Zunshine v. Giddens

U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Bankruptcy

New York Law Journal

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Judge Alison Nathan

Joint broker-dealer MF Global dealt in securities and commodities. Zunshine was a former commodities futures customer. MF Global's liquidation, removed to bankruptcy court under the Securities Investor Protection Act (SIPA), was subject to SIPA and the Commodities Exchange Act. Under both, bankruptcy court approved procedures for Zunshine and other commodities customers to file a claim. Its orders approved a declaration and release form that claimants had to sign before receiving allowed distributions. Dismissing objections to the form's separate "release provision" and "indemnification provision," district court affirmed bankruptcy court's approval of the subject form. The release provision did not improperly create a right of set off in favor of the Securities Investor Protection Corp. (SIPC). It applied only to net equity claims, and articulated the rule that a plaintiff is not entitled to recover more than once for the same injury. As to the indemnification provision, the court was not convinced that a SIPA trustee breaches a fiduciary duty simply by requiring claimants to indemnify the trustee, the estate, or the SIPC in the event that a lien undisclosed to the trustee at the time of distribution is later discovered.

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