Greenwich Sentry, L.P. and 217 Canner Associates, LLC, Liquidating Trustee

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------X 	FOR PUBLICATION
In re: 	Chapter 11
GREENWICH SENTRY, L.P. and 	Case No. 10-16229 (BRL)
GREENWICH SENTRY PARTNERS, L.P.,
(Jointly Administered)
Debtors.
---------------------------------------------------------------X
APPEARANCES:
WOLLMUTH MAHER & DEUTSCH LLP
500 Fifth Avenue
New York, New York 10110
Telephone: 	(212) 382-3300
Facsimile: 	(212) 382-0050
By: 	Paul R. DeFilippo
James N. Lawlor
Attorneys for the Liquidating Trustee
WESTERMAN BALL EDERER MILLER & SHARFSTEIN, LLP
1201 RXR Plaza
Uniondale, New York 11556
Telephone: 	(516) 622-9200
Facsimile: 	(516) 622-9212
By: 	Eric G. Waxman III
Attorneys for Christopher McLoughlin Keough, Quantum Hedge Strategies Fund, LP, and SIM
Hedged Strategies Trust
Before: Hon. Burton R. Lifland
United States Bankruptcy Judge
MEMORANDUM DECISION AND ORDER DENYING THE MOTION FOR AN
ORDER CONFIRMING THAT CERTAIN LIMITED PARTNERS ARE HOLDERS OF
ALLOWED LIMITED PARTNER INTERESTS AND MEMBERS OF CLASS 4 UNDER
THE AMENDED PLAN
Before the Court is the motion (the “Motion”) of Christopher McLoughlin Keough,
Quantum Hedge Strategies Fund, LP, and SIM Hedged Strategies Trust (the “Purported Limited
Partners” or “Movants”), purported limited partners in Greenwich Sentry, L.P. (“Sentry,” and
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together with Greenwich Sentry Partners, L.P., the “Debtors”), seeking an order declaring that
the Movants are holders of allowed limited partner interests entitled to distributions under the
Debtors’ confirmed plans. The liquidating trustee (the “Liquidating Trustee”) for the liquidating
trusts of the Debtors, 217 Canner Associates, LLC, filed an opposition to the Motion.
The instant Motion was brought by a number of parties who elected to blatantly ignore an
explicit order of this Court. 	The order at issue stated, in bold capital letters, that all interest
holders must file proofs of interest by the bar date, notwithstanding what is contained in the
Debtors’ schedules. 	Rather than comply and file proofs of interest, the Purported Limited
Partners attempt to evade that order by advancing several unpersuasive arguments. Accordingly,
the Motion is DENIED.
BACKGROUND
The Debtors operated as private investment partnerships, sold limited partnership
interests to investors through confidential offering memoranda, and used the proceeds to invest
pursuant to an investment program. 	On November 19, 2010, the Debtors filed a petition for
chapter 11 relief in this Court. Shortly thereafter, the Debtors filed a summary of schedules and
statement of financial affairs (the “Schedules”). 	See Dkt. No. 44. 	The Debtors’ Schedules
included a list of known interest holders and the “Estimated Percentage Ownership” for each of
them. The list provides:
This list of equity holders is based upon the administrator’s records of investors in
Greenwich 	Sentry, 	L.P. 	and 	in 	Greenwich 	Sentry 	Partners, 	L.P. 	as 	of
November 30, 2008. This list may include limited partners that made redemption
requests prior to November 30, 2008, but to whom no redemption payments were
made as a result of the disclosure on or about December 11, 2008 of the ponzi
scheme that had been operated by Bernard L. Madoff Investment Securities LLC.
Schedules, Ex. B.
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On April 6, 2011, the Court entered the First Bar Date Order1 setting May 23, 2011 (the
“First Bar Date”) as the bar date for filing proofs of claim and proofs of interest. According to
this order, purported interest holders need not file proofs of interest if their interest is listed in the
Debtors’ schedules, provided that the “[i]nterest is not scheduled as ‘disputed,’ ‘contingent,’ or
‘unliquidated.’” First Bar Date Order, p. 3.
