Madoff Trustee to Distribute $505 Million to Customers
The trustee for Bernard L. Madoff Investment Securities Inc. said he will make an additional distribution of $505 million to customers, bringing the total to more than $5.4 billion, or almost 43 percent of approved claims.
The distribution, announced today, will be the third by Irving S. Picard, the trustee. Including $806 million provided by the Securities Investor Protection Corp., Picard previously distributed just under $5 billion to customers.
The bankruptcy court in New York will hold a hearing on March 13 to approve the new distribution to victims of Madoff’s $20 billion Ponzi scheme, the largest in U.S. history.
The distribution will be made from the $9.317 billion Picard has recovered so far. He is precluded from paying almost $2.5 billion held in reserve for disputed claims. In addition, Picard is holding back $1.3 billion until courts rule on whether customers are entitled to interest on their claims to take into consideration the time-value of money.
March 22 will be the record date for the new distribution.
Most of it results from more than $1 billion in a settlement escrow that expired on Feb. 8.
The funds Picard holds don’t include an additional $2.2 billion that was forfeited to the government. Late last year, the government began the process leading eventually to distribution of the forfeited funds to customers.
There are about 2,200 customers with approved claims. Half already have been paid in full, as a result of advances from SIPC, whose fund pays as much as $500,000 per claim. Once customers all recover 100 percent, SIPC is next in line to recoup its advances, including liquidation costs. Unsecured creditors will have a recovery only after SIPC is fully repaid.
The Madoff firm began liquidating in December 2008, with appointment of a trustee under the Securities Investor Protection Act.
Bernard Madoff individually went into an involuntary Chapter 7 liquidation in April 2009. His bankruptcy case was consolidated with the firm’s liquidation. Madoff is serving a 150-year prison sentence following a guilty plea.
The Madoff liquidation case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The criminal case is U.S. v. Madoff, 09-cr- 00213, U.S. District Court, Southern District of New York (Manhattan).
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