- Keough v. 217 Canner Associates, LLC (In the Matter of Greenwich Sentry, L.P.), 13-0193-cv Summary Order (2d Cir. 2013)
- AFFIRMATION by the Second Circuit Court of Appeals of the District Court's affirmation of a bankruptcy court decision and order denying a motion seeking confirmation that Appellants are holders of allowed interests and entitled to distribution under a plan.
- Procedural context:
- Appellants appeal the district court's affirmation of the bankruptcy court's denial of their motion seeking confirmation that the Appellants are holders of allowed interests and entitled to distribution under a plan. The Second Circuit reviews the factual findings in the bankruptcy court for clear error, it reviews conclusions of law de novo, and it reviews the use of section 105 equitable powers for abuse of discretion.
- Appellants were listed in an exhibit to the Debtor's SOFA as holding limited partner interests in the Debtor. After entry of an initial order setting a claims bar date, certain limited partners disagreed with the liquidating trustee as to whether it was necessary for them to file proofs of interest. The bankruptcy court resolved the issue by entering an extended bar date order, giving all parties additional time to file proofs of claims and interests, regardless of whether the interests were scheduled in the SOFA. The Appellants failed to file proofs of interest and now assert the bankruptcy court acted beyond its authority under section 105(a) in requiring the Appellants to file proofs of interest. The Circuit Court holds the bankruptcy court acted within its discretion in entering the extended bar date order. The SOFA listing the equity interests, including the Appellants' interests, indicates the ownership percentages listed are estimates. The bankruptcy court did not err in finding the unliquidated status of the claim as ambiguous. Section 105(a) allows courts to fill gaps in the statutory language. The ambiguity in the SOFA made it unclear whether section 1111(a) (deeming a claim appearing the schedules as filed, unless, inter alia, unliquidated) applied. Thus, the bankruptcy court's use of section 105(a) helped clarify what section 1111(a) required.
- Guido Calabresi, Debra Ann Livingston, Denny Chin
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