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Baker & Hostetler LLP 45 Rockefeller Plaza New York, New York 10111 Telephone (212) 589-4200 Facsimile (212) 589-4201 David J. Sheehan Regina Griffin Thomas L. Long Stacey A. Bell Amanda E. Fein Attorneys for Irving H. Picard, Esq., Trustee for the
Substantively Consolidated SIPA Liquidation of
Bernard L. Madoff Investment Securities LLC and
Bernard L. Madoff
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES INVESTOR PROTECTION CORPORATION,
No. 12-mc-00115 (JSR)
Plaintiff-Applicant, ECF Case
v. BERNARD L. MADOFF INVESTMENT SECURITIES LLC,
Electronically Filed
Defendant.
In re: BERNARD L. MADOFF,
Debtor.
TRUSTEE’S MEMORANDUM OF LAW IN OPPOSITION TO
DEFENDANTS’ MOTIONS TO DISMISS CONCERNING SECTION 550(a)
ISSUES 1 AND 2 AS ORDERED BY THE COURT ON AUGUST 21, 2012
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 1 of 37
TABLE OF CONTENTS
Page
-i-
PRELIMINARY STATEMENT ................................................................................................... 1
BRIEF FACTUAL BACKGROUND............................................................................................ 5
The Trustee’s Action Against Initial Transferee Fairfield ..................................... 5
The Trustee’s Action Against Initial Transferee Kingate ...................................... 6
The Trustee’s Recovery Proceedings Against the Subsequent Transferee Defendants ................................................................................................. 6
THE RELEVANT PROVISIONS OF SIPA AND THE BANKRUPTCY CODE ....................... 7
ARGUMENT ................................................................................................................................. 9
I. THE TRUSTEE DOES NOT NEED TO OBTAIN A JUDGMENT AGAINST INITIAL TRANSFEREES BEFORE COMMENCING SECTION 550 RECOVERY ACTIONS AGAINST SUBSEQUENT TRANSFEREES .................................................................................................... 9
A. SIPA Permits the Trustee to Recover Voidable Transfers ......................... 9
B. Nothing in the Plain Language of Section 550 Requires a Fully Litigated, Court-Issued Judgment of Avoidance Against Initial Transferees Before a Recovery Proceeding May Be Brought Against Subsequent Transferees ................................................................ 9
C. The Majority of Courts Have Rejected the Issue 1 Subsequent Transferee Defendants’ Interpretation of Section 550(a), and Have Held that the Trustee Need Only Establish the Avoidability of the Initial Transfers ........................................................................................ 10
1. The Legislative History of Section 550 Reveals that the Language “To the Extent a Transfer is Avoided” Simply Incorporates the Section 548(c) Defense into Recovery Actions ......................................................................................... 12
2. Section 550 Expressly Authorizes the Trustee To Determine Which Transferee To Pursue, Similar To Joint and Several Liability .................................................................... 13
3. The Defendants’ Argument Is Inconsistent with the Statutory Scheme of the Bankruptcy Code, Which Separates the Concepts of Avoidance and Recovery ................... 14
4. Reading Section 550(a) to Allow for Recovery of Avoidable Transfers Avoids Absurd Results ............................... 16
a. Preventing Trustees from Settling With Initial Transferees ....................................................................... 16
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 2 of 37
TABLE OF CONTENTS (continued)
Page
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b. Legal and Practical Impossibilities of Suing Initial Transferees ....................................................................... 17
c. Defendants’ Interpretation of Section 550 Would Permit Subsequent Transferees to Avoid Liability and Diminish Assets of the Estate in Direct Contravention of the Statute’s Purpose ............................ 18
D. Interpreting Section 550 to Permit the Trustee to Pursue the Recovery Proceedings Fulfills the Statute’s Purpose .............................. 18
E. Even Were an Avoidance Against Initial Transferees a Prerequisite to Recovery Proceedings, the Defendants are Not Entitled to Dismissal .................................................................................................. 19
II. THE TRUSTEE’S RECOVERY PROCEEDINGS ARE TIMELY ................... 20
A. The Issue 2 Subsequent Transferee Defendants’ Argument Improperly Imports the Statute of Limitations For Avoidance Actions into Section 550 Recovery Proceedings ..................................... 20
B. The Trustee’s Claims Against the Initial Transferees and the Subsequent Transferees Were Timely Under the Applicable Statutes of Limitation ............................................................................... 22
C. The Subsequent Transferee Defendants Cannot Use a Statute of Limitations Defense Under Section 546(a) to Preclude Recovery Where that Defense Is Not Available to Preclude Avoidance of the Initial Transfers ........................................................................................ 23
D. The Defendants’ Interpretation of Section 550 is Counter to the Purpose of Statute of Limitations ............................................................ 25
E. The Subsequent Transferee Defendants Have Been Afforded Their Due Process Rights .................................................................................. 26
III. THE CONFLICTING ARGUMENTS OF THE ISSUE 1 AND ISSUE 2 SUBSEQUENT TRANSFEREE DEFENDANTS DEMONSTRATE THAT NEITHER GROUP’S INTERPRETATION OF SECTION 550 IS CORRECT ........................................................................................................... 26
IV. THE TRUSTEE HAS ADEQUATELY STATED A CLAIM AGAINST DEFENDANTS FOR RECOVERY OF SUBSEQUENT TRANSFERS ........... 28
CONCLUSION ............................................................................................................................ 29
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 3 of 37
-iii-
TABLE OF AUTHORITIES
Page(s)
CASES
Advanced Telecom Network, Inc. v. Allen (In re Advanced Telecom Network, Inc.), 321 B.R. 308 (Bankr. M.D. Fla. 2005), rev’d on other grounds by 490 F.3d 1325 (11th Cir. 2007) ........................................................................................................................11
Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974) .................................................................................................................25
Asarco LLC v. Shore Terminals LLC, No. C 11-01384, 2012 WL 2050253 (N.D. Cal. June 6, 2012) ...............................................23
Auburn Hous. Authority v. Martinez, 277 F.3d 138 (2d Cir. 2002).....................................................................................................27
Begier v. IRS, 496 U.S. 53 (1990) .....................................................................................................................8
Brown v. Phillips (In re Phillips), 379 B.R. 765 (Bankr. N.D. Ill 2007) .......................................................................................11
Cal. Pub. Emp. Retirement Sys., et al. v. Caboto-Gruppo Intesa BCI, et al. (In re
Worldcom Secs. Litig.), 496 F.3d 245 (2d Cir. 2007).....................................................................................................25
City of Pontiac Gen. Employees Ret. Syst. v. MBIA, Inc. 637 F.3d 169 (2d Cir. 2011).....................................................................................................25
Conn. Ex. Rel. Blumenthal v. U.S. Dep’t of the Interior, 228 F.3d 82 (2d Cir. 2000), cert. denied, 532 U.S. 1007 (2001) .............................................21
Crafts Plus+, Inc. v. Foothill Capital Corp. (In re Crafts Plus+, Inc.), 220 B.R. 331 (Bankr. W.D. Tex. 1998) ...................................................................................11
Dye v. Sachs (In re Flashcom, Inc.), 361 B.R. 519 (Bankr. C.D. Cal. 2007) .....................................................................................26
Exch. Nat’l Bank of Chicago v. Wyatt, 517 F.2d 453 (2d Cir. 1975).......................................................................................................7
IBT Int’l, Inc. v. Northern (In re Int’l Admin. Servs., Inc.), 408 F.3d 689 (11th Cir. 2005) ......................................................................................... passim
In re Adler Coleman Clearing Corp., 198 B.R. 70 (Bankr. S.D.N.Y. 1996) .........................................................................................7
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 4 of 37
TABLE OF AUTHORITIES (continued)
Page
-iv-
In re Enron Creditors Recovery Corp., 388 B.R. 489 (S.D.N.Y. 2008) .....................................................................................16, 17, 18
In re Jones Storage & Moving, Inc., 2005 WL 2590385 (Bankr. D. Kan. Apr. 14, 2005) ..........................................................24, 26
In re Mid Atlantic Fund, Inc., 60 B.R. 604 (Bankr. S.D.N.Y. 1986) .......................................................................................22
Johnson v. Railway Express Agency, Inc., 421 U.S. 454 (1975) .................................................................................................................21
K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (1988) .................................................................................................................27
Kendall v. Sorani (In re Richmond Produce Co.), 195 B.R. 455 (N.D. Cal. 1996) ......................................................................................9, 13, 15
Leifer v. Murphy, 267 N.Y.S. 701 (1933) .............................................................................................................19
Leonard v. First Commercial Mortgage Co. (In re Circuit Alliance, Inc.), 228 B.R. 225 (Bankr. D. Minn. 1998) ...............................................................................13, 14
Leonard v. Optimal Payments, Ltd. (In re Nat’l Audit Defense Network Inc.), 332 B.R. 896 (Bankr. D. Nev. 2005) .......................................................................................11
Menninger v. Midwest Mfg. Techs., Inc. (In re Midwest Mobile Techs., Inc.), 304 B.R. 787 (Bankr. S.D. Ohio 2003) ....................................................................................14
