and had under-registered usage, leading Entergy to conclude it had underbilled the casino by more than $1 million over time.
- Entergy asserted that a portion of the underbilling related to post-petition service and sought an administrative expense claim of approximately $218,607.39, along with a large late-filed prepetition claim.
- Entergy did not file by either the prepetition bar date or the administrative expense deadline. It moved in September 2012 for an enlargement of time to file and pursue both claims.
- The reorganized debtors opposed the requests. The court heard the motions in January 2013 and issued its decision in February 2013.

## Issues

1. Whether Entergy showed “excusable neglect” under Federal Rule of Bankruptcy Procedure 9006(b)(1), applying Pioneer, to extend the expired deadlines to file (a) a prepetition proof of claim and (b) an administrative expense claim.
2. Whether allowing late-filed claims—especially a substantial administrative expense claim after plan confirmation and the plan effective date—would prejudice the reorganized debtors and disrupt the plan’s claim-resolution framework.

## Decision

- The court denied Entergy’s motion to enlarge time to file a late prepetition proof of claim.
- The court denied Entergy’s motion to enlarge time to file and obtain payment of a late administrative expense claim (including the approximately $218,607.39 request).
- Applying Rule 9006(b)(1) and the Pioneer factors, the court held Entergy did not prove excusable neglect by a preponderance of the evidence.
- The court found the “reason for delay” factor weighed heavily against Entergy because the delayed discovery stemmed from Entergy’s own metering, testing, and billing practices—matters within its control.
- The court found the length of delay significant, including that Entergy sought to assert its prepetition claim long after the prepetition bar date and pursued administrative relief months after the plan’s administrative-claim deadline.
- The court determined that permitting a large, late administrative claim after confirmation and the plan effective date would impose an unplanned burden on the reorganized debtors and interfere with the finality and administration of the confirmed plan.
- The court accepted there was no showing of bad faith by Entergy, but held good faith did not outweigh the other factors.

## Legal Principles

- Under Fed. R. Bankr. P. 9006(b)(1), after a deadline has expired, a court may extend the time to act only if the failure to act resulted from “excusable neglect.”
- Excusable neglect is evaluated using the Pioneer factors: (1) prejudice to the debtor, (2) length of the delay and its impact on the case, (3) reason for the delay and whether it was within the movant’s reasonable control, and (4) good faith.
- The movant bears the burden to prove excusable neglect by a preponderance of the evidence.
- A creditor’s internal errors and delayed detection of its own billing or metering problems generally weigh against excusable neglect where the cause and timing of discovery were within the creditor’s control.
- Post-confirmation deadlines for administrative expense claims are enforced to protect plan finality and the settled expectations of the reorganized debtor and other creditors.

## Conclusion

In In re Majestic Holdco, LLC, the bankruptcy court refused to extend expired bar dates for Entergy’s late prepetition and administrative claims arising from underbilled electricity, holding that Entergy’s delayed discovery of a defective meter and its resulting delay in seeking relief did not amount to excusable neglect under Rule 9006(b)(1) and Pioneer, particularly given the disruption and prejudice that allowing substantial late claims would cause in a confirmed Chapter 11 case.


In re Majestic Holdco, LLC, 2013 WL 653091 (2013)