534 F. App'x 77
2d Cir.2013Background
- Appellants Keough, Quantum Hedge Strategies Fund, LP, and SIM Hedged Strategies Trust appeal a bankruptcy-order decision denying their status as holders of allowed limited partner interests and Class 4 members entitled to distribution.
- The bankruptcy court issued an Extended Bar Order clarifying what proof of interest must be filed under 11 U.S.C. §1111(a); it required all limited partners to file proofs of interest regardless of schedule status.
- Attachment B to the Debtors’ Statement of Financial Affairs listed limited partners’ equity interests as “Estimated Percentage Ownership” and described as potentially including redeemed investors; this created ambiguity as toliquidated vs. unliquidated status.
- Section 1111(a) deems claims filed if scheduled, except disputed, contingent, or unliquidated claims; the court found ambiguity about whether listed interests were liquidated.
- The Extended Bar Order sought to resolve this ambiguity by requiring proofs of interest; appellants did not file and their interests were disallowed.
- The district court affirmed, and the Second Circuit affirmed the district court’s judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to issue Extended Bar Order under §105(a)? | Appellants contend §105(a) cannot override clear deeming under §1111(a). | Respondent argues §105(a) authorizes needed equitable relief to fill gaps. | Affirmative; §105(a) authorizes extension to clarify §1111(a) requirements. |
| Whether Attachment B ambiguity justified extending the bar and denying claims? | Appellants argue deeming applies since listed on schedules and not marked disputed. | Ambiguity supported by Attachment B; court acted within discretion. | Yes; ambiguity supported Extended Bar Order and denial of untimely proofs. |
| Did appellants’ failure to file proofs of interest warrant disallowance of their interests? | Appellants claim no prejudice or hardship shown. | Extended Bar Order required timely filing; failure to do so justifies disallowance. | Yes; no abuse of discretion in disallowing interests. |
Key Cases Cited
- In re Mazzeo, 131 F.3d 295 (2d Cir. 1997) (liquidated vs unliquidated value; timing and ascertainability of value)
- The Rath Packing Co., 55 B.R. 528 (Bankr. N.D. Iowa 1985) (unknown amount implies unliquidated; value ascertainment matters)
- In re Smart World Technologies, LLC, 423 F.3d 166 (2d Cir. 2005) (bankruptcy court authority to fill gaps; equitable powers)
- In re Dairy Mart Convenience Stores, Inc., 351 F.3d 86 (2d Cir. 2003) (equitable relief within §105(a) proper to carry out Code)
- In re U.S. Wireless Data, Inc., 547 F.3d 484 (2d Cir. 2008) (abuse of discretion standard in equity powers)
- In re Jackson, 593 F.3d 171 (2d Cir. 2010) (plenary review of bankruptcy court factual findings and law)
- In re Momentum Mfg. Corp., 25 F.3d 1132 (2d Cir. 1994) (limitations of 105(a) and reliance on equitable relief)
- In re Barbieri, 199 F.3d 616 (2d Cir. 1999) (limits of §105(a) authority; fill gaps)