On July 20, 2011, the Debtors filed their proposed plans of reorganization (the “Proposed
Plans”). See Dkt. Nos. 173, 175. The Debtors construed the plans as disallowing limited partner
interests unless the holder of such interests had timely filed proofs of interest. 	Certain limited
partners (the “Original Objecting Limited Partners”) objected to the Proposed Plans and the
accompanying disclosure statements. 	See Dkt. No. 192. 	The Original Objecting Limited
Partners argued that their interests had been listed in the Schedules and were not listed as
“disputed,” “contingent,” or “unliquidated” and, therefore, they were exempt from filing a proof
of interest pursuant to section 1111(a) of the Bankruptcy Code (“Section 1111(a)”). The Debtors
countered that the Original Objecting Limited Partners were required to file proofs of interest
because the interests in the Schedules were not liquidated, but were “estimated” and subject to
redemption payments. The above notwithstanding, the Debtors agreed to extend the bar date and
notify all interest holders that they must file proofs of interest, even if their interests were not
scheduled as disputed, contingent, or unliquidated.
Consequently, on September 20, 2011, this Court entered the Extended Bar Date Order,2
1 See Order (A) Fixing a Date for Filing Proofs of Claim and Proofs of Interest Pursuant to Bankruptcy Rule
3003(c)(3) and (B) Fixing The Form and Manner of Notice Thereof [hereinafter the “First Bar Date Order”] (Dkt.
No. 93).
2 See So Ordered Stipulation Between Greenwich Sentry, L.P. and Greenwich Sentry Partners, L.P. and Pasha S.
Anwar, Julia Anwar, ABR Capital Fixed Option/Income Strategic Fund LP, Diversified Investment Associates
Class A Units, Natalia Hatgis and Core Equity Trust, on Behalf of Themselves and on Behalf of the Putative Class
of all Similarly Situated Limited Partners in Class 4 Included in the Excluded Limited Partners, RE: Extending Bar
Date For Class 4 Limited Partners [hereinafter the “Extended Bar Date Order”] (Dkt. No. 208).
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extending the time for interest holders to file proofs of interest to October 20, 2011 (the
“Extended Bar Date”). 	The Extended Bar Date Order and its accompanying notice (“the
Extended Bar Date Notice”), see Dkt. No. 208, Ex. A, warned interest holders that they must file
proofs of interest or they would forfeit their right to any distribution from the estate.
Specifically, the Extended Bar Order stated:
The Extension Notice shall, among other things, advise [interest holders in the
Debtors] that notwithstanding the fact that their applicable Interests may not be
scheduled as ‘disputed,’ ‘contingent’ or ‘unliquidated’ in the List of Equity
Holders annexed to each of Debtor’s Statement of Financial Affairs, such [interest
holders in the Debtors] are still required to timely file a Proof of Interest.
Extended Bar Date Order, p. 4, ¶ 4. 	In turn, the Extended Bar Date Notice provided: “If you
have an Interest against either of the Debtors that arose on or prior to the Filing Date . . . you
MUST file a Proof of Interest to share in distributions from the Debtors’ bankruptcy estates and
vote with respect to such Interest on a Chapter 11 plan filed by the Debtors.” See Extended Bar
Date Notice, p. 2, ¶ 1 (emphasis in original). The notice also provided in bold capital letters:
REGARDLESS OF WHETHER YOUR INTEREST IS NOT SCHEDULED
AS 	“DISPUTED,” 	“CONTINGENT” 	OR 	“UNLIQUIDATED” 	IN 	THE
LIST 	OF 	EQUITY 	HOLDERS 	ANNEXED 	TO 	EACH 	DEBTOR’S
STATEMENT OF FINANCIAL AFFAIRS, YOU ARE STILL REQUIRED
TO FILE A TIMELY PROOF OF INTEREST.
Id. at p. 3 (emphasis in original). Moreover, unlike the First Bar Date Notice, the Extended Bar
Date Notice did not include an exception under the heading “Who Need Not File A Proof Of
Interest” for interest holders listed in the Schedules but not listed as “disputed,” “contingent,” or
“unliquidated.” 	Each of the Purported Limited Partners received notice of the Extended Bar
Date. See Certificate of Service of the Extended Bar Order (Dkt. No. 210).
