United States District Court, S.D. New York
In re PLUSFUNDS GROUP, INC., Debtor.
HARBOUR TRUST CO. LTD., In Its Capacity as SPhinX Trustee, Appellant & Cross-Appellee,
ROBERT AARON, et al., Appellees & Cross-Appellants
For Harbour Trust Co. Ltd., Trustee for the SPhinX Trust, Appellant: Leo R. Beus, LEAD ATTORNEY, PRO HAC VICE, Beus Gilbert PLLC, Phoenix, AZ; David J. Molton, Brown Rudnick LLP (NYC), New York, NY; Timothy Joseph. Paris, PRO HAC VICE, Beus Gilbert PLLC, Phoenix, AZ.
For Robert Aaron, Derivatives Portfolio Management, Ltd., Derivatives Portfolio Management, LLC, DPM Mellon Limited, DPM Mellon, LLC, Appellees: Brian John Pendleton, Jr., LEAD ATTORNEY, DlA Piper (US); Daniel Gerard Egan, DLA Piper, New York, NY; Gregg Mattisen Galardi, DLA Piper U.S. LLP (NY), New York, NY.
OPINION & ORDER
HONORABLE PAUL A. CROTTY, United States District Judge.
This action arises out of a bankruptcy case that has been closed since December 2010. Prior to the case's closing, the bankruptcy court confirmed a plan of liquidation
that provided for creation of the SPhinX Trust (the " Trust" ) and designated Harbour Trust Co. Ltd. (the " Trustee" ) as its trustee. On February 11, 2013, the Trustee moved to reopen the case so that it could seek an extension of the Trust. Robert Aaron, Derivatives Portfolio Management, Ltd., Derivatives Portfolio Management, LLC, DPM Mellon Ltd., and DPM Mellon, LLC (collectively, the " DPM Defendants" ), who are defendants in related civil actions initiated by the Trustee, filed objections to the Trustee's motion. On May 13, 2013, U.S. Bankruptcy Judge James M. Peck held that the DPM Defendants did not have standing to object but nonetheless he denied the Trustee's motion to reopen. The Trustee appealed to this Court and the DPM Defendants cross-appealed. The Court AFFIRMS the bankruptcy court's decision in its entirety.
I. The Chapter 11 Filing
On March 2, 2006, PlusFunds Group, Inc. (the " Debtor" ) filed for relief under chapter 11 of the Bankruptcy Code. ( See Bankr. Dkt. No. 1.) Prior to filing its petition, the Debtor was a privately held financial services provider that offered a range of investment vehicles, including the SPhinX Funds platform, ( See Bankr. Dkt. No. 452, Art. II.) After Refco Inc. (" Refco" ) and its affiliated debtors filed for bankruptcy on October 17, 2005, the Refco creditors' committee sought recovery of approximately $312 million from one of the SPhinX Funds. ( Id.) This resulted in a wave of redemptions by investors in other SPhinX Funds and, ultimately, the Debtor's own liquidation. ( Id.)
The Debtor filed its schedules of assets, liabilities, creditors, and executory contracts (the " Schedules" ) on March 22, 2006. ( See Bankr. Dkt. No. 67.) In the Schedules, the Debtor listed Derivatives Portfolio Management, LLC, DPM Mellon Ltd., and DPM Mellon, LLC as creditors and/or counterparties to executory contracts. ( Id. at 16, 28-29.) On August 7, 2007, the court confirmed the Debtor's chapter 11 plan of liquidation (the " Plan" ), ( see Bankr. Dkt. No. 515), which provided for the creation of the Trust pursuant to the SPhinX Trust Agreement (the " Trust Agreement" ). ( See Bankr. Dkt. No. 774, Ex. A.) The primary purpose of the Trust was to pursue and liquidate certain causes of action against creditors and counterparties (the " Causes of Action" ) so that any value realized could be given to the Trust's beneficiaries. ( See id., Ex. A § § 2.2, 3.1.) The Trust Agreement could only be amended upon the written consent of the Advisory Board, ( see id., Ex. A § 11.8), whose powers and authority automatically ceased upon termination of the Trust, ( see id., Ex. A § 9.6).
The Trust Agreement provided for termination of the Trust in two ways. If the Trust paid all of its costs, expenses, and obligations and distributed all assets in accordance with the Plan, the Trustee could move to terminate the Trust. ( See id., Ex. A § 10.2.) Otherwise, the Trust would terminate on September 20, 2012 and the Trustee would distribute all assets in accordance with the Plan immediately thereafter. ( See id., Ex. A § 10.3.) The Trust could be extended, however, if the Trustee obtained the bankruptcy court's approval during the six months prior to termination. ( See id., Ex. A § 10.3.)
On December 3, 2010, the Debtor moved to close its chapter 11 case. ( See Bankr. Dkt. No. 764.) in a supporting declaration, the Debtor stated that " the Debtor's estate has been fully administered and . . . there will be no matters pending before the Court. (Bankr. Dkt. No. 765, Ex. A ¶ 8.) The Debtor ...