     Case: 19-10461      Document: 00515353324         Page: 1    Date Filed: 03/20/2020




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                         United States Court of Appeals
                                                                                  Fifth Circuit

                                      No. 19-10461                              FILED
                                                                          March 20, 2020
                                                                           Lyle W. Cayce
In the Matter of: VALUEPART, INCORPORATED,                                      Clerk

              Debtor

JINIL STEEL COMPANY, LIMITED,

              Appellant

v.

VALUEPART, INCORPORATED; DENNIS FAULKNER, as trustee of the
Creditor Trust,

              Appellees




                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 3:18-CV-2239


Before CLEMENT, HIGGINSON, and ENGELHARDT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:*
       This appeal arises from a district court decision affirming the
bankruptcy court’s rejection of Jinil Steel Company’s (“Jinil”) late-filed proof of
claim as related to ValuePart, Inc.’s (“ValuePart”) Chapter 11 bankruptcy


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                 No. 19-10461
proceedings. Because Jinil has failed to show that its year-long delay in filing
its proof of claim was the result of “excusable neglect,” we AFFIRM the district
court’s judgment.
                                       I.
      Jinil is a South Korean steel company. Jinil sold steel products on credit
to another Korean company, WooSung Hitech (“WooSung”), which in turn sold
products to ValuePart, a U.S. company. In 2014, WooSung began “delaying” its
payments to Jinil. Jinil became concerned about WooSung’s financial condition
and cut off future credit sales. Because ValuePart relied on the products it
received from WooSung, ValuePart signed a guarantee agreement, promising
to pay Jinil directly for the steel WooSung purchased from Jinil if WooSung
failed to make its required payments. The guarantee was signed on September
3, 2015, and was “valid for 12 months, starting from the signing date.”
      A few months later, WooSung again defaulted on its payments to Jinil.
WooSung was apparently “financially shaken” because it was not “receiving
payments from ValuePart.” Because ValuePart was obligated under the
guarantee agreement to pay Jinil directly when WooSung defaulted, Jinil
began making extensive “efforts to get paid[,] by numerous demands and
contacts to ValuePart.” At some point in 2015, “[Jinil] had no choice [but] to
hire an attorney” to collect on WooSung’s debts from ValuePart. In the years
2015, 2016, and 2017, the record reflects that Jinil hired at least one Italian
law firm to bring civil and criminal claims against ValuePart.
      WooSung filed for bankruptcy in Korea in June 2016. Soo Hong Lee,
Jinil’s managing director and general manager, filed a claim in the Korean
court on Jinil’s behalf, but the record is silent as to whether Jinil recovered
anything from WooSung’s eventual liquidation. In October 2016, Mr. Lee
began an extended leave of absence for “personal reasons.” He did not return
to work until March 2018.
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       On October 27, 2016, ValuePart filed for bankruptcy in the Northern
District of Texas. The bar date established for filing proofs of claims was March
7, 2017 (“Bar Date”). ValuePart’s claims agent sent a notice of ValuePart’s
bankruptcy and a proof of claim form (“Notice”) to Jinil by first-class mail in
November 2016. The Notice warned: “A CREDITOR WHO FAILS TO FILE A
PROOF OF CLAIM ON OR BEFORE THE DEADLINE LISTED BELOW MAY
BE BARRED FROM ASSERTING ITS CLAIMS AGAINST THE DEBTOR.”
The Bar Date was prominently displayed in a separate text box in the middle
of the second page of the Notice, which stated in bold font that the “DEADLINE
AND METHOD FOR FILING PROOFS OF CLAIM[S] . . . has been set for
MARCH 7, 2017.”
       On January 4, 2017, Jinil’s accounting manager, Chun Young Hwa, sent
ValuePart’s claims agent an email with some questions about the Notice Jinil
had received. Mr. Hwa asked if Jinil was “a creditor or an entity [with] a right
of [a] creditor” in ValuePart’s bankruptcy and asked “why the court sent” Jinil
the Notice. Two days later, the claims agent responded to Mr. Hwa’s email,
explaining how Jinil could file a proof of claim and once again stating that the
“Bar Date for filing a Proof of Claim is March 7, 2017.” Jinil did not mention
ValuePart’s bankruptcy or the Notice to its Italian counsel.
       Shortly thereafter, on January 13, 2017, WooSung filed a proof of claim
in the ValuePart bankruptcy for $2.2 million in unpaid invoices. ValuePart
objected to WooSung’s proof of claim. Because WooSung failed to respond to
the objection, the bankruptcy court sustained the objection in October 2017. 1
       Despite Mr. Hwa’s January 2017 correspondence with ValuePart’s
claims agent and Jinil’s representation by Italian counsel in other matters



