Madoff Bankruptcy Trustee Secures Largest Feeder-Fund Bank Settlement

NEW YORK - (Mealey's) The trustee of the bankruptcy estate of convicted multibillion-dollar Ponzi scheme mastermind Bernard L. Madoff secured a nearly $500 million settlement with a feeder fund of Madoff's investment firm, according to documents made available Dec. 7 in a New York federal bankruptcy court (Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC [In re Bernard L. Madoff], No. 08-1789, S.D. N.Y. Bkcy.).

 Bernard L Madoff Investment Securities LLC (BLMIS) trustee Irving H. Picard filed a motion for entry of order approving the settlement agreement with Swiss bank Unionbancaire Privée, UBP S.A. and M-Invest Limited in the U.S. Bankruptcy Court for the Southern District of New York.

Under the terms of the settlement, which are subject to court approval, M-Invest, which was a "direct customer of BLMIS," and UBP have agreed to pay no less than $470 million and no more than $500 million guaranteed.

This, Picard explains, represents "a good faith, complete, and total compromise between the parties as to any and all claims the Trustee would have asserted in a lawsuit for approximately One Billion Dollars against UBP and M-Invest including but not limited to claims the Trustee had against UBP and M-Invest for avoidable direct transfers by BLMIS."

"This Settlement Payment is not specifically or expressly allocated to any of the particular claims that would have been asserted by the Trustee.  The UBP Settlement will greatly benefit the victims of the Madoff Ponzi scheme, and the Trustee respectfully requests that the Court approve it," Picard says, calling the settlement agreement "the largest BLMIS Feeder Fund/bank settlement here to date in cash."

Picard filed the complaint against UBP and M-Invest, seeking claims under Sections 542, 544(b), 547, 548, 550 and 551 of the Bankruptcy Code and Sections 270-281 of the New York Debtor and Creditor Law for direct or indirect transfers.

[Editor's Note:  Full coverage will be in the December 2010 issue of the LexisNexis Financial Services Litigation Report.  In the meantime, the motion for entry of order is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #88-101221-026B.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

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