Miller v. Steinberg (In re Marilyn Steinberg Enters.), 141 B.R. 587 (Bankr. E.D.Pa. 1992) .......................................................................................15
Morton v. Mancari, 417 U.S. 535 (1974) .................................................................................................................21
Official Comm. Of Unsecured Creditors, v. Foss (In re Felt Mfg. Co.), 371 B.R. 589 (Bankr. D.N.H. 2007) ........................................................................................11
Official Comm. of Unsecured Creditors v. J.P. Morgan Chase Bank (In re M. Fabrikant
& Sons, Inc.), 394 B.R. 721 (Bankr. S.D.N.Y. 2008) .....................................................................................11
Oscar Mayer & Co. v. Evans, 441 U.S. 750 (1979) ...........................................................................................................21, 22
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 5 of 37
TABLE OF AUTHORITIES (continued)
Page
-v-
Picard v. Bureau of Labor Ins. (In re Bernard L. Madoff Inv. Secs.), __ B.R. __, 2012 WL 4856207 (Bankr. S.D.N.Y. Oct. 11, 2012) ................................... passim
Picard v. Estate of Stanley Chais, et al. (In re Bernard L. Madoff Inv. Secs.), 445 B.R. 206 (Bankr. S.D.N.Y. 2011) .....................................................................................21
Picard v. Peter Madoff et al. (In re Bernard L. Madoff Inv. Secs.), 468 B.R. 620 (Bankr. S.D.N.Y. 2012) ...............................................................................21, 22
Pirie v. Chicago Title & Trust Co., 182 U.S. 438 (1901) .................................................................................................................28
Pry v. Maxim Global, Inc. (In re Maxim Truck Co.), 415 B.R. 346 (Bankr. S.D. Ind. 2009) .....................................................................................25
Rieser v. Moorman (In re Equity Land Title Agency, Inc.), 370 B.R. 154 (Bankr. S.D. Ohio 2007) ..............................................................................24, 25
Sand & Gravel Co. v. U.S., 552 U.S. 130 (2008) .................................................................................................................25
Savage & Assocs., P.C. v. BLR Servs. SAS, et al. (In re Teligent, Inc.), 307 B.R. 744 (Bankr. S.D.N.Y. 2004) .....................................................................................15
SEC v. F.O. Baroff Co., 497 F.2d 280 (2d Cir. 1974).......................................................................................................7
SEC v. Packer, 498 F.2d 978 (2d Cir. 1974).......................................................................................................7
Shapiro v. Art Leather, Inc. (In re Connolly N. Am., LLC), 340 B.R. 829 (Bankr. E.D. Mich. 2006) ..................................................................................11
Silverman v. K.E.R.U. Realty Corp. (In re Allou Distribs., Inc.), 379 B.R. 5 (Bankr. E.D.N.Y. 2007) .........................................................................................28
SIPC v. Barbour, 421 U.S. 412 (1975) ...................................................................................................................7
SIPC v. Bernard L. Madoff Inv. Sec. LLC (In re Madoff Secs.), No. 12-MC-00115 (JSR) (S.D.N.Y. Aug. 12, 2012) .................................................................1
SIPC v. Stratton Oakmont, Inc., 234 B.R. 293 (Bankr. S.D.N.Y. 1999) .....................................................................................15
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 6 of 37
TABLE OF AUTHORITIES (continued)
Page
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Thompson v. Jonovich (In re Food & Fibre Protection, Ltd.), 168 B.R. 408 (Bankr. D. Ariz. 1994) .......................................................................................26
Twyne’s Case, 3 Coke Rep. 80b, 76 Eng. Rep. 809 (K.B. 1601) .....................................................................19
U.S. Lines, Inc. v. U.S. (In re McLean Indus.), 184 B.R. 10 (Bankr. S.D.N.Y. 1995) .................................................................................21, 22
U.S. Nat’l Bank of Oregon v. Indep. Ins. Agents of America, Inc. 508 U.S. 439 (1993) .................................................................................................................27
U.S. v. Menasche, 348 U.S. 528 (1955) .................................................................................................................21
Universal Church v. Geltzer, 463 F.3d 218 (2d Cir. 2006), cert. denied, 549 U.S. 1113 (2007) ...........................................18
William v. Baxter Land Co., Inc. (In re Arkansas Catfish Growers, LLC), 2007 WL 215815 (E.D. Ark. Jan. 25, 2007) ............................................................................11
Woods & Erickson LLP v. Leonard (In re AVI), 389 B.R. 721 (B.A.P. 9th Cir. 2008)................................................................................ passim
World Bazaar Franchise Corp. v. CCC Associates Co. (In re World Bazaar Franchise
Corp.), 167 B.R. 985 (Bankr. N.D. Ga. 1994) .....................................................................................13
STATUTES
11 U.S.C. § 544 ........................................................................................................................1, 7, 8
11 U.S.C. § 545 ................................................................................................................................8
11 U.S.C. § 546 ..............................................................................................................4, 22, 23, 27
11 U.S.C. § 546(a) ................................................................................................................. passim
11 U.S.C. § 546(a)(1)(A) ...............................................................................................................20
11 U.S.C. § 547 ........................................................................................................................1, 7, 8
11 U.S.C. § 548 ..................................................................................................................1, 7, 8, 15
11 U.S.C. § 548(a)(1)(a) .................................................................................................................8
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 7 of 37
TABLE OF AUTHORITIES (continued)
Page
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11 U.S.C. § 548(c) ...................................................................................................................12, 15
11 U.S.C. § 549 ................................................................................................................................8
11 U.S.C. § 550 ...................................................................................................................... passim
11 U.S.C. § 550(a) ................................................................................................................. passim
11 U.S.C. § 550(a)(1) ...............................................................................................................13, 14
11 U.S.C. § 550(a)(2) ...............................................................................................................11, 20
11 U.S.C. § 550(b) .....................................................................................................................8, 15
11 U.S.C. § 550(d) .........................................................................................................................20
11 U.S.C. § 550(f) .................................................................................................................. passim
11 U.S.C. § 553(b) ...........................................................................................................................8
11 U.S.C. § 724(a) ...........................................................................................................................8
15 U.S.C. § 78fff-1 ..........................................................................................................................7
15 U.S.C. § 78fff-2(c)(3) .......................................................................................................7, 9, 10
15 U.S.C. § 78fff(b) .........................................................................................................................7
OTHER AUTHORITIES
5 COLLIER ON BANKRUPTCY ¶ 550 (16th ed. 2010). ..........................................................11, 12, 14
124 CONG. REC. H. 11,047 (Sept. 28, 1978) ............................................................................12, 13
H.R. REP. NO. 95-595 (1977) ...................................................................................................12, 14
S. REP. NO. 95-989 (1978) .......................................................................................................12, 14
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 8 of 37
Irving H. Picard (the “Trustee”) as trustee for the substantively consolidated liquidation
of Bernard L. Madoff Investment Securities LLC (“BLMIS”) and Bernard L. Madoff
(“Madoff”), by and through his undersigned counsel, respectfully submits this Memorandum in
opposition to the motions to dismiss concerning Section 550(a) Issues 1 and 2 filed by
defendants encompassed in this Court’s August 21, 2012 Order (“Issue 1 Subsequent Transferee
Defendants” and “Issue 2 Subsequent Transferee Defendants,” and collectively referred to as
“Subsequent Transferee Defendants”). The Court’s Order of August 21, 2012 specifically
directed common briefing with respect to the following issues:
(1) whether, as a precondition for pursuing a recovery action against a subsequent transferee under 11 U.S.C. § 550(a), the Trustee must first obtain a fully-litigated, final judgment of avoidance against the relevant initial transferee under 11 U.S.C. §§ 544, 547 or 548 (“Issue 1”), or (2) whether the Trustee’s recovery action against a subsequent transferee under 11 U.S.C. § 550(a) must be dismissed unless the Trustee has obtained a judgment against the relevant subsequent transferee avoiding the initial transfer or he asserts a claim against the subsequent transferee to avoid the initial transfer within the period prescribed by 11 U.S.C. § 546(a) (“Issue 2”).1
PRELIMINARY STATEMENT
Utilizing the fraudulent conveyance provisions of Bankruptcy Code §§ 547, 548 and 550,
among others, the Trustee timely commenced a number of avoidance and recovery actions
against initial and subsequent transferees who received stolen BLMIS customer property.