       1 It appears that WooSung was liquidated by the time ValuePart’s objection was filed,
but the record does not definitively say so.
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                                  No. 19-10461
concerning ValuePart, the bankruptcy court did not receive Jinil’s proof of
claim (dated February 28, 2018) until March 6, 2018, approximately one year
after the Bar Date. The proof of claim came after the son of Jinil’s owner—who
had studied in the United States—contacted the claims agent in late February
2018 regarding Mr. Hwa’s email from the prior year. Then, on June 25, 2018,
Jinil moved to allow its late-filed proof of claim, arguing that the Korean-
English language barrier had prohibited it from “comprehend[ing] a single
mailed notice in English” and that “its failure to fully understand US
bankruptcy laws amount[ed] to excusable neglect.”
      The bankruptcy court held a hearing on Jinil’s motion on July 30, 2018.
A few days later, the bankruptcy court denied Jinil’s motion, finding that Jinil
had failed to establish excusable neglect. Jinil appealed to the district court,
and the district court affirmed the judgment. Jinil then appealed to this court.
                                        II.
      “Our review is . . . focused on the actions of the bankruptcy court.”
Official Comm. of Unsecured Creditors v. Moeller (In re Age Ref., Inc.), 801 F.3d
530, 538 (5th Cir. 2015). We review the bankruptcy court’s refusal to allow a
late-filed proof of claim for abuse of discretion. Pioneer Inv. Servs. Co. v.
Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 398−99 (1993). The bankruptcy
court’s component findings of fact are reviewed for clear error, and its
conclusions of law de novo. In re Age Ref., Inc., 801 F.3d at 538.
                                        III.
                                        A.
      In a Chapter 11 bankruptcy, an unsecured creditor whose claim is not
listed on the debtor’s schedule and who fails to file a timely proof of claim “shall
not be treated as a creditor with respect to such claim for the purposes of voting
and distribution.” Fed. R. Bankr. P. 3003(c)(2). But, even after the filing
deadline has passed, the bankruptcy court has discretion to permit a creditor
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                                  No. 19-10461
to file a proof of claim “where the failure to act [i.e., to file earlier] was the
result of excusable neglect.” Fed. R. Bankr. P. 9006(b)(1). “Excusable neglect is
the failure to timely perform a duty due to circumstances that were beyond the
reasonable control of the person whose duty it was to perform.” Omni Mfg., Inc.
v. Smith (In re Smith), 21 F.3d 660, 666 (5th Cir. 1994) (cleaned up). In
evaluating whether to excuse a late filing, a court considers several factors laid
out in the Supreme Court’s decision in Pioneer, which include: “the danger of
prejudice to the debtor, the length of the delay and its potential impact on
judicial proceedings, the reason for the delay, including whether it was within
the reasonable control of the movant, and whether the movant acted in good
faith.” 507 U.S. at 395. The burden to show excusable neglect is on the
movant—i.e., the creditor seeking to file a late claim. Bank of Am., N.A. v. Allen
Capital Partners, L.L.C. (In re DLH Master Land Holding, L.L.C.), 464
F. App’x 316, 318 (5th Cir. 2012).
      On appeal, Jinil argues that its failure to file a timely proof of claim was
“excusable neglect” because (1) its employees did not speak English; (2) it
believed that ValuePart had included its debt to Jinil on the schedules, in light
of Jinil’s Italian claims against ValuePart; and (3) it was relying on the proof
of claim that WooSung had filed for amounts that ValuePart owed on the same
invoices.
      The bankruptcy court made three key findings of fact. First, at least two
months before the Bar Date, Jinil received actual notice of ValuePart’s
bankruptcy petition, along with the proof of claim form. This finding was
supported by Mr. Hwa’s email to ValuePart’s claims agent on January 4,
2017—sixty days before the Bar Date—requesting more information on
submitting a proof of claim. Second, Jinil representatives had a sufficient
understanding of English to be “aware[] of the notices . . . and the fact that
