NEW YORK--(BUSINESS WIRE)--Herrick, Feinstein LLP announced a global settlement of various litigations arising out of the collapse of Bernard L. Madoff Investment Securities LLC (“Madoff”) that will return approximately $206 million, collectively and over time, to several defrauded investor groups, who invested in several Madoff feeder hedge funds, collectively known as the Beacon/Andover Funds.
Combined with past distributions by the Beacon/Andover Funds and the anticipated future distributions from the Madoff Trustee, the settlement is expected to return to most, if not all, of Beacon/Andover Funds’ individual investors nearly 100%, or more, of their investment, based upon a current anticipated 65% distribution from the Madoff Trustee of the Beacon/Andover Funds’ allowed bankruptcy claims.
Herrick, Feinstein Partner and Co-Chair of the firm’s Securities and Commodities Litigation and Regulatory Practice Group Arthur G. Jakoby, counsel for the Beacon/Andover Funds, said, “This settlement is probably the most favorable outcome for any investor who invested with Madoff through an investment feeder fund. To achieve a result that approaches returning approximately 100% or more of our investors’ principal investments is remarkable and, hopefully, will help heal the financial wounds of our Funds’ Madoff victims. The crimes perpetrated by Bernard Madoff against the Beacon/Andover Funds were financially devastating to our investors but this settlement provides our investors with justice and will restore to our investors their hard earned monies.”
The global settlement is a combination of two main settlements:
The first is a settlement which Herrick, Feinstein negotiated with the Madoff Trustee. The Madoff Trustee had commenced a lawsuit by which he sought to (i) completely disallow the Beacon/Andover Funds’ net equity claim of approximately $141 million which the Funds asserted against the Madoff Estate, and (ii) recover (or “clawback”) $28.31 million that the Beacon/Andover Funds had withdrawn from their Madoff accounts over the years. Under the settlement, the Trustee not only agreed to allow the full amount of the Funds’ net equity claim of approximately $141 million but also agreed to increase the Funds’ net equity claim by $24 million (for a total allowed net equity claim of approximately $165 million) in connection with $24 million of payments to be made by the Funds and others to the Trustee under the settlement agreement. The Trustee also agreed to pay $500,000 to each of the Beacon Fund and Andover Fund representing the upper limit on the amount of SIPC payments authorized under current law and approved almost $63 million in “catch-up” distributions to be paid, immediately upon approval of the settlement by the court, to the Beacon/Andover Funds in connection with those claims. Based upon an anticipated 65% distribution from the Madoff Trustee, together with the SIPC payment, this settlement will recoup over $100 million of Beacon/Andover investor losses.
Under the second settlement, the Beacon/Andover Funds will, net of certain fees and expenses, receive approximately $99 million from their former outside investment advisor, Ivy Asset Management, LLC, which includes a $3.5 million contribution plus a waiver of certain management fees from the Beacon/Andover Funds’ management.
The second settlement was negotiated collectively and cooperatively by the New York State Attorney General’s Office and the U.S. Department of Labor along with Herrick, Feinstein and several class action law firms, including, but not limited to, Lowey Dannenberg Cohen & Hart, lead class counsel, Cohen Millstein Sellers & Toll, lead ERISA class counsel and several other law firms representing various investor groups, all of whom worked together to achieve this unprecedented result. Investor Howard Siegel also participated in the settlement negotiations as a representative of the Beacon Fund.
The Herrick, Feinstein team was led by Mr. Jakoby and included Bankruptcy Partner Paul Rubin as well as Frederick E. Schmidt, Jr.
The individual investor groups, collectively known as the Beacon/Andover Funds, include Beacon Associates LLC I, Beacon Associates LLC II, Beacon Associates LLC, Andover Associates, L.P., Andover Associates LLC I and Andover Associates (QP) LLC. The defrauded investors in these funds include hundreds of individual investors and dozens of New York union pension and welfare plans.
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