Deutsche Bank AG was sued by Kingate Global Fund Ltd. over claims the German bank refused to honor an agreement to buy bankruptcy claims on the estate of convicted con man Bernard Madoff.
Kingate Global Fund and Kingate Euro Fund, two so-called Madoff “feeder funds” based in the British Virgin Islands, filed their complaint in federal court in New York today, asking a judge to force Deutsche Bank to follow through on its commitment to buy the claims.
Deutsche Bank agreed to buy $1.62 billion in claims from the funds in August, and has refused to complete the purchase because a proposed settlement between Kingate and Madoff estate trustee Irving Picard doesn’t provide “sufficient protection” for the Frankfurt-based bank, according to the complaint.
“The Kingate funds will suffer real and concrete damages if Deutsche Bank continues its bad faith attempt to either renegotiate or terminate what everyone understood to be -- and what plainly states that it is -- a done deal,” lawyers for Kingate said in the complaint. “The Kingate Funds’ settlement with the Madoff trustee, which is the result of years of negotiations, will fall apart.”
Picard in June sued the Kingate funds, which are being liquidated in the British Virgin Islands, seeking $975 million in funds they took out of Madoff’s scheme. The funds have been unable to complete a settlement with Picard because of Deutsche Bank’s refusal to honor the agreement, lawyers for Kingate said in the lawsuit.
“Deutsche Bank will purchase Kingate’s claim if both parties can finalize mutually acceptable documentation,” Renee Calabro, a New York-based spokeswoman for the bank, said in a phone interview.
The case is Kingate Global Fund Ltd. v. Deutsche Bank Securities Inc., 11-cv-9364, U.S. District Court, Southern District of New York (Manhattan).