Securities Investor Protection Corporation v. MF Global Inc.

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK 	NOT FOR PUBLICATION
In re:
MF GLOBAL INC.,
Debtor.
Case No. 11-2790 (MG) SIPA
MEMORANDUM OPINION AND ORDER DENYING MOTION OF SANGANI
FAMILY LP FOR EXTENSION OF BAR DATE (FOR CAUSE) PURSUANT TO
BANKRUPTCY RULE 3003(C)
A P P E A R A N C E S:
MARK SCHLACHET
Counsel for Sangani Family LP
3637 South Green Road, 2d Floor
Cleveland, Ohio 44122
Lake Forest, Illinois 60045
By: 	Mark Schlachet, Esq.
HUGHES HUBBARD & REED LLP
Counsel for James W. Giddens, Trustee for the SIPA Liquidation of MF Global Inc.
One Battery Park Plaza
New York, New York 10004
By: 	James B. Kobak, Esq.
Jeffrey S. Margolin, Esq.
Josiah S. Trager, Esq.
Dina R. Hoffer, Esq.
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
Before the Court is the Motion of Sangani Family LP for Extension of Bar Date (For
Cause) Pursuant to Bankruptcy Rule 3003(c). (ECF Doc. #861) (the “Motion”). The Motion
seeks an extension of the January 31, 2012 Bar Date for all former MF Global Inc. (“MFGI”)
commodities futures customers and former MFGI securities futures customers to file their
respective claims. The Motion proposes that the Bar Date be extended to forty-five days
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following the SIPA Trustee’s compliance with section 107(a) of the Bankruptcy Code, which
requires that filed papers in a bankruptcy case be publicly available. James W. Giddens, Trustee
for the liquidation of MFGI, (the “Trustee”), filed an opposition to the Motion. (ECF Doc.
#925.) For the reasons explained below, the Court denies the Motion.
BACKGROUND
The background of this case has already been discussed in numerous opinions of this
Court and will not be repeated here. On November 23, 2011, the Court issued an order
establishing parallel claims processes for customers’ commodity futures claims and securities
claims, which, among other things, established the Bar Date of January 31, 2012, to submit
claims for former MFGI commodities and securities futures customers.1 (ECF Doc. #423) (“Bar
Date Order”).
DISCUSSION
In its Motion, the Sangani Family LP (“Sangani”) complains that the Trustee has not as
of yet supplied public access to a claims register in these proceedings. 	The Motion states that
“[t]he Trustee of the MF Global, Inc. estate has hired EPIQ Systems as claims agent for the
Bankruptcy Court such that, unlike most Bankruptcy Cases, claims are filed through EPIQ
Systems and are not available at the Bankruptcy Court for parties to examine.” 	Motion, at 3.2
1 	The Bar Date for general unsecured claims and all other claims is June 2, 2012.
2 	In support of its Motion, Sangani liberally interprets the language in the Court’s case management order
(ECF Doc. #418), as “strongly impl[ying] . . . that all filed papers would be publicly available absent an Order per
Section 107(b) of the Code,” which provides protection for trade secrets and commercial information. Motion, at 3.
The Court’s case management order addresses filing and notice procedures for pleadings on the Court’s docket and
does not address the claims register; however, the exact language of the order states:
Nothing in these Procedures shall prejudice the right of any party to move the
Court to request relief under section 107(b) of the Bankruptcy Code to protect
any entity with respect to a trade secret or confidential research development, or
(Footnote continued on next page)
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Sangani states that “[i]t is important to many of the customers in this case that they have access
to the claims filed by similarly situated creditors of the Debtor,” because “[t]his case . . . presents
unusual challenges to the creditor, whose claims arose from exotic financial products and the
alleged misdeeds of persons known and unknown.” Motion, at 4. Although the Motion doesn’t
expressly state the reasons why it believes that access to a claims register is important, it states
that “[t]he claims filed to date contain the information of creditors with varying knowledge levels
and sensitivities to the claims process and its nuances,” id, and the Motion seems to suggest that
certain customers, but not necessarily Sangani, are having difficulty completing their own claim
forms for lack of access to others’ claim forms. See Motion, at 6 (“The number of Commodities
Futures Customers who are misinformed, uninformed, and otherwise unprepared to file their
claims by January 31, 2012 cannot be estimated. To enforce a 90-day Bar Date when claimants
have been deprived of the statutory protections of Section 107(a) is unfair.”). 	The Motion
requests an extension of the Bar Date pursuant to Rule 3003(c) of the Federal Rules of
Bankruptcy Procedure.