On December 22, 2011, the Debtors filed their first amended plans of reorganization (the
“Amended Plans”), see Dkt. Nos. 211, 213, which provided for distribution on “Allowed” claims
and interests. “Allowed” claims and interests entitled to distribution require the filing of a proof
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of claim or interest, unless the “[c]laim or [i]nterest has been or hereafter is listed by the Debtor
in the Schedules as liquidated in amount and not disputed or contingent.” See Amended Plans,
p. 4. 	By order dated December 22, 2011, this Court entered the Confirmation Order,3 which
provided that the terms of the Plans shall govern classification of claims and interests for
purposes of distribution. See Confirmation Order, p. 17, ¶ 3.
DISCUSSION
I. 	THE PURPORTED LIMITED PARTNERS ARE BOUND BY THE EXTENDED BAR DATE O RDER
Bar dates ensure the sound administration of a bankruptcy estate by “enabling the parties
to a bankruptcy case to identify with reasonable promptness the identity of those making claims
against the bankruptcy estate and the general amount of the claims, a necessary step in achieving
the goal of successful reorganization.” 	Midland Cogeneration Venture Ltd. P’ship v. Enron
Corp. (In re Enron), 419 F.3d 115, 128 (2d Cir. 2005) (citing First Fidelity Bank, N.A. v. Hooker
Invs. Inc. (In re Hooker Invs., Inc.), 937 F.2d 833, 840 (2d Cir. 1991)). “If individual creditors
were permitted to postpone indefinitely the effect of a bar order . . . the institutional means of
ensuring the sound administration of the bankruptcy estate would be undermined.” Hooker Invs.,
937 F.2d at 840. 	Despite the importance of filing proofs of claim or interests, it is deemed
unnecessary by the Code in certain situations. 	See, e.g., 11 U.S.C. § 1111(a) (stating that “[a]
proof of claim or interest is deemed filed . . . for any claim or interest that appears in the
schedules 	. . 	. 	except 	a 	claim or 	interest 	that 	is 	scheduled 	as 	disputed, 	contingent 	or
unliquidated”). 	Consistent with Section 1111(a), the Federal Rule of Bankruptcy Procedure
(“Bankruptcy Rule”) 3003 provides that “the list of equity security holders” filed with the
debtor’s schedule of liabilities “shall constitute prima facie evidence of the validity and amount
3 See Order Confirming First Amended Plans of Reorganization Under Chapter 11 of the Bankruptcy Code Proposed
by Greenwich Sentry, L.P. and Greenwich Sentry Partners, L.P., Debtors and Debtors-in-Possession [hereinafter the
“Confirmation Order”] (Dkt. No. 306).
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of the equity security interests . . . .” 	Fed. R. Bankr. P. 3003(b)(2). 	The purpose underlying
Section 1111(a) is to “lessen the fury of the inevitable paper storm that descends upon
bankruptcy proceedings.” In re Crouthamel Potato Chip Co., 786 F.2d 141, 145 (3d Cir. 1986).
In other words, this section was “designed to eliminate unnecessary practices and procedures
where money is tight, time is expensive, proceedings are by necessity protracted, and [its] goal is
to achieve administrative efficiency and, as much as possible, to conserve time and money,
administrative expenses and fees.” 	Id. 	In essence, Section 1111(a) is premised on procedural
efficiency, and if the amount of a claim or interest is clear to all parties, filing proof of that claim
or interest is unnecessary and wasteful.
In the instant case, it was not evident from the Debtors’ Schedules and Proposed Plans
whether scheduled limited partners were required to file proofs of interest. 	For administrative
efficiency and to prevent unnecessary protracted litigation as to the status of any purported
limited partners’ interests, this Court entered the Extended Bar Date Order. This order extended
the bar date to file proofs of interest and explicitly cautioned all limited partners in the Debtors to
file proofs of interest, notwithstanding the manner in which they were listed on the Schedules.
