Cashed-Out Madoff Investors Fear Clawback Suits

Cashed-Out Madoff Investors Fear Clawback Suits - 2/11/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Cashed-Out Madoff Investors Fear Clawback Suits
Pete Brush

Securities Law 360. February 11, 2009
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EXCERPT: Investors who managed to cash out of Bernard L. Madoff's now-collapsed investment funds are seeking changes to a claims bar date in the associated bankruptcy case, according to court papers filed Tuesday. The motion, filed in the U.S. Bankruptcy Court for the Southern District of New York, is intended to preserve jury trial rights of Madoff clients who took their money out prior to the collapse of what criminal prosecutors call the largest Ponzi scheme ever. The Lucerne Foundation, Collingwood Enterprises and Douglas Rimsky want the bar date order to be modified so that future claims arising from potential avoidance actions are excepted from the current bar dates — slated for March and July — and would not need to be filed until 30 days after any judgment from such potential avoidance actions, sometimes called clawback suits. Attempts to resolve the issue with Irving Picard, the trustee managing the liquidation, and without the need for court intervention have not been successful, the motion says, adding that the trustee declined to take a position on the matter. Absent a clarification of the claims deadline, investors may be forced to choose between filing a claim now, thereby potentially losing their right to a jury trial, or not filing a claim, thereby potentially losing their right to share in payments made by the Securities Investor Protection Corp. and the Madoff estate, law firm Kramer Levin Naftalis & Frankel LLP, which represents the movants, said in a statement Tuesday. In a bankruptcy case, the filing of a proof of claim constitutes a waiver of the right to a jury trial. Responses to the motion are due by Feb. 20 ahead of a hearing on the issue set for Feb. 24.

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