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Lifland Decision on Request For Claims Deadline Delay

Lifland Decision on Request For Claims Deadline Delay

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Published by: DealBook on Feb 25, 2009
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06/14/2009

 
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK--------------------------------------------------------SECURITIES INVESTOR PROTECTIONCORPORATION,Adv. Pro. No. 08-01789 (BRL)Plaintiff-Applicant,SIPA Liquidationv.BERNARD L.MADOFF INVESTMENTSECURITIES LLC,Defendant.
----------------------------------------------------------
APPEARANCES
:
KRAMER LEVIN NAFTALIS & FRANKEL LLP1177 Avenue of the AmericasNew York, New York 10036Tel: (212) 715-9100By: Philip BentleyPhilip S. KaufmanGregory A. Horowitz
 Attorneys for Lucerne Foundation, Collingwood  Enterprises and Douglas Rimsky
BAKER & HOSTETLER LLP45 Rockefeller PlazaNew York, New York 10111Telephone: (212) 589-4200Facsimile: (212) 589-4201By: Irving H. PicardDavid J. SheehanKelly S. Burgan
 Attorneys for Irving H. Picard, Esq.,Trustee for the SIPA Liquidation of  Bernard L. Madoff Investment Securities LLC 
SECURITIES INVESTORPROTECTION CORPORATION805 Fifteenth Street, N.W., Suite 800Washington, DC 20005Telephone: (202) 371-8300Facsimile: (202)371-6728By: Josephine Wang, General CounselMILBERG LLP
 
One Pennsylvania Plaza, 49th
P
FloorNew York, New York 10119Tel: (212) 594-5300Fax: (212) 868-1229By:Jonathan M. LandersBrad N. FriedmanMatthew Gluck Sanford P. Dumain
 Attorneys for the Unofficial Committee of Certain Claim Holders
Before: Burton R. Lifland,United States Bankruptcy Judge
MEMORANDUM DECISION AND ORDER DENYING MOTION TO MODIFYORDER ESTABLISHING DEADLINES FOR THE FILING OF CUSTOMER CLAIMS
Lucerne Foundation, Collingwood Enterprises and Douglas Rimsky (collectively,“Movants”), move for an order modifying this Court’s December 23, 2008 order (the “ClaimsProcedures Order”) establishing deadlines the (“Bar Dates”) for the filing of customer claims inthe Bernard L. Madoff Investment Securities LLC ( the “Debtor”) proceeding. Movants identifythemselves as investors who have received distributions from the Debtor directly or indirectlyprior to December 11, 2008. They have either been paid in full or, for strategic purposes, do notwish to file claims prior to the established Bar Dates.While couched in terms of a request for clarification, Movants actually request that theClaims Procedures Order be modified to provide expressly that any claim arising in the future asa result of the Trustee’s successful pursuit of an avoidance action is excepted from the Bar Dateand need not be filed until 30 days after the judgment giving rise to the claim becomes final.The Claims Procedures Order provides, among other things, an absolute July 2, 2009 deadline
 
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The Claims Procedure Order also sets an initial period (not to exceed sixty days fromthe date of publication) for the filing of customer claims. SIPA provides for this initial periodfor customers who have claims for securities, to the extent possible, to have their claims satisfiedin kind. Since Movants do not seek to recover securities, they face only the July 2, 2009 BarDate.for the filing of all claims.
1
 
See
Claims Procedures Order at pp. 3, 7; 15 U.S.C. § 78fff-2(a)(3).The Securities Investor Protection Corporation (“SIPC”), the Trustee appointed pursuant to theSecurities Investor Protection Act (“SIPA”) and an Unofficial Committee of (unofficial) ClaimHolders strenuously oppose the motion.
Discussion
Section 78fff-2(a)(3) of SIPA contains a six-month time limit for filing customer claims:Time limitations-No claim of a customer or other creditor of the debtor which is receivedby the Trustee after the expiration of the six-month period beginning on the date of publication of notice.... shall be allowed, except that the court may, upon applicationwithin such period and for cause shown, grant a reasonable, fixed extension of time forthe filing of a claim by the United States, by a State or political subdivision thereof, or byan infant or incompetent person without a guardian.15 U.S.C. § 78fff-2(a)(3) (1981). Thus, it is clear from the face of the statute that the six-monthtime limit for filing is subject to extension at the discretion of the court in only three specifiedinstances, none of which are applicable here.
See Miller v. Austin,
72 B.R. 893, 896 (S.D.N.Y.1987). Further emphasis is contained in the legislative history of the provision. The Section-by-Section Summary of the SIPA Amendments of 1977 states:Claims of customers. . . must actually be received by the trustee within a six-monthperiod from the date of publication of notice. . . . Claims filed more than six months afterpublication would be barred except for certain claims by a government authority, aninfant or an incompetent. . . .
 Id. citing
Report of the Senate Committee on Banking, Housing and Urban Affairs, No. 95-763,95th Cong., 1st Sess. at 12; 3 U.S.Code Cong. & Admin.News 764, 775 (1978).
Securities and  Exch. Comm'n v. Kenneth Bove & Co.
, 353 F. Supp. 496, 497 (S.D.N.Y. 1973) (recognizing that

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