Picard v. Fairfield Greenwich; Picard v. Schneiderman
- Summarized by David Banker , Montgomery, McCracken, Walker & Rhoads, LLP
- 8 years 7 months ago
- Picard v. Fairfield Greenwich; Picard v. Schneiderman, 13‐1289‐bk (L) 13‐1392‐cv (CON); 13‐1785, (2d Cir. August 8, 2014)
- The United States Court of Appeals for the Second Circuit held that the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (ʺBLMISʺ) and of the bankruptcy estate of Bernard L. Madoff (the "Madoff Trustee") was not entitled to declaratory or injunctive relief where he sought to block the settlement of three lawsuits against "feeder funds," none of which involved BLMIS or the Madoff estate as a party.
The Court of Appeals held that declaratory and injunctive relief to stay the settlements involving these "feeder funds," which funds were also defendants in fraudulent conveyance actions commenced by the Madoff Trustee, was not justified where the settlements involved neither suits against BLMIS and the Madoff estate nor estate property within the meaning of the Bankruptcy Codeʹs automatic stay provisions, the SIPA and two district court orders related to the BLMIS and Madoff estates.
The Court of Appeals also ruled that injunctive relief under section 105 of the Bankruptcy Code was not warranted on the grounds that the Madoff Trustee could not show that the BLMIS estate was likely to suffer irreparable harm if the settlements went forward as planned.
- Procedural context:
- The Madoff Trustee initiated adversary proceedings seeking to block the settlement of three lawsuits, none of which involved BLMIS or the Madoff estates as a party. The United States Court of Appeals for the Second Circuit (Sack, Chin and Droney, Circuit Judges) in two separate cases, which it heard in tandem on appeal, affirmed the ruling of the district court (Victor Marrero and Jed S. Rakoff, Judges) dismissing the trusteeʹs claims for declaratory and injunctive relief.
- The Madoff Trustee initiated adversary proceedings seeking to block the settlement of three lawsuits, none of which involved BLMIS or the Madoff estate as a party. The suits in question were brought by and on behalf of investors in so‐called ʺfeeder fundsʺ—funds that channeled investments to Madoffʹs Ponzi scheme—against the funds themselves and other persons and entities affiliated with them. The Trustee asserts that the settlements in these cases would hinder his ability to recoup fraudulent transfers he alleges BLMIS made to the settling defendants.
- SACK, CHIN, and DRONEY, Circuit Judges
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