One of the final steps in the administration of the Warranty Gold Liquidation Trust is the finalization of valid and allowed claims against the Trust. As part of that process, the Trustee has reviewed +/- 17,000 written Proofs of Claim and has prepared a Refund Claim calculation for +/- 64,000 claimants. Many of the filed claims are objectionable to varying degrees. Some claims are entirely invalid, while other claims only require a slight modification in amount or priority. The following are complete copies of the pending objections. (Each list is shown in alphabetical order.)
Second Omnibus Objection (Contracts Not Sold By WG) - This is a list of claims subject to specific objection because the underlying service contract was not sold by Warranty Gold.
Third Omnibus Objection (General Unsecured Claim Status) - Reviews of each filed proof of claim have revealed that a large portion of them purport to be partially or wholly asserted on either a secured or a priority unsecured basis. For example, some claimants have marked their proofs of claim to indicate that Refund Claims or alleged Covered Repair Claims are "secured" by the value of a vehicle covered by the VSC, not by identifiable collateral property of the estate. The Debtor never sold VSCs or entered into any other agreements containing a provision that would accord such a secured priority to any WGVSC Holder Claims. Other claimants have marked proofs of claim to indicate that their claims should be allowed on a priority unsecured basis. Occasionally, such claimants cite Bankruptcy Code § 507(a)(6) as the basis for such priority, but much more often this assertion was made by a creditor who failed to identify any statutory or other basis for such heightened priority. In any event, the confirmed Plan specifically prohibits any treatment of these claims at a secured or priority unsecured level. By voting as a class – individually or through Class Co-Counsel at the Class Representatives' behest – to confirm the Plan on its terms, and in assenting to prior Court Orders, all WGVSC Holders have effectively stipulated that their claims may be allowed only as non-priority general unsecured claims.
Fourth Omnibus Objection (Specific VSC Holder Repair Claims) - Analysis of each written proof of claim filed in this case has revealed that a number of Repair Claims seek amounts or claims not allowed by their VSC, the Newman Settlement or the Plan. These objectionable demands include claims for, among others, hypothetical future repairs, loss of a vehicle's value due to depreciation or emotional distress arising from the loss of VSC coverage. In addition, the Plan requires that all filed Repair Claims include "appropriate documentation," such as receipts or invoices, to substantiate the claim. In certain cases, claimants failed to include documentation to support all or a portion of their asserted Repair Claims. The Plan Trustee files this Fourth Omnibus Objection to certain Repair Claims that do not comply with the Plan and Newman Settlement.
Fifth Omnibus Objection (Duplicate Claims) - Analysis of each written Proof of Claim filed in this case has revealed that a significant number of Repair Claims were filed more than once or seek amounts or claims that are otherwise duplicative of other claims. The Plan and Newman Settlement allow each claim to be asserted only once; therefore, the Plan Trustee files this Fifth Omnibus Objection to Repair Claims that are duplicates or assert the same claim amounts more than once.
Sixth Omnibus Objection (FASC Claims) - After the collapse of NWIG on June 9, 2003, the Debtor reached an agreement with First Automotive Insurance Risk Retention Group to replace NWIG and insure and administer the VSCs that Warranty Gold sold to consumers after June 9, 2003, including making payments on any covered repair claims. Pursuant to a Court-approved settlement, First Automotive Service Corporation ("FASC") has assumed all liability for all Warranty Gold VSCs purchased from June 9, 2003 to the Petition Date (the "FASC VSCs"). Certain FASC VSC holders filed claims against the Debtor in this case (the "FASC VSC Holder Claims"). Pursuant to section 4.4 of the Plan, FASC VSC Holder Claims are treated as Class 4 claims and FASC is responsible for payment of all such claims. Pursuant to section 4.4 of the Plan, all FASC VSC Holder Claims should be paid by FASC. Further, all FASC VSC Holders must seek payment from FASC before they can assert a claim against the Debtor. The Plan Trustee files this limited objection to all FASC VSC Holder Claims to ensure they are treated in accordance with their status as Class 4 claims pursuant to the Plan.
Seventh Omnibus Objection (Calculation of Refund Claims) - Analysis of each written proof of claim filed in this case has revealed that thousands (i.e., the majority) of them seek a purchase price refund in an amount that controverts the Plan's Refund Formula; therefore, the Plan Trustee files this objection to adjust the filed Refund Claims to comply with the Plan and the Refund Formula. Most often, claimants noted on their claim forms a VSC's original purchase price and sought a refund of the entire amount or an unliquidated portion thereof. The Plan does not entitle any WGVSC Holders to a refund of the full purchase price they paid; rather, it allows Refund Claims representing only that portion of a paid premium that remained unearned, as a matter of passage of time, on the Petition Date. For Refund Claim purposes, the Plan effectively moots those provisions of all VSCs that would otherwise link the duration of repair coverage to the mileage accrued on any covered vehicles.
