In Re Fairfield Sentry Ltd.
452 B.R. 52
| Bankr. S.D.N.Y. | 2011Background
- Debtors Fairfield Sentry Limited, Fairfield Sigma Limited, and Fairfield Lambda Limited are non-U.S. feeder funds investing with BLMIS, in liquidation due to the Madoff Ponzi scheme.
- BVI proceedings were commenced for each debtor in 2009; liquidators Stride, later Lau and Krys, were appointed as Foreign Representatives.
- This Court recognized the BVI Proceedings as foreign main proceedings under chapter 15 on July 22, 2010 (Recognition Order).
- Foreign Representatives sought relief under 11 U.S.C. § 108 and to set July 22, 2010 as the 'order for relief' date, arguing § 108 tolling is automatic in chapter 15.
- There are 209 Redeemer Actions pending in this district, alleging unjust enrichment, money had and received, mistaken payment, constructive trust, and BVI avoidance claims totaling over $5.79 billion.
- The Foreign Representatives also pursue the Sentry Direct Action against Fairfield Greenwich entities for >$919 million, and additional potential claims against others related to the Madoff losses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 108 tolling applies in chapter 15 automatically | Foreign Representatives: § 108 tolling automatically applies via § 103(a). | Objectors: § 108 not available in chapter 15; not automatic. | Yes; § 108 tolling applies automatically in chapter 15. |
| Whether § 1520 eliminates Section 108 tolling in chapter 15 | § 108 relief remains available despite § 1520 distinctions. | § 1520 arguments foreclose § 108 tolling. | No; § 1520 does not foreclose § 108 tolling. |
| Whether § 103(a) makes Chapter 1 provisions applicable to Chapter 15 include § 108 | Plain language of § 103(a) makes § 108 applicable in Chapter 15. | Limitation arguments based on chapter boundaries and incorporation. | Yes; § 103(a) makes § 108 applicable in Chapter 15. |
| Whether the Recognition Date is the 'order for relief' for § 108 timing | Recognition Date marks the relief triggering date under § 108. | No change to 'order for relief' timing beyond traditional definitions. | Recognition Date is the date of the 'order for relief' for § 108. |
| Whether § 1507 and § 1521(a)(7) support extending § 108 relief in Chapter 15 | If not automatic, § 1507(a) and § 1521(a)(7) authorize extension as necessary to effectuate Chapter 15. | Reliance on § 108 is sufficient; additional relief not necessary. | Relief is warranted under § 1507 and § 1521(a)(7). |
Key Cases Cited
- In re Fairfield Sentry Ltd., 440 B.R. 60 (Bankr.S.D.N.Y.2010) (recognition and cross-border insolvency framework; prior related rulings)
- Local Union No. 38, Sheet Metal Workers' Int'l Ass'n v. Custom Air Sys.,, 333 F.3d 345 (2d Cir.2003) (trustee-like role supports § 108 relief when debtor in possession acts as trustee)
- In re Olympia & York Maiden Lane Co., LLC, 233 B.R. 662 (Bankr.S.D.N.Y.1999) (trustee-like functions justify § 108 relief for similar entities)
- Am. Sur. Co. of New York v. Marotta, 287 U.S. 513 (1933) (include vs mean distinction; broad interpretation of 'include' in statutory definitions)
- Roe v. City of New York, 232 F. Supp. 2d 240 (S.D.N.Y.2002) (require balancing of statutes when construing cross-textual interpretations)