See Extended Bar Date Notice, pp. 2-3. 	Having failed to comply with the Extended Bar Date
Order, the Purported Limited Partners now advance several arguments as to why they are not
bound by it: (i) Section 1111(a) prevented this Court from ordering them to file proofs of
interest; (ii) Sentry’s Amended Plan and the Confirmation Order nullified the requirement to file
proofs of interest; and (iii) disallowance of their interests for failure to file proofs of interest
deprives them of property interests without due process. 	As explained below, these arguments
are unpersuasive.
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A. This Court had Authority to Enter the Extended Bar Date Order
In an attempt to justify ignoring the Extended Bar Date Order, the Purported Limited
Partners assert that: (i) their interests were listed on the Schedules in a manner deemed filed per
Section 1111(a) and (ii) courts cannot enter a bar date order that overrides Section 1111(a).
Contrary to the Purported Limited Partners’ argument, courts clearly have the authority to
enter orders requiring interest holders to file proofs of interest, regardless of what is stated in the
schedules. See In re Yonkers Prof’l Hosp., 113 B.R. 153, 157 (Bankr. S.D.N.Y. 1990) (holding
that by specifically ordering interest holders to file proofs of interest, “the ‘double deeming’
effect of § 1111(a) of the Bankruptcy Code and [the corresponding Bankruptcy Rule], which . . .
provide for a claim to be deemed filed, . . . was rebutted by this court’s order”); In re McLean
Enters., 98 B.R. 485, 486 (Bankr. W.D. Mo. 1989) (finding “that it had, has, and will have in the
future the ability to issue bar orders in Chapter 11 cases” requiring claimants to file proofs of
claim even if not scheduled as disputed, contingent, or unliquidated); see also E*Trade Fin.
Corp. v. MarketXT Holdings Corp (In re MarketXT Holdings Corp.), 336 B.R. 67, 71 (Bankr.
S.D.N.Y. 2006) (“The ‘bar date order’ entered in the Chapter 11 case required all creditors with
secured or unsecured, contingent or fixed, liquidated or unliquidated claims to file a proof of
claim by a date certain. This order was binding on [the creditor].”) (emphasis added).
The Movants misplace reliance on The Tenth RMA Partners, L.P. v. DiCroce (In re
DiCroce), where it was determined that a bankruptcy court cannot establish a bar date for claims
deemed filed under Section 1111(a). 	DiCroce, No. 97-057, 1998 WL 35416878, at *4 (B.A.P.
1st Cir. Feb. 25, 1998) (“[A]lthough the court could establish a bar date by which creditors who
needed to file proofs of claim were required to do so, it could not extend such an order to cover
claims already ‘deemed filed’ under § 1111(a).”). In that case, the schedules listed the creditor
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“as the holder of a liquidated, noncontingent, undisputed, unsecured, nonpriority claim in the
amount of $287,486.49.” 	Id. at *1. 	As such, the liquidated amount of the claim was
undisputable and the court’s order requiring the claim holder to file a proof of claim served no
administrative purpose. 	Here, in contrast, the Debtors’ Schedules were ambiguous4 and led to
disputes between the Debtors and the limited partners regarding the need to file proofs of
interest. 	Thus, it is illogical to use Section 1111(a)—a section grounded in administrative
efficiency—to prohibit a court from entering an order aimed at minimizing disruptive litigation
on 	peripheral 	issues 	and 	facilitating 	the 	parties’ 	negotiations 	and 	plan 	confirmation.
Accordingly, issuing the Extended Bar Order was well within the scope of this Court’s authority.
B. The Confirmation Order Did Not Nullify the Requirements of the Extended Bar Date Order
The Purported Limited Partners further argue that Sentry’s Amended Plan and the
Confirmation Order somehow nullified the Extended Bar Date Order’s requirement of filing
proofs of interest. 	Under Sentry’s Amended Plan, “allowed interests” include an interest for
which no proof of interest was filed, but ‘is listed by the Debtor in the Schedules as liquidated in
amount and not disputed or contingent” See Amended Plans, p. 4. 	The Confirmation Order
permanently enjoins challenges to classification and distribution under the Amended Plan. 	As
such, the Purported Limited Partners posit that the Confirmation Order nullifies the Extended
Bar Date Order’s requirement that limited partners must file proofs of interest by the Extended
Bar Date.
