Madoff trustee may pursue $8 billion claims vs. banks in feeder fund cases
By Jonathan Stempel
NEW YORK (Reuters) - A federal judge has made it easier for the trustee seeking money for Bernard Madoff's victims to pursue more than $8 billion of claims against banks and other financial firms that received money from "feeder funds" that profited from the swindler's massive Ponzi scheme.
U.S. District Judge Jed Rakoff said federal bankruptcy law did not require the trustee, Irving Picard, to obtain final court orders against the feeder funds before pursuing claims against third parties to which those funds transferred money.
In a decision made public on Wednesday, the Manhattan judge said a contrary holding "could cause bankruptcy proceedings to drag on unnecessarily for years, wasting court resources as well as creating unnecessary uncertainty for potential defendants who may be subject to recovery proceedings."
The ruling keeps alive claims in roughly 57 cases, against defendants including affiliates of Bank of America Corp (BAC.N: Quote), Barclays Plc (BARC.L: Quote) and Standard Chartered Plc (STAN.L: Quote), that will now be handled in the U.S. bankruptcy court in Manhattan, court records show.
Picard said he has so far recovered $9.5 billion of the roughly $17.3 billion of principal that Madoff's customers lost.
"This is a significant development in the liquidation proceedings as the ... trustee's current subsequent transfer complaints seek recoveries in excess of $8 billion," Amanda Remus, a spokeswoman for Picard, said in a statement.
Robinson Lacy, a Sullivan & Cromwell partner representing some of the third-party transferees, declined to comment.
The case related to Fairfield Sentry Ltd and Kingate Global Fund Ltd, two feeder funds that in 2009 went into liquidation. Continued...