Jinil Steel may have to take additional steps to assert a claim against
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                                 No. 19-10461
[ValuePart].” The court supported this finding with Mr. Hwa’s email, as well
as the email correspondence between the claims agent and the son of Jinil’s
owner nearly a year later. Third, Jinil’s failure to file a timely proof of claim
was not because Jinil was relying on WooSung’s claim. The court reasoned that
the evidence did not support such an assertion, and, given that the person
responsible for handling the ValuePart claim—Mr. Lee—was on a leave of
absence, “he could not have made a decision not to file a proof of claim in
reliance on the WooSung [proof of claim].”
      We hold that the bankruptcy court’s findings of fact were not clearly
erroneous. Clear error means that the reviewing court is “left with the definite
and firm conviction that a mistake has been committed.” Anderson v. City of
Bessemer, 470 U.S. 564, 573 (1985) (quoting United States v. U.S. Gypsum Co.,
333 U.S. 364, 395 (1948)). If the bankruptcy court’s “account of the evidence is
plausible in light of the record viewed in its entirety, the court of appeals may
not reverse it even though convinced that . . . it would have weighed the
evidence differently.” Id. at 574. First, we agree that Jinil undisputedly
received the Notice—Mr. Hwa’s email to the claims agent is proof of this.
Further, Mr. Hwa’s email demonstrates that, prior to the Bar Date, at least
one person at Jinil understood that Jinil was required to submit a proof of
claim in ValuePart’s bankruptcy if Jinil believed itself to be a creditor.
Moreover, the February 2018 email to ValuePart’s claims agent from the
English-speaking son of Jinil’s owner implores us to question why someone at
Jinil did not involve him earlier. As for the bankruptcy court’s finding of fact
that Jinil did not rely on WooSung’s timely-filed proof of claim, we agree that
the record does not support Jinil’s argument that it did so. As the bankruptcy
court noted, Mr. Lee was not around to make the decision to rely on WooSung’s
proof of claim. And there is no evidence that he instructed anyone at Jinil to
rely on WooSung’s proof of claim.
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                                   No. 19-10461
      Although Jinil does not dispute that the Pioneer factors apply here, it
contests the bankruptcy court’s determinations that “[t]he reasons offered for
the delay [in Jinil’s filing of its proof of claim] were not convincing and certainly
were within [its] reasonable control”; that “[a]llowing a claim in excess of $1.5
million will undoubtedly prejudice [ValuePart] and the other unsecured
creditors”; and that “allowing claims to be filed [one year] past the Bar Date
would have a significant effect on judicial proceedings.” We agree that the
bankruptcy court did not abuse its discretion in finding that “the Pioneer
factors weigh against a finding of excusable neglect.”
      We do not find the reasons offered for Jinil’s delay in filing—i.e., (1) the
Korean-English language barrier; (2) that ValuePart “should have known” to
include Jinil on its schedules because of the parties’ Italian litigation; and
(3) that Jinil was relying on WooSung’s claim—to be persuasive. As explained
above, reasons (1) and (3) are unconvincing because, respectively: the email
correspondence between ValuePart’s claims agent and (i) Mr. Hwa and (ii) the
son of Jinil’s owner show that at least one person at Jinil, as well as someone
closely tied to Jinil, had a sufficient grasp of English, and the record does not
show that Mr. Lee sought to rely on WooSung’s proof of claim. Reason (2) is
refuted by the fact that the Notice explicitly stated that Jinil could view
ValuePart’s schedules at any time. To determine whether it was listed on the
schedules, all Jinil had to do was look: “[ValuePart] will file a schedule of
creditors pursuant to Federal Rule of Bankruptcy Procedure 1007. [Jinil] may
review the schedules at the bankruptcy clerk’s office or online at
www.upshotservices.com/Valuepart.”
      We also find that the delay in filing was within Jinil’s “reasonable
control.” Based on the bankruptcy court’s findings of fact, we believe Jinil had
all the information it needed to file a timely proof of claim. Jinil has not shown


