Not Filing Suit Hampered Bankruptcy Court Intervention
Close
 

Not Filing Suit Hampered Bankruptcy Court Intervention

Plaintiffs filed a nine-count complaint alleging accounting malpractice. They asserted they could not file their claim due to the automatic stay provisions of a separate bankruptcy case involving the hedge funds in which they had invested. Thus the applicable time period for bringing their malpractice claims was tolled and they timely filed their complaint once the bankruptcy proceedings were resolved. The Appellate Court affirmed dismissal agreeing the claim was time-barred. The applicable statute of limitations gives a claimant two years from the time they knew or reasonably should have known of the act or omission in the accountant's professional service that gave rise to their cause of action, but not more than five years after the date on which the act or omission occurred. The court found the law which tolls the statute of limitations if the action is stayed by injunction, order, or statutory prohibition, was not triggered by the bankruptcy. By not filing suit, the plaintiffs provided no opportunity for the bankruptcy court or trustee to intervene; moreover there was no specific injunction or order barring their claims.

Ritchie Capital Management LLC v McGladrey And Pullen LLP