Court rejects Madoff Trustee's efforts to block 'feeder fund' settlement

www.debtwire.com–A federal court has saved a USD 80m settlement for indirect investors of Bernard Madoff s ponzi scheme, the Wall Street Journal reported. US District Judge Victor Marrero has ruled that Irving Picard, the court-appointed trustee in charge of recovering money for Bernard Madoff s victims, cannot block the settlement that was agreed with founders of the ‘feeder fund’ Fairfield Greenwich Group on behalf of a group of investors.

Picard has contested several of these settlements involving agreements with victims who invested indirectly in Madoff’s firm, the Journal said, on the basis that the deals make it more difficult for him to get funds for victims who invested directly in the ponzi scheme.

Picard claimed that Fairfield had fed the Madoff firm billions of dollars, but the court ruled that Fairfield investors were not subject to Picard’s jurisdiction, according to the report.

This ruling is separate from the 2011 agreement Picard reached with the liquidators of several Fairfield Greenwich funds, who agreed to award up to USD 1bn in claims against the Madoff bankruptcy estate and share future recoveries. On several occasions the courts have ruled that victims who invested in Madoff’s firm via feeder funds were barred from recovering their money from the Madoff bankruptcy estate, the report noted.

Fairfield Greenwich counsel David A. Barrett of Boies, Schiller & Flexner LLP expressed his satisfaction. A spokesman for Picard refused to comment, the report said. The court will give a final approval to the settlement on Friday.

Losses by the Greenwich Sentry and Fairfield Sentry funds are estimated to exceed USD 1.3bn, the report added.