On June 20, 2013, a three-member panel of the United States Court of Appeals for the Second Circuit issued an important decision that significantly curtails the authority of Irving Picard, as Trustee for the liquidation of Bernard L.
Irving Picard, the trustee appointed under the Securities Investor Protection Act (the “Trustee”), 15 U.S.C. § 78aaa et seq. (“SIPA”), to administer the estate of Bernard L. Madoff Investment Securities, LLC, has brought hundreds of actions seeking to avoid transfers that were purportedly fraudulent or preferential (the “Avoidance Actions”). Some of the Avoidance Action defendants sought to withdraw the reference to the Bankruptcy Court, basing their motions on the Supreme Court’s decision in Stern v. Marshall, 131 S. Ct. 2594 (2011).
The Unsecured Creditors Comm. v. Community Bank(In re Stinson Petroleum Co., Inc.), Case No. 12-60234 (5th Cir., Jan. 7, 2013)
CASE SNAPSHOT
The trustee in the bankruptcy of an LLC member asked the Bankruptcy Court for a declaration that the LLC was dissolved pursuant to its operating agreement. The operating agreement mandated dissolution upon the bankruptcy of a member, but the court denied the trustee’s motion, relying on provisions in the Bankruptcy Act that trump contractual limitations. In re Warner, 480 B.R. 641 (Bankr. N.D. W.Va. Sept. 27, 2012).
Settlement of collection disputes over amounts and payment terms for bond-related claims, including in bankruptcy cases, involves issues of binding minority bondholders and releasing the indenture trustee, as well as straightforward determinations of collectability economics. Bondholders unhappy with a proposed settlement can be bound nevertheless when the deal is incorporated into a bankruptcy plan of reorganization and majority bondholders out-vote them, but only if certain requirements are met. A recent bankruptcy court decision, In re Lower Bucks Hosp., 471 B.R.
In a recent contested matter in the case Home Valley Bancorp., Inc., Case No.
Louis J. Freeh, a former FBI director and the court-appointed creditor trustee in the MF Global bankruptcy, estimates that creditors’ claims could be in excess of $3 billion. In his recent report to the bankruptcy court, Freeh estimates creditors likely include major banks, investors and service providers, potentially leading to 112 claims against MF Global, which collapsed in October 2011.
A recent opinion from the United States Bankruptcy Court for the Western District of New York shows that even the best laid strategies can return to haunt the insiders of a debtor. In Wallach v.
Irving Picard, the trustee in charge of recovering approximately $20 billion from the Madoff Ponzi scheme, may now seek claims against the wives of Bernard Madoff's two sons according to a recent court order. Judge Burton Lifland of the U.S.