Subsequent to the commencement of the Trustee’s lawsuits, two of the initial transferees who
received billions of dollars of fraudulent transfers from BLMIS, Fairfield Sentry Ltd.
(“Fairfield”) and Kingate Global Fund Ltd. (“Kingate”), commenced liquidation proceedings in
the British Virgin Islands and Cayman Islands, respectively. Faced with the prospect of
1 See Order, SIPC v. Bernard L. Madoff Inv. Sec. LLC (In re Madoff Secs.), No. 12-MC-00115 (JSR) (S.D.N.Y. Aug. 12, 2012) (Dkt. No. 15).
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 9 of 37
2
protracted and expensive litigation against an insolvent entity in liquidation proceedings in a
foreign jurisdiction, the Trustee entered into a settlement with Fairfield, which yielded a consent
judgment against that initial transferee for the entire amount of initial fraudulent transfers.
Bankruptcy Judge Lifland issued an order approving the settlement agreement, noting that it
offered “significant value to the BLMIS estate for distribution to victims of the Madoff Ponzi
scheme.”2 The Trustee’s action against Kingate, another insolvent initial transferee from whom
certain of the Subsequent Transferee Defendants received transfers, remains pending.
Two groups of defendants who received subsequent transfers from initial transferees
Fairfield and Kingate now move to dismiss, ostensibly under Section 550 of the Code. The Issue
1 Subsequent Transferee Defendants claim that pursuant to Section 550(a), the Trustee’s
recovery claims against them must be dismissed because a condition precedent has not been
satisfied. The Issue 2 Subsequent Transferee Defendants argue that the Trustee’s recovery
proceedings against them under Section 550 of the Code are untimely because, they assert, the
Trustee failed to bring those claims within the statute of limitations set forth in Section 546(a).
Both groups of defendants are wrong.
In particular, the Issue 1 Subsequent Transferee Defendants argue that, before any
recovery actions can be commenced against subsequent transferees, bankruptcy trustees are
required in every case to engage in protracted, burdensome and expensive litigation against the
initial transferees right through to a final court adjudicated judgment of avoidance – regardless
of whether the initial transferees are insolvent, defunct, deceased or even within the court’s
jurisdiction.
2 Picard v. Fairfield Sentry Limited, Settlement Approval Hearing (“Fairfield Tr.”), No. 09-01239 (Dkt. No. 93) June 7, 2011, at 36:21-25.
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 10 of 37
3
Close examination of the “plain” language of Section 550 reveals that it imposes no such
precondition upon recovery actions. It is therefore not surprising that the Issue 1 Subsequent
Transferee Defendants’ argument has been rejected by the majority of courts that have
considered it, including a recent decision by Judge Lifland in Picard v. Bureau of Labor Ins. (In
re Bernard L. Madoff Inv. Secs.), __ B.R. __, 2012 WL 4856207, at *15 (Bankr. S.D.N.Y. Oct.
11, 2012) (“BLI”). As Judge Lifland and the majority of courts have concluded, Section 550 of
the Code contemplates that the Trustee has the choice to seek recovery from initial transferees,
subsequent transferees or any combination thereof – so long as he can establish in the recovery
proceeding that the initial transfer is avoidable. Moreover, these courts have found that the Issue
1 Subsequent Transferee Defendants’ arguments with respect to Section 550 are contrary to the
Code’s statutory scheme, legislative history and the very purposes for which the avoidance and
recovery provisions were enacted.
As to the Issue 2 Subsequent Transferee Defendants’ argument, there is no question that
the Trustee’s recovery proceedings are timely within the relevant statute of limitations period set
forth in Section 550(f). Consistent with the Code’s distinct separation of the concepts of
avoidance and recovery, the Code provides two independent statutes of limitation that set forth
(i) the period within which a trustee must bring an action to avoid initial transfers, as established
by Section 546(a), and (ii) the period within which a trustee must bring a recovery proceeding, as
set forth in Section 550(f). The Issue 2 Subsequent Transferee Defendants are attempting to
import into these Section 550 recovery proceedings the Section 546(a) statute of limitations, and
in doing so, improperly conflate the two separate and independent statutes of limitations
Congress created for avoidance and recovery, respectively.
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 11 of 37
4
Moreover, because the two-year statute of limitations defense set forth in Section 546(a)
is unavailable here to preclude avoidance of the initial transfers at issue, it is likewise unavailable
to preclude recovery of those transfers. The Trustee timely brought avoidance actions against
the initial transferees at issue, Fairfield and Kingate, within two years from the date of
commencement of BLMIS’s liquidation. The Trustee also timely commenced recovery actions
against the subsequent transferees by bringing them within the Section 550(f) statute of
limitations period. Accordingly, the motion to dismiss brought by the Issue 2 Subsequent
Transferee Defendants must also be denied.
Nothing demonstrates the fallibility of the Subsequent Transferee Defendants’
construction of Section 550 more than the contradictions between their own arguments. The
Issue 1 Subsequent Transferee Defendants argue that the Trustee cannot pursue an action against
any subsequent transferee defendant until he first obtains a final, litigated judgment of avoidance
against the initial transferees. The Issue 2 Subsequent Transferee Defendants argue that the
Trustee’s recovery proceedings against them are time-barred because he did not commence
actions to avoid the initial transfers against them within the two-year period set forth in Section
546 of the Code. In other words, the Issue 1 Subsequent Transferee Defendants are contending
that the Trustee’s actions against them were brought too early; the Issue 2 Subsequent Transferee
Defendants are arguing that the Trustee’s actions were brought too late.
What the two groups of Subsequent Transferee Defendants have in common is that they
are both attempting to distort the “recovery” provisions of the Code in a manner that would
preclude any recovery whatsoever from subsequent transferees. But their own arguments in
opposition to one another merely demonstrate that neither group’s interpretation of Section 550
is the right one.
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 12 of 37
5
BRIEF FACTUAL BACKGROUND
Each of the moving Subsequent Transferee Defendants received subsequent transfers of
fraudulent conveyances of BLMIS customer property from initial transferees Fairfield and/or
Kingate. The following summarizes the relevant history of the actions brought by the Trustee
against those initial transferees.
The Trustee’s Action Against Initial Transferee Fairfield
On May 18, 2009, before the expiration of the two-year statute of limitations for
avoidance actions set forth in Section 546(a) of the Code, the Trustee commenced an adversary
proceeding against Fairfield, an initial transferee of funds from BLMIS. In that action, the
Trustee sought, among other things, the avoidance of the transfers made by BLMIS to Fairfield
during the six-year period prior to the Filing Date of the BLMIS proceedings totaling
$3,054,000,000 (the “Fairfield Initial Transfers”). Portions of the Fairfield Initial Transfers were
subsequently transferred, either directly or indirectly, to some of the Subsequent Transferee
Defendants.
On July 21, 2009, the Eastern Caribbean Supreme Court in the High Court of Justice of
the Virgin Islands entered an order commencing the winding up of Fairfield because of its
insolvency. With the Fairfield insolvency filing, it was evident that obtaining a full recovery of
the Fairfield Initial Transfers from Fairfield was impossible. Accordingly, in an effort to recover
the maximum funds for the benefit of BLMIS’s defrauded customers, the Trustee entered into a
settlement with Fairfield (the “Settlement Agreement”), pursuant to which Fairfield agreed to:
(i) pay the Trustee $70 Million; (ii) reduce its customer claim by nearly $730 million; and (iii)
enter into a consent judgment against it in favor of the Trustee for the entire amount of initial
transfers sought to be avoided by the Trustee totaling $3,054,000,000. See Ex. D to Defendants’
Issue 1 brief.