Rule 3003(c) states that “[t]he court shall fix and for cause shown may extend the time
within which proofs of claim or interest may be filed.” The language of Rule 3003 clearly states
that the rule is only applicable to cases under chapters 9 and 11 of the Bankruptcy Code. See
FED. R. BANKR. P. 3003(a).
(Footnote continued from prior page)
commercial information, or to protect a person with respect to scandalous or
defamatory matter contained in a paper filed in this case.
Order Pursuant to Section 105(a) of the Bankruptcy Code and Bankruptcy Rules 1015(c) and 9007 Implementing
Certain Notice and Case Management Procedures and Related Relief, ¶ 10.
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Pursuant to section 78fff(b) of the Securities Investor Protection Act (“SIPA”), “to the
extent consistent with the provisions of [SIPA], a liquidation proceeding shall be conducted in
accordance with, and as though it were being conducted under chapters 1, 3 and 5 of subchapters
I and II of chapter 7 of title 11.” 15 U.S.C. § 78fff(b). The Trustee’s duties include liquidating
the commodities broker arm of MFGI to the extent not inconsistent with SIPA. Id. § 78fff-1(b).
Liquidation of joint brokers under SIPA does not incorporate the provisions of chapters 9 and 11
of the Bankruptcy Code; thus, liquidation proceedings under SIPA exclude application of Rule
3003.
Under SIPA, the Bar Date for securities net equity claims to be filed is sixty days after
the publication of notice of the commencement of liquidation proceedings. See id. § 78fff-
2(a)(3). The Court directed the publication of the Notice of Commencement of liquidation
proceedings to be completed no later than December 2, 2011 and set the Bar Date for the filing
of securities futures customer claims at January 31, 2012. See Bar Date Order, at 2, 6. 3 The
Court may only extend the bar date for securities claims for “the filing of a claim by the United
States, by a State or political subdivision thereof, or by an infant or incompetent person without a
guardian.” 15 U.S.C. § 78fff-2(a)(3).
To the extent not inconsistent with SIPA and in compliance with section 78fff(b) of
SIPA, the Trustee’s liquidation of the commodities broker arm of MFGI is governed by
subchapter IV of chapter 7 of the Bankruptcy Code (the “Commodity Broker Liquidation
Provisions”), as supplemented by the Commodity Exchange Act, 7 U.S.C. § 1 et seq., and the
regulations promulgated by the Commodities Futures Trading Commission thereunder, 17 C.F.R.
3 	SIPA mandates that all other claims of creditors be filed within six months after the publication of the
Notice of Commencement. See 15 U.S.C. § 78fff-2(a)(3). In compliance with this provision, the Court set the Bar
Date at May 28, 2012. See Bar Date Order, at 6.
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§§ 190.01–190.10 (the “Part 190 Regulations”). The Part 190 Regulations direct the Trustee to
set forth a bar date for commodities futures customer claims. See 17 C.F.R. § 190.02(d). To
avoid confusion, the Trustee requested, and this Court set, the same bar date of January 31, 2012
for commodities futures customers as securities futures customers. See Bar Date Order, at 6.
Unlike chapter 11 cases in which Rule 3003(c) allows a court to extend the bar date, there
is no provision in the Part 190 Regulations for the Court to extend the Bar Date, and Bankruptcy
Rule 3002 allows the Court to extend the Bar Date in chapter 7 cases only for “infants or
incompetent persons or the representative of either,” but only “[i]n the interests of justice and if
it will not unduly delay the administration of the case.” FED. R. BANKR. P. 3003(c)(2). Because
SIPA liquidations only incorporate chapters 1, 3, 5, and the Commodity Broker Liquidation
Provisions of the Bankruptcy Code, Sangani has no legal basis upon which to request this Court
to extend the Bar Date.4
CONCLUSION
For the reasons stated above, the Motion is DENIED.
Dated: March 7, 2012
New York, New York.
_____/s/Martin Glenn_______
MARTIN GLENN
United States Bankruptcy Judge
4 	The Court notes that Sangani has suffered no injury-in-fact, as it timely submitted and then amended its
own proofs of claim. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Sangani cannot claim third-
party standing to request relief on the part of other MFGI customers; nor has it demonstrated evidence that other
MFGI customers have been hindered in any way from protecting their own interests. See Powers v. Ohio, 499 U.S.
400, 411 (1991).
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