Madoff Trustee Secures Significant Recovery Agreement with Luxembourg Fund

A Landmark Recovery Agreement in the Madoff Case

In a significant development for the recovery efforts surrounding the infamous Madoff Ponzi scheme, Irving H. Picard, the Trustee operating under the Securities Investor Protection Act (SIPA), has announced a recovery agreement that promises to bolster the Madoff Customer Fund by $498.3 million. This agreement, made with the Luxembourg Investment Fund and its U.S. Equity Plus counterpart, marks an essential step forward for the victims of Bernard L. Madoff Investment Securities LLC (BLMIS).

The Luxembourg Investment Fund (LIF), exclusively invested with BLMIS starting in September 2005 through UBS (Luxembourg) S.A., has recently settled its claims against the Madoff estate. The recent motion filed in the United States Bankruptcy Court for the Southern District of New York highlights the resolution of the SIPA Trustee's claims and the customer claim submitted by LIF, demonstrating the collaborative steps taken in the wake of such an extensive financial scandal.

As outlined in the agreement, the Trustee will receive a hefty sum of $498.3 million, which corresponds to the total amount transferred to LIF from BLMIS. In addition to this, the Trustee will also obtain 15% of any proceeds arising from a lawsuit that LIF has initiated in Luxembourg against UBS, further enhancing the recovery for those affected by the catastrophe that was Madoff’s fraudulent operations.

The approval hearing for this settlement is scheduled for June 25, 2025, at 10:00 AM EST, marking an official step toward sealing the agreement. Upon approval, LIF will have a customer claim valued at approximately $758.8 million, along with a relevant catch-up distribution based on the previous interim distributions to date. Notably, LIF will fund the settlement payment through a deduction from its outstanding distributed claims, ensuring a streamlined financial settlement process.

Josephine Wang, the President and CEO of the Securities Investor Protection Corporation (SIPC), expressed her congratulations to Picard and his team for securing this notable settlement. Wang stated, "The settlement with LIF not only resolves our case against a significant international defendant, but it also has the benefit of freeing up reserves in the customer fund for distribution to other Madoff customers with allowed claims who have yet to recover their principal."

Mr. Picard echoed these sentiments, mentioning that this resolution not only eliminates the complexities of international litigation but also establishes a solid precedent for further recoveries. He commended his legal team, particularly mentioning David Sheehan for his diligent work in negotiating the settlement through extensive discussions.

The full financial ramifications of this agreement remain to be seen, particularly with the possibility of additional financial recovery from ongoing litigation in Luxembourg against UBS. While legal complexities can often drag on, this favorable agreement is seen as a victory, reflecting the unwavering commitment and strategic proficiency of the SIPA legal team aiming to recover funds for those affected by Madoff’s notorious schemes.

Additional information regarding this settlement, as well as the Trustee's ongoing efforts related to recoveries, can be found on the SIPA Trustee's official website here. The court proceedings and updates concerning the funds distribution will also be accessible through the Bankruptcy Court's page. As the Madoff saga continues to unfold, this recovery agreement stands as a beacon of hope for countless victims who have endured the fallout from one of history’s most notorious financial frauds.