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 13 of 37
6
On June 10, 2011, Bankruptcy Judge Lifland approved the settlement after an open
hearing on the Trustee’s Bankruptcy Rule 9019 motion. The bankruptcy court conditioned its
approval of the settlement upon approval of the settlement by the BVI court, which was received
on June 24, 2011, and thereafter, the consent judgment against Fairfield Sentry was entered on
July 13, 2011.
The Trustee’s Action Against Initial Transferee Kingate
On April 17, 2009, well before the two-year statute of limitations period applicable to
avoidance actions under Section 546(a) expired, the Trustee commenced a proceeding against
Kingate, and initial transferee, which remains pending. Like Fairfield, Kingate and its
management company are currently in liquidation. A number of the Subsequent Transferee
Defendants are subsequent transferees of the initial fraudulent transfers received by Kingate.
The Trustee’s Recovery Proceedings Against the Subsequent Transferee Defendants
Because the Trustee received only a partial recovery of the Fairfield Initial Transfers, and
has yet to recover the Kingate initial fraudulent transfers, the Trustee commenced recovery
proceedings against the Subsequent Transferee Defendants pursuant to Section 550 of the Code.
The Trustee’s complaints against each of the Subsequent Transferee Defendants alleged that: (i)
the initial transferees Fairfield and/or Kingate received transfers of property from BLMIS; (ii)
those initial transfers are avoidable under one or more sections of the Bankruptcy Code; and (iii)
some or all of those initial transfers were transferred either directly or indirectly to the
Subsequent Transferee Defendants. See, e.g., Issue 2 Defs’ Ex. A. The Trustee’s complaints
against the Subsequent Transferees incorporate by reference all of the allegations from the
respective complaints against the initial transferees, including those concerning the avoidability
of the initial transfers at issue.
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 14 of 37
7
THE RELEVANT PROVISIONS OF SIPA AND THE BANKRUPTCY CODE
The Securities Investor Protection Act (“SIPA”) was enacted to “protect the public
customers of securities dealers from suffering the consequences of financial instability in the
brokerage industry.” SEC v. F.O. Baroff Co., 497 F.2d 280, 281 (2d Cir. 1974) (citations
omitted); see also SEC v. Packer, 498 F.2d 978, 980 (2d Cir. 1974). Through SIPA, Congress
created “a new form of liquidation proceeding applicable only to SIPC member firms,” which
was designed to return promptly customer property. SIPC v. Barbour, 421 U.S. 412, 416 (1975).
A SIPA liquidation is essentially a bankruptcy proceeding that is conducted under specified
chapters of the Bankruptcy Code. See 15 U.S.C. § 78fff(b); Exch. Nat’l Bank of Chicago v.
Wyatt, 517 F.2d 453, 457-59 (2d Cir. 1975); In re Adler Coleman Clearing Corp., 198 B.R. 70,
74 (Bankr. S.D.N.Y. 1996). A trustee in a SIPA liquidation proceeding has the general powers
of a bankruptcy trustee, as well as additional duties specified by the Act. See 15 U.S.C.
§ 78fff-1.
Consistent with SIPA’s purpose of protecting a broker-dealer’s customers, Section 78fff-
2(c)(3) provides the Trustee with the power to recover customer property that was fraudulently
transferred by BLMIS to restore the funds of customer property for distribution to customers.
Specifically, Section 78fff-2(c)(3) of SIPA provides that the Trustee “may recover any property
transferred by the debtor which, except for such transfer, would have been customer property if
and to the extent that such transfer is voidable or void under the provisions of [the Bankruptcy
Code].” 15 U.S.C. § 78fff-2(c)(3) (emphasis added). Thus, SIPA considers voidable or void
property to be recoverable by the Trustee, and directs us to the avoidance and recovery
provisions of the Bankruptcy Code.
Through Sections 544, 547, 548 and 550 of the Bankruptcy Code, Congress sought to
protect a bankrupt’s creditors by, among other things, providing a trustee with the power to avoid
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 15 of 37
8
and recover assets fraudulently transferred by a debtor. In Begier v. IRS, 496 U.S. 53, 58 (1990),
the Supreme Court explained that the purpose of these avoidance and recovery provisions was to
“preserve the property includable within the bankruptcy estate” and to restore property to
debtors’ estates for distribution to creditors.
Under Section 548(a)(1)(a) of the Code, a trustee may avoid any transfer “of an interest
of the debtor in property” where, among other things, the debtor made the transfer with “actual
intent to hinder, delay or defraud certain creditors.” Section 550 provides in relevant part:
[T] o the extent that a transfer is avoided under section 544, 545, 547, 548, 549, 553(b), or 724 (a) of this title, the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from – (1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or (2) any immediate or mediate transferee of such initial transferee.
11 U.S.C. § 550.
Under the avoidance and recovery scheme enacted by Congress, it is the initial transfers
made by a debtor of its property that are avoided. After establishing the initial transfer is
avoidable, a trustee may recover from the initial transferee, or any subsequent transferee in the
chain, subject to the defenses available to them.3 Notably, recovery actions against subsequent
transferees under Section 550 do not avoid subsequent transfers made to these defendants; they
merely seek to recover all or a portion of an initial fraudulent transfer of the debtor’s property
that the subsequent transferee defendant received. See 11 U.S.C. §§ 550(a) and (b).
3 See 11 U.S.C. § 544 (“The Trustee … may avoid any transfer of property of the debtor …”); § 545 (“The Trustee … may avoid the fixing of a statutory lien on property of the debtor …”); § 547 (“The Trustee may avoid any transfer of an interest of the debtor in property …”); § 548 (“The Trustee may avoid any transfer…of an interest of the debtor in property …”).
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ARGUMENT
I. THE TRUSTEE DOES NOT NEED TO OBTAIN A JUDGMENT AGAINST
INITIAL TRANSFEREES BEFORE COMMENCING SECTION 550 RECOVERY
ACTIONS AGAINST SUBSEQUENT TRANSFEREES
A. SIPA Permits the Trustee to Recover Voidable Transfers
As set forth below, the Issue 1 Subsequent Transferee Defendant’s focus their entire
statutory construction argument on one particular phrase in Section 550 of the Code “to the
extent that a transfer is avoided …” 11 U.S.C. § 550(a) (emphasis added). But SIPA governs
these proceedings, and by its plain language permits the Trustee to recover transfers that are
“voidable or void” under the Bankruptcy Code. See SIPA §78fff-2(c)(3). The Issue 1
Subsequent Transferee Defendants have not advanced – because they cannot advance – any
construction of Section 550 of the Code that will allow them to circumvent the express language
of SIPA, which clearly authorizes the Trustee’s recovery claims here.
B. Nothing in the Plain Language of Section 550 Requires a Fully Litigated,
Court-Issued Judgment of Avoidance Against Initial Transferees Before a
Recovery Proceeding May Be Brought Against Subsequent Transferees
The Issue 1 Subsequent Transferee Defendants’ motion purports to rely upon the “plain
language” of Section 550 of the Code, which provides that “to the extent a transfer is avoided,”
the trustee may recover from the initial transferee of such transfer or any immediate or mediate
transferee of such initial transferee. The Issue 1 Subsequent Transferee Defendants argue that
the language to “the extent a transfer is avoided” prevents a Trustee from pursuing a recovery
against them without a final adjudicated judgment of avoidance as against the initial transferee.
But nowhere in the plain language of the statute is there any such express precondition to
recovery actions brought against subsequent transferees. See, e.g., Kendall v. Sorani (In re
Richmond Produce Co.), 195 B.R. 455, 463 (N.D. Cal. 1996) (holding that nothing in Section
550 suggests “that recovery from immediate transferees is in any way dependent upon a prior
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action or recovery against the initial transferee”). In fact, Section 550 makes clear that a Trustee
can pursue recovery from any initial transferee, mediate transferee or immediate transferee, or
any combination thereof. But what is not “plain” from the statutory language itself is what the
term “avoid” means, what exactly is required to achieve “avoided” status, or who or what party
(or parties) must do the “avoiding.” Nowhere in the language of Section 550 is there any
specification that a transfer can be “avoided” only after a fully contested and completed litigation
against an initial transferee. Nowhere does the Code require a court to do the “avoiding” of a
transfer. And nowhere does the Code preclude the parties themselves – a trustee and an initial
transferee – from “avoiding” the initial transfer through a court-approved settlement agreement.