The Purported Limited Partners are misguided, however, for two principal reasons. First,
4 This ambiguity is exemplified by the parties’ widely divergent interpretations of the manner in which the
Schedules listed the interests. The Liquidating Trustee argues that (i) these interests were clearly not liquidated
given that they were listed as estimated and subject to redemption payments, and (ii) Section 1111(a) does not
require the term “unliquidated” to be noted on the Schedules. The Original Objecting Limited Partners argued that
their interests were liquidated on the Schedules, and even if they were not, Section 1111(a) requires the Debtors to
affirmatively note that an interest is unliquidated in order to trigger a requirement to file a proof of interest
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the Purported Limited Partners manufacture an inconsistency between the Amended Plans and
the Extended Bar Date Order. 	The Amended Plans allows for distribution on unfiled claims or
interests only if the “[c]laim or [i]nterest has been or hereafter is listed by the Debtor in the
Schedules as liquidated in amount and not disputed or contingent.” Amended Plans, p. 4
(emphasis added). The Purported Limited Partners’ interests were not listed as liquidated in the
Schedules. Indeed, the interests were listed as “estimated” and subject to redemption payments
made by investors. 	Second, while the Confirmation Order provided that the terms of the
Amended Plans shall govern classification of claims and interests for purposes of distribution,
neither the Confirmation Order nor the Amended Plans provided that they supersede or
otherwise nullify the Extended Bar Date Order.
C. Due Process is Not Offended By Denying Distribution to the Purported Limited Partners
Finally, the Purported Limited Partners contend that disallowance of their interests for
failure to file proofs of interest would deprive them of property interests without due process. Of
course, “[s]etting an outside limit for the time to assert a right triggers due process concerns of
which every court must be cognizant.” In re New Century TRS Holdings, Inc., 465 B.R. 38, 46
(Bankr. D. Del. 2012). But “[t]his concern is resolved through notice.” Id. To comport with due
process requirements, “a party seeking relief must provide notice reasonably calculated, under all
the circumstances, to apprise interested parties of the pendency of the action and afford them an
opportunity to present their objections.” 	Morgan Olson, LLC v. Frederico (In re Grumman
Olson Indus.), 445 B.R. 243, 254 (Bankr. S.D.N.Y. 2011) (quotations and citations omitted). In
the context of bar dates, due process requires that known creditors and interest holders receive
clear and unambiguous notice of the bar date in order to afford them the opportunity to file
proofs of claim or interest. See Wilzig v. Lopez (In re Lopez), 192 B.R. 539, 544 (B.A.P. 9th Cir.
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1996); In re Enron Corp., No. 01-16034, 2006 WL 898031, at *4 (Bankr. S.D.N.Y. Mar. 29,
2006).
In the instant case, due process is not offended by denying distribution to the Purported
Limited Partners. 	It is uncontested that they received notice of the Extended Bar Date, which
unambiguously stated, in bold font and capital letters, that all interest holders must file proofs of
interest by the Extended Bar Date. 	As such, the timely filing of proofs of interest was the
Purported Limited Partners’ only means to secure a distribution through Sentry’s Amended Plan.
See In re Hooker Invs., 937 F.2d at 840 (“Indeed, so important are the interests served by the bar
order that . . . a creditor who fails to file a proof of claim by the bar date may be entirely barred
from sharing in the distribution of the bankruptcy estate.”); In re New York Seven-Up Bottling
Co., 153 B.R. 21, 23 (Bankr. S.D.N.Y. 1993) (“A creditor in a Chapter 11 case who receives
appropriate notice of the bar date and fails to file timely a proof of claim with respect to a
disputed claim will not be treated as a creditor for distribution purposes.”). 	The Purported
Limited Partners’ failure to file proofs of interest by the Extended Bar Date cannot be condoned.
They received notice of the bar date and ignored the Extended Bar Date order at their own peril.
CONCLUSION
In light of the foregoing, the Purported Limited Partners’ Motion is DENIED.
IT IS SO ORDERED.
Dated: New York, New York
June 1, 2012
/s/ Burton R. Lifland
United States Bankruptcy Judge
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