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                                  No. 19-10461
that its failure to do so was based on factors akin to incarceration or ill health.
See Pioneer, 507 U.S. at 393.
      Finally, we agree with the bankruptcy court that allowing Jinil’s
approximately $1.5 million and one-year-late claim will prejudice ValuePart
and the other unsecured creditors and could have a significant effect on future
judicial proceedings. As this court has held, “in virtually any bankruptcy
proceeding, time is the essence of prejudice.” Pyramid Mobile Homes, Inc. v.
Speake (In re Pyramid Mobile Homes, Inc.), 531 F.2d 743, 746 (5th Cir. 1976).
And we have found that a bankruptcy court did not abuse its discretion in
denying a creditor’s motion to file its proof of claim just forty-two days late. See
In re DLH Master Land Holding, L.L.C., 464 F. App’x at 318−19; see also
Kollinger v. Hoyle (In re Kollinger), 551 F. App’x 104, 108 (5th Cir. 2013) (“[N]o
excuse justifies failing to file a brief for ten months.”). Thus, the bankruptcy
court did not abuse its discretion in denying Jinil’s motion to allow its late-filed
claim.
                                        B.
      Jinil also stresses an argument that was not included in its motion for
allowance of its proof of claim: that its claim should be considered timely
because the Notice was not served in accordance with the Hague Service
Convention. See Convention on the Service Abroad of Judicial and
Extrajudicial Documents in Civil and Commercial Matters, Nov. 15, 1965, 20
U.S.T. 361, 658 U.N.T.S. 163 [hereinafter Hague Service Convention]. The
bankruptcy court did not have the benefit of any briefing on this argument.
Instead, Jinil’s attorney mentioned the Hague Service Convention for the first
time at the hearing on Jinil’s motion to allow its late-filed proof of claim. The
attorney noted that both the United States and South Korea are parties to the
Convention, that the Convention requires “judicial and extrajudicial
documents . . . first be sent over to the Central Authority administered by the
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                                      No. 19-10461
Supreme Court of South Korea,” and that the Convention also requires “that
any English documents or any foreign language documents . . . be translated
into Korean.” But he failed to cite any relevant cases interpreting the scope of
the Convention or its applicability to bankruptcy notices.
       Thus, we hold that Jinil has forfeited its argument with regard to the
Hague Service Convention because it failed to properly “rais[e] [the argument]
to such a degree that the trial court may rule on it.” Butler Aviation Int’l, Inc.
v. Whyte (In re Fairchild Aircraft Corp.), 6 F.3d 1119, 1128 (5th Cir. 1993),
abrogated on other grounds by Tex. Truck Ins. Agency, Inc. v. Cure (In re
Dunham), 110 F.3d 286, 288–89 (5th Cir. 1997); see also MaddenSewell, LLP
v. Mandel, 498 B.R. 727, 729 (E.D. Tex. 2013) (“[L]itigants [must] properly
present and brief the grounds for claims, defenses, or objections . . . .”). 2
                                            IV.
       For the foregoing reasons, we AFFIRM the district court’s judgment
affirming the bankruptcy court’s holding that Jinil has not shown excusable
neglect.




       2 Jinil makes two other arguments in its briefing: (1) that the bankruptcy court’s
decision denied it due process, and (2) that WooSung’s proof of claim should be deemed
an “informal” proof of claim by Jinil, or, alternatively, that Jinil’s proof of claim was an
“amended” version of WooSung’s timely proof of claim. These claims were not raised to the
bankruptcy court, so they are forfeited.
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