As discussed more fully below, the majority of authorities that have reviewed the
language “to the extent … avoided” of Section 550 have concluded that the Trustee need only
establish the avoidability of the initial transfers at issue in a recovery proceeding against
subsequent transferees. Thus, it is clear that the language of Section 550 does not have the
“plain meaning” advanced by defendants.
Even if Section 550 of the Code were interpreted in the strained manner that the Issue 1
Subsequent Transferee Defendants urge, under the express language of SIPA, the Trustee need
only show that a transfer is “voidable” pursuant to the provisions of the Bankruptcy Code to
recover it. See 15 U.S.C. § 78fff-2(c)(3).
C. The Majority of Courts Have Rejected the Issue 1 Subsequent Transferee
Defendants’ Interpretation of Section 550(a), and Have Held that the Trustee
Need Only Establish the Avoidability of the Initial Transfers
The majority of courts to consider the Issue 1 Subsequent Transferee Defendants’
argument have rejected the notion that fully adjudicated judgments against initial transferees are
a precondition to recovery actions against subsequent transferees – including two of the most
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recent decisions out of the Bankruptcy Court for the Southern District of New York.4 BLI, 2012
WL 4856207, at *14; Official Comm. of Unsecured Creditors v. J.P. Morgan Chase Bank (In re
M. Fabrikant & Sons, Inc.), 394 B.R. 721, 745-46 (Bankr. S.D.N.Y. 2008). These courts have
determined that the appropriate interpretation of the language “to the extent that a transfer is
avoided” requires only that a trustee demonstrate the avoidability of the initial transfer in a
recovery proceeding against subsequent transferees. As the Eleventh Circuit stated in IBT Int’l,
Inc. v. Northern (In re Int’l Admin. Servs., Inc.), 408 F.3d 689, 708 (11th Cir. 2005):
After looking at the statute as a whole, we think Congress contemplated “to the extent that a transfer is avoided” to be a simultaneous as well as successive process. The trustee here did not have to pursue litigation against [the initial transferees] to successfully avoid the transfers of assets to [the subsequent transferees]. Therefore, we hold that Section 550(a) does not mandate a plaintiff to first pursue recovery against the initial transferee and successfully avoid all prior transfers of a mediate transferee…
In re Int’l Admin. Servs..
Collier’s has determined that this is the “better view,”5 and the Ninth and Eleventh
Circuits agree. See Woods & Erickson LLP v. Leonard (In re AVI, Inc.), 389 B.R. 721, 735
(B.A.P. 9th Cir. 2008) (“a trustee is not required to avoid the initial transfer from the initial
transferee before seeking recovery from subsequent transferees under § 550(a)(2)”); In re Int’l
Admin. Servs., 408 F.3d at 708 (“Section 550(a) does not mandate a plaintiff to first pursue
4 See also William v. Baxter Land Co., Inc. (In re Arkansas Catfish Growers, LLC), 2007 WL 215815, at *2 (E.D. Ark. Jan. 25, 2007); Brown v. Phillips (In re Phillips), 379 B.R. 765, 786 (Bankr. N.D. Ill 2007); Official Comm. Of Unsecured Creditors, v. Foss (In re Felt Mfg. Co.), 371 B.R. 589, 638-39 (Bankr. D.N.H. 2007); Shapiro v. Art Leather, Inc. (In re Connolly N. Am.,
LLC), 340 B.R. 829, 839-43 (Bankr. E.D. Mich. 2006); Leonard v. Optimal Payments, Ltd. (In re
Nat’l Audit Defense Network Inc.), 332 B.R. 896, 915 (Bankr. D. Nev. 2005); Advanced Telecom
Network, Inc. v. Allen (In re Advanced Telecom Network, Inc.), 321 B.R. 308, 327 (Bankr. M.D. Fla. 2005), rev’d on other grounds by 490 F.3d 1325 (11th Cir. 2007); Crafts Plus+, Inc. v.
Foothill Capital Corp., (In re Crafts Plus+, Inc.), 220 B.R. 331, 334-38 (Bankr. W.D. Tex. 1998).
5 5 COLLIER ON BANKRUPTCY ¶ 550.02[1] (16th ed. 2010).
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recovery against the initial transferee and successfully avoid all prior transfers against a mediate
transferee”).
Notably, the BLI case involved a similarly situated subsequent transferee of Fairfield,
who advanced the same construction of Section 550 as the Issue 1 Subsequent Transferee
Defendants. Judge Lifland rejected the defendant’s argument there, holding that the Trustee
need only establish the avoidability of the initial transfers to Fairfield to pursue recovery from
the subsequent transferee. BLI, 2012 WL 4856207, at *15. His reasoning, and that of the
majority of courts, included: a thorough review of the statutory scheme surrounding the Code’s
avoidance and recovery provisions, the legislative history of Section 550, the purposes
underlying the avoidance and recovery provisions, and the desire to avoid absurd results.
1. The Legislative History of Section 550 Reveals that the Language “To
the Extent a Transfer is Avoided” Simply Incorporates the Section
548(c) Defense into Recovery Actions
One of the reasons courts have rejected the Defendants’ interpretation of “to the extent …
avoided” is because the legislative history of Section 550 makes clear that this language was
adopted for the purpose of providing to subsequent transferees the same defense enjoyed by
initial transferees under the Code as set forth in Section 548(c). H.R. REP. NO. 95-595, at 375-76
(1977); S. REP. NO. 95-989, at 90 (1978); In re Int’l Admin. Servs., 408 F.3d at 706 (citing 124
CONG. REC. H. 11,047, at 79 (Sept. 28, 1978)); 5 COLLIER ON BANKRUPTCY ¶ 550.02[1].
Congress took this language to mean that “liability is not imposed on a transferee to the extent
that a transferee is protected under a provision such as Section 548(c), which grants a good faith
transferee for value of a transfer that is avoided only as a fraudulent transfer, a lien on the
property transferred to the extent of value given.” H.R. REP. NO. 95-595, at 430 (1977). Thus,
“[i]f the value of the property transferred by the debtor exceeds the value given by the transferee,
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the transfer will be avoidable only to the extent of that excess.” 5 COLLIER ON BANKRUPTCY ¶
550.02[1] (emphasis added).
2. Section 550 Expressly Authorizes the Trustee To Determine Which
Transferee To Pursue, Similar To Joint and Several Liability
Another reason the courts have determined that trustees can pursue recovery actions
against subsequent transferees without first fully litigating avoidance actions against initial
transferees is because, similar to joint and several liability, the Code allows the Trustee to pursue
recovery against whomever he chooses. Section 550(a)(1) is phrased in the disjunctive,
suggesting that a trustee elects between naming the initial transferee, the beneficiary, or the
subsequent transferee as defendant in a recovery action. See In re AVI, Inc., 389 B.R. at 733; In
re Int’l Admin. Servs., 408 F.3d at 707; In re Richmond Produce Co., 195 B.R. at 463; Leonard
v. First Commercial Mortgage Co. (In re Circuit Alliance, Inc.), 228 B.R. 225, 236 (Bankr. D.
Minn. 1998). The statute does not dictate or prioritize a trustee’s choice of whom to sue, so
although it is clear that a trustee can only equitably recover once under Section 550(a), no
language in the statute mandates joinder. In re Circuit Alliance, Inc., 228 B.R. at 236-37. This
is a clear parallel to the joint and several liability doctrine where joint tortfeasors can be sued
independently without barring the potential claims, cross or future, for indemnification that the
named defendant may bring against the unnamed participants. Id.
Because a trustee can use Section 550(a) to recover from the transferee of his choosing,
an avoidable transfer is all that is required to state a claim for recovery against a transferee.
World Bazaar Franchise Corp. v. CCC Associates Co. (In re World Bazaar Franchise Corp.),
167 B.R. 985, 990 (Bankr. N.D. Ga. 1994) (“Under the literal language of the statute, there must
be an avoidable transfer before there can be recovery under § 550”) (citations omitted); see also
Menninger v. Midwest Mfg. Techs., Inc. (In re Midwest Mobile Techs., Inc.), 304 B.R. 787, 789
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(Bankr. S.D. Ohio 2003) (“Section 550(a)(1) is said to establish joint liability comparable to the
joint and several liability of joint tortfeasors.”). By “neither prioritizing the estate’s recourse nor
mandating joinder, the statute allows the trustee to pick his named defendants.” In re Circuit
Alliance, Inc., 228 B.R. at 236.
3. The Defendants’ Argument Is Inconsistent with the Statutory Scheme
of the Bankruptcy Code, Which Separates the Concepts of Avoidance
and Recovery
Courts have also rejected the Issue 1 Subsequent Transferee Defendants’ argument that a
separate “avoidance” action against initial transferees must precede any recovery proceeding
under Section 550 because such a construction impermissibly conflates the two concepts of
avoidance and recovery.
The legislative history of the Bankruptcy Code reveals that Congress clearly intended to
separate the two concepts of avoidance of transfers and recovery from transferees. See H.R. REP.
NO. 95-595, at 311 (1977) (Section 550 “enunciates the separation between the concepts of
avoiding a transfer and recovering from the transferee”); see S. REP. NO. 95-989, at 90 (1978).
According to the House Report for the Bankruptcy Reform Act of 1978, Section 550 “prescribes
the liability of a transferee of an avoided transfer, and enunciates the separation between the
concepts of avoiding a transfer and recovering from the transferee . . . . or from any immediate or
mediate transferee.” H.R. REP. NO. 95-595, at 122 (1977) (emphasis added); see also 5 COLLIER
ON BANKRUPTCY ¶ 550.LH (“The notions to separate the concepts of avoidability of transfers
and the liability of and recovery from transferees and to consolidate the rules regarding liability
and recovery in section 550 originated with the Commission on the Bankruptcy Laws of the
United States.”). 6
6 See also Savage & Assocs., P.C. v. BLR Servs. SAS, et al. (In re Teligent, Inc.), 307 B.R. 744, 749 (Bankr. S.D.N.Y. 2004) (“The Code separates the avoidance of a fraudulent transfer from
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Because the concepts of avoidance and recovery are separate and distinct, they are
addressed in separate sections of the Code (see 11 U.S.C. §§ 546-549 and 550, respectively),
each section providing for independent affirmative defenses (see 11 U.S.C. §§ 548(c) and
550(b), respectively) and separate statutes of limitation (see 11 U.S.C. § 546(a) and § 550(f),
respectively).
As recognized by the Ninth Circuit and several other courts, the fact that Congress kept
the concepts of avoidance and recovery distinct indicates that “the trustee need not first avoid a
transfer from the initial transferee when seeking recovery from a subsequent transferee under and
§ 550.” In re AVI, Inc., 389 B.R. at 734.7 It is sufficient that the trustee proves in an action
against the subsequent transferees that the initial transfer was avoidable. Id. at 733. Recognizing
this distinction, Judge Lifland recently concluded that “there is nothing in Section 550 suggesting
that ‘recovery from immediate transferees is in any way dependent upon a prior action or
recovery against the initial transferee.’” BLI, 2012 WL 4856207, at *15 (citing In re Richmond
Produce Co., 195 B.R. at 463).
the recovery of a fraudulent transfer.”); SIPC v. Stratton Oakmont, Inc., 234 B.R. 293, 312 (Bankr. S.D.N.Y. 1999) (“The statute clearly separates ‘(1) the initial transferee of such transfer ...’ from ‘(2) any immediate or mediate transferee of such initial transferee,’ otherwise known as the subsequent transferee ...”) (quoting 11 U.S.C. § 550(a)).
7 See also In re Int’l Admin. Servs., 408 F.3d at 707 (“[T]he distinction between initial transferee and mediate transferee for avoidance purposes is irrelevant. The Defendants need only be transferees.”); In re Richmond Produce Co., 195 B.R. at 463 (holding that “once the trustee proves that a transfer is avoidable under § 548, he may seek to recover against any transferee, initial or immediate, or an entity for whose benefit the transfer is made”) (emphasis added); Miller v. Steinberg (In re Marilyn Steinberg Enters.), 141 B.R. 587, 595-96 (Bankr. E.D.Pa. 1992).
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4. Reading Section 550(a) to Allow for Recovery of Avoidable Transfers
Avoids Absurd Results
A number of courts have rejected the Issue 1 Subsequent Transferee Defendants’
construction of Section 550(a) because it “produces a harsh and inflexible result that runs
counterintuitive to the nature of avoidance actions.” In re Int’l Admin. Servs., 408 F.3d at 704.
Because bankruptcy law is based in equity, courts attempt to avoid absurd results when faced
with the impracticality or utter impossibility of avoiding a transfer against an initial transferee
prior to pursuing recovery proceedings. BLI, 2012 WL 4856207, at *15; see In re Enron
Creditors Recovery Corp., 388 B.R. 489 (S.D.N.Y. 2008), Hearing Transcript (“Enron Tr.”), No.
07-6597 (Dkt. No. 32) April 16, 2008, at 37:15-25, 38:1-10.
a. Preventing Trustees from Settling With Initial Transferees
One absurd result of interpreting Section 550 to allow for recovery from subsequent
transferees only after a final, fully contested adjudication and judgment of avoidance against
initial transferees would be that bankruptcy trustees would be prevented from ever settling with
initial transferees. As the Ninth Circuit aptly noted in In re AVI, Inc.:
Under a strict construction of §550, the trustee would be precluded from pursuing subsequent transferees after settling with an initial transferee who does not admit liability. In turn, trustees would have little incentive to partially settle avoidance actions, thereby running up the costs of litigation and causing further delay. Congress could not have contemplated this outcome in enacting § 550….Simply put, the statute should be interpreted to provide flexibility and
avoid an absurd result, especially in cases that involve multiple transfers or
settlements as in this case.
In re AVI, Inc., 389 B.R. at 735 (emphasis added) (internal citation omitted); see also BLI, 2012
WL 4856207, at *15.
In BLI, Judge Lifland recently rejected the same argument advanced by the Issue 1
Subsequent Transferee Defendants, because it would “forc[e] the Trustee to choose between
engaging in such burdensome litigation with the insolvent initial transferee on the one hand, or
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forever forfeit[] the right to recovery from all subsequent transferees on the other.” BLI, 2012
WL 4856207, at *15. Such an absurd result cannot be what Congress intended in its enactment
of Section 550.
b. Legal and Practical Impossibilities of Suing Initial Transferees
The Issue 1 Subsequent Transferee Defendants’ proffered construction of Section 550 as
requiring judgments of avoidance against initial transferees fails to take into account
circumstances where it may be impracticable or impossible for a trustee to litigate to final
judgment against the initial transferees. See Enron Tr., at 38:11-15. For example, initial
transferees may be, and often are, defunct, deceased or insolvent – as is the case with both initial
transferees at issue in this proceeding.
Under such circumstances, interpreting Section 550 to require a fully contested litigation
and court-issued judgment of avoidance against insolvent initial transferees would be asking
bankruptcy trustees to waste resources on litigating a case without the hope of any considerable
recovery. BLI, 2012 WL 4856207, at *15 (“It was ‘impractical’ for the Trustee to obtain such a
judgment against Fairfield Sentry because it would have entailed protracted, expensive litigation
with an insolvent entity in the midst of a liquidation proceeding with little chance of a
meaningful recovery”).
In Enron, Judge Hellerstein recognized that “the whole substructure of bankruptcy is
equity,” and stated that courts should not “create an interpretation of statutes like [Section 550]
in a way that eliminates the possibility of recovery.” In reversing the bankruptcy court’s
decision on which the defendants rely, Judge Hellerstein concluded that:
I think it necessary to leave open the possibility of an exception where for legal or practical reasons it is impossible or impractical to satisfy the precondition of an avoidance. Like any condition precedent two [sic] ready an application of the requirement of the condition precedent can amount to a forfeiture. And in this application it would bar the trustee from seeking recovery of assets that arguably
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should be recovered for the bankrupt to stay and the creditors thereof. And so I believe that since we are involved with statutory extensions of laws of equity and I think we should inform the way that the bankruptcy code and rules are interpreted not in the feasance of literal terms, but, certainly, where there is sufficient ambiguity to allow such we can satisfy both literal rule and equity.
Enron Tr., at 34:10-11; 38:7-10; In re Enron Creditors Recovery Corp., 388 B.R. at 489.
c. Defendants’ Interpretation of Section 550 Would Permit Subsequent Transferees to Avoid Liability and Diminish Assets of the Estate in Direct Contravention of the Statute’s Purpose
Still other courts have recognized that the defendants’ interpretation of Section 550(a)
would permit subsequent transferee defendants to evade liability. In re Int’l Admin. Servs., 408
F.3d at 707 (“The cornerstone of the bankruptcy courts has always been the doing of equity, and
in situations such as this, where money is spread throughout the globe, fraudulent transferors
should not be allowed to use § 550 as both a shield and a sword. Not only would subsequent
transferees avoid incurring liability, but they would defeat recovery and further diminish the
assets of the estate.”) (citation omitted). In many instances, a bankrupt’s estate and its creditors
would be made to bear the brunt of this ineffectuality because the costs and delay associated with
unnecessary litigation against initial transferees would be borne by the estate and its creditors.
Id.; see also BLI, 2012 WL 4856207, at *15. Under this harsh and inflexible interpretation of the
Section 550, “any streetwise transferee would simply re-transfer the money or asset in order to
escape liability,” and the policies underlying the Bankruptcy Code would be thwarted. In re Int’l
Admin. Servs., 408 F.3d at 704.
D. Interpreting Section 550 to Permit the Trustee to Pursue the Recovery
Proceedings Fulfills the Statute’s Purpose
The purpose of the avoidance and recovery provisions is to “protect the interests of
creditors against fraudulent transfers” and to “preserve property of the estate for distribution to
creditors.” Universal Church v. Geltzer, 463 F.3d 218, 228 (2d Cir. 2006) (citation omitted),
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cert. denied, 549 U.S. 1113 (2007). Construing Section 550 in the manner advanced by the
Trustee – and as accepted by the majority of courts – would permit him to accomplish the widest
recovery possible of the assets fraudulently conveyed by BLMIS, and is thus the only
interpretation of the statute that is consistent with its very purpose.
Moreover, the Trustee’s interpretation of the statute is the only interpretation consistent
with long-standing jurisprudence, that for more than 500 years has directed the liberal
construction of statutes addressing fraudulent conveyances. Twyne’s Case, 3 Coke Rep. 80b, 76
Eng. Rep. 809 (K.B. 1601) (“And because fraud and deceit abound in these days more than in
former times, it was resolved in this case by the whole court, that all statutes made against fraud
should be liberally and beneficially expanded to suppress the fraud.”); see also Leifer v. Murphy,
267 N.Y.S. 701, 705 (1933) (noting with regard to New York Debtor and Creditor Law, “[i]t is a
remedial statute designed to furnish a creditor, as therein defined, full, complete and speedy
relief against his fraudulent debtor. It should, therefore, receive a liberal construction by the
courts in order to accomplish that purpose”).
E. Even Were an Avoidance Against Initial Transferees a Prerequisite to
Recovery Proceedings, the Defendants are Not Entitled to Dismissal
Even if Section 550 did require the Trustee to obtain an avoidance against initial
transferees as a precondition to the commencement of recovery actions, none of the Subsequent
Transferees Defendants is entitled to dismissal.
The Trustee has, through the settlement with Fairfield, effectively “avoided” the initial
transfers from BLMIS, and indeed, has partially recovered some of those transfers from
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Fairfield.8 As the action against Kingate remains pending, there is no basis to dismiss as against
any of the Kingate subsequent transferees.
II. THE TRUSTEE’S RECOVERY PROCEEDINGS ARE TIMELY
A. The Issue 2 Subsequent Transferee Defendants’ Argument Improperly
Imports the Statute of Limitations For Avoidance Actions into Section 550
Recovery Proceedings
The Issue 2 Subsequent Transferee Defendants contend that the Trustee’s recovery
claims against them must be dismissed because the initial transfers have not been “avoided,” and
now cannot be avoided as against them because the Trustee failed to do so within the two-year
statute of limitations period prescribed for avoidance proceedings in Section 546(a) of the Code.
Such a construction improperly imports a statute of limitations from another statutory provision,
contrary to the statutory scheme which separates the concepts of avoidance and recovery.
As noted above, consistent with the Code’s bifurcation of avoidance and recovery, the
Code provides two different statutes of limitation for the commencement of avoidance and
recovery actions. Section 546(a) establishes the statute of limitations for avoidance proceedings,
and provides that those actions must be commenced “within two years of entry of the order for
relief.” 11 U.S.C. § 546(a)(1)(A). Section 550(f), which governs the recovery actions like those
at issue on this motion, provides that such recovery actions “must be brought no later than one
year after the avoidance of the transfer or the closing or dismissal, whichever occurs first.”
8 The Issue 1 Subsequent Transferee Defendants acknowledge that, through the Fairfield Settlement Agreement, the Trustee has obtained a substantial recovery from Fairfield. See Defs’ Issue 1 Br. at 14. Rather than recognizing that their argument acknowledges the effective avoidance of the initial transfers, the Issue 1 Subsequent Transferee Defendants assert the Trustee’s claims against them should be dismissed on equitable grounds to prevent the Trustee from recovering more than the estate is due. Id. However, defendants’ argument ignores the fact that Section 550(d) itself provides the defendants with protection against any such unjust results, by limiting the Trustee to a single satisfaction and does not take into account the fact that the Trustee has recovered less than one-third of the avoidable transfers made to Fairfield. See 11 U.S.C. § 550(a)(2).
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11 U.S.C. § 550(f); see also Picard v. Peter Madoff et al. (In re Bernard L. Madoff Inv. Secs.),
468 B.R. 620, 632 (Bankr. S.D.N.Y. 2012) (citations omitted).
Congress established specific statutes of limitation for particular causes of action, and to
read into one statute a period of limitations from another statute – as Defendants urge – is
contrary to Congressional intent.9 Indeed Defendants’ attempts here to import the limitations
period of Section 546(a) into these recovery proceedings would render the statute of limitations
provision of Section 550(f) a nullity – in direct contravention of fundamental principles of
statutory construction.10
Moreover, the notion that the Issue 2 Subsequent Transferees Defendants advance – that
trustees should be required to bring all suits against subsequent transferees within the two year
period set forth in Section 546(a) – is neither practical nor feasible, particularly in a complex,
globe-spanning case such as this one. See Picard v. Estate of Stanley Chais, et al. (In re Bernard
L. Madoff Inv. Secs.), 445 B.R. 206, 236 (Bankr. S.D.N.Y. 2011) (bankruptcy court recognizing
hurdles to Trustee’s subsequent transferee proceedings, including that the Trustee is an
9 See U.S. Lines, Inc. v. U.S. (In re McLean Indus.), 184 B.R. 10, 15 (Bankr. S.D.N.Y. 1995) (“[h]ad Congress intended to impose a time limitation on objections to claims under section 502(d), they could have done so very easily. Congress’ failure to do so precludes this Court from rewriting the statute…”); see Oscar Mayer & Co. v. Evans, 441 U.S. 750, 757 (1979); Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 464-65 (1975) (“the length of the period allowed for instituting suit inevitably reflects a value judgment concerning the point at which the interests in favor of protecting valid claims are outweighed by the interests in prohibiting the prosecution of stale ones”).
10 See U.S. v. Menasche, 348 U.S. 528, 538 (1955) (“[t]he cardinal principle of statutory construction is to save and not to destroy”) (internal citations and quotations omitted); Morton v.
Mancari, 417 U.S. 535, 551 (1974) (“The courts are not at liberty to pick and choose among congressional enactments, and when two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.”); Conn. Ex. Rel. Blumenthal v. U.S. Dep’t of the Interior, 228 F.3d 82, 88 (2d Cir. 2000) (explaining that the court is required to disfavor an interpretation of a statute that renders language superfluous), cert. denied, 532 U.S. 1007 (2001).
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“outsider” to the subsequent transfer transactions, and will need discovery to identify the specific
subsequent transfers by date, amount and the manner in which they were effected) (citation
omitted).
In analogous circumstances, other courts have rejected attempts of defendants to import
statutes of limitations from one statutory provision to another.11 So too here, Defendants’
attempt to import the two-year avoidance statute of limitations period set forth in Section 546
into this Section 550 recovery action is improper.
B. The Trustee’s Claims Against the Initial Transferees and the Subsequent
Transferees Were Timely Under the Applicable Statutes of Limitation
As set forth above, the Trustee timely commenced avoidance actions against the initial
transferees, Fairfield and Kingate, well within the two-year Section 546(a) statute of limitations
period. The Trustee also commenced timely recovery actions against the Kingate and Fairfield
subsequent transferees.
Because the avoidance action against Kingate remains pending, the statute of limitations
for the Kingate Subsequent Transferee Defendants has not even begun to run. See Picard v.
Peter Madoff, et al., 468 B.R. at 623. As to the Fairfield subsequent transferee defendants, the
Bankruptcy Court entered an order approving the Fairfield Settlement Agreement on June 11,
2011. This order triggered the one year statute of limitations under Section 550(f) for the
Trustee’s actions against the Fairfield Subsequent Transferee Defendants. See BLI, 2012 WL
11 In re Mid Atlantic Fund, Inc., 60 B.R. 604, 610 (Bankr. S.D.N.Y. 1986) (rejecting defendant’s argument that Section 546(a) statute of limitations applied to bar a trustee’s Section 502(d) claim); In re McLean Indus., 184 B.R. at 15 (same); see also Oscar Mayer & Co. v. Evans, 441 U.S. 750, 757 (1979).
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 30 of 37
23
4856207, at *16.12 Thus, the recovery actions brought by the Trustee based on subsequent
transfers by Fairfield brought within one year of June 11, 2011 were timely.
The Bankruptcy Court rejected a similar statute of limitations argument advanced by
another Fairfield subsequent transferee defendant in BLI. 2012 WL 4856207, at *16. There, like
here, BLI argued that the Trustee’s recovery action was time-barred. In rejecting that argument,
the Bankruptcy Court found that the Fairfield Settlement Agreement – the same settlement
agreement at issue on these motions – “presents the court with finality with respect to Fairfield
Sentry” and that finality triggers the one-year statute of limitations in Section 550(f). Id. The
court found that so long as the Trustee has brought his action against the subsequent transferees
within one year of the Fairfield Settlement, that action is timely. Id.; see Asarco LLC v. Shore
Terminals LLC, No. C 11-01384, 2012 WL 2050253, at *5 (N.D. Cal. June 6, 2012).
C. The Subsequent Transferee Defendants Cannot Use a Statute of Limitations
Defense Under Section 546(a) to Preclude Recovery Where that Defense Is
Not Available to Preclude Avoidance of the Initial Transfers
The Code bifurcates the concepts of avoidance and recovery, and provides separate
defenses for both. The subsequent transferees’ defenses are set forth in Section 550 of the Code,
including the statute of limitation defense in 550(f). In addition, subsequent transferees can take
advantage of the defenses set forth in Section 546 or 548, but only to the extent those defenses
are available to preclude the avoidance of an initial transfer. The converse is also true: if a
defense set forth in Sections 546 or 548 is not available to preclude avoidance of an initial
transfer, then it is not available to preclude recovery of that transfer from subsequent transferees.
12 Issue 1 Subsequent Transferee Defendants argue that to give Section 550(f) full effect would require the trustee to first avoid the initial transfer as to the initial transferee before recovering against subsequent transferees. See Defs’ Issue 1 Br. at 9. But as the court noted in BLI, a trustee’s settlement with an initial transferee serves as an adequate trigger to commence the Section 550(f) statute of limitations period, rendering Section 550(f) fully consistent with the Trustee’s reading of Section 550(a). BLI, 2012 WL 4856207, at *16.
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 31 of 37
24
The Trustee timely commenced avoidance actions against the initial transferees, Kingate
and Fairfield. Thus, because the statute of limitations defense set forth in Section 546(a) is
unavailable to preclude avoidance of the initial transfers made to Kingate and Fairfield, that
defense is unavailable to preclude the Trustee’s recovery of those transfers from the Subsequent
Transferee Defendants.
In re Jones Storage & Moving, Inc., a case on which the Subsequent Transferee
Defendants heavily rely, supports the Trustee’s position here. 2005 WL 2590385, at *1 (Bankr.
D. Kan. Apr. 14, 2005). In that case, the trustee’s avoidance action was not brought within the
two-year limitation period of Section 546(a), but the initial transferee defendants failed to raise
Section 546(a) as a defense to the avoidance action. Id. After the trustee settled with the initial
transferee, the court permitted the subsequent transferee defendant to assert the untimeliness of
the avoidance action as a defense in the action against them. Id. The Jones decision was based,
in part, on the fact that the statute of limitations defense under Section 546(a) would have been
available to the initial transferee in the avoidance action, and thus, the subsequent transferees
should have had that same defense available to them. Id. Here, to the contrary, no such defense
under Section 546(a) is available to Fairfield or Kingate to preclude avoidance of the initial
transfers, and therefore the Subsequent Transferee Defendants cannot avail themselves of a
Section 546(a) defense to preclude recovery.
The Issue 2 Subsequent Transferee Defendants’ reliance on Rieser v. Moorman (In re
Equity Land Title Agency, Inc.), 370 B.R. 154, 158 (Bankr. S.D. Ohio 2007) is also misplaced.
There, the bankruptcy court entered a default judgment against the initial transferees, but in its
order, expressly limited the use of the default judgment solely to the trustee and the initial
transferees. Id. In a later action against the subsequent transferees, the court held that the default
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 32 of 37
25
judgment could not be used to establish avoidance of the transfers because of the restrictive
language in the default judgment. Id. In granting the dismissal motion, the court recognized that
its holding was an “unusual result” because “absent restrictive language, a court’s decision is
available for all appropriate purposes.” Id. By way of contrast, the Settlement Agreement and
Judge Lifland’s order approving it expressly contemplated that the Trustee would use the
settlement and consent judgment in recovery proceedings against subsequent transferees. See
Issue 1 Defs’ Ex. D, Fairfield Settlement Agreement ¶ 24.
D. The Defendants’ Interpretation of Section 550 is Counter to the Purpose of
Statute of Limitations
The Issue 2 Subsequent Transferee Defendants’ statute of limitations argument is also not
consistent with the purpose of statutes of limitations, which is to protect defendants against stale
claims. Cal. Pub. Emp. Retirement Sys., et al. v. Caboto-Gruppo Intesa BCI, et al. (In re
Worldcom Secs. Litig.), 496 F.3d 245, 254 (2d Cir. 2007) (“Statutes of limitations are designed
to prevent ‘the revival of claims that have been allowed to slumber until evidence has been lost,
memories have faded, and witnesses have disappeared.’”) (citing Am. Pipe & Constr. Co. v.
Utah, 414 U.S. 538, 554 (1974)); see Sand & Gravel Co. v. U.S., 552 U.S. 130, 133 (2008); City
of Pontiac Gen. Employees Ret. Syst. v. MBIA, Inc. 637 F.3d 169, 175 (2d Cir. 2011). No such
concerns regarding the assertion of stale claims are implicated here, where it is clear from the
statutory scheme that Congress intended for a trustee to have an open-ended statute of limitations
under Section 550(f) that may not be triggered for several years. See, e.g., Pry v. Maxim Global,
Inc. (In re Maxim Truck Co.), 415 B.R. 346, 353 (Bankr. S.D. Ind. 2009) (permitting trustee to
add a named defendant’s spouse as a subsequent transferee where no transfer had been avoided
and more than seven years had elapsed between the commencement of the case and the trustee’s
filing of an amended complaint).
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 33 of 37
26
E. The Subsequent Transferee Defendants Have Been Afforded Their Due
Process Rights
The Issue 2 Subsequent Transferee Defendants argue that unless an avoidance action is
brought against them within the two year time period set forth in Section 546(a), their due
process rights will be violated. To the contrary, the cases cited by these defendants merely hold
that their rights to due process afford them the opportunity to contest the avoidability of initial
transfers, to the extent that issue was not fully adjudicated in a prior proceeding – a proposition
that the Trustee does not contest.13 See Dye v. Sachs (In re Flashcom, Inc.), 361 B.R. 519, 525
(Bankr. C.D. Cal. 2007); Thompson v. Jonovich (In re Food & Fibre Protection, Ltd.), 168 B.R.
408, 422 (Bankr. D. Ariz. 1994) (in finding that the subsequent transferee had a due process right
to contest the avoidability of the initial transfers, the court held subsequent transferee had the
right to raise whatever defenses were available to the initial transferee); In re Jones Storage and
Moving, Inc., 2005 WL 2590385, at *4-5.
III. THE CONFLICTING ARGUMENTS OF THE ISSUE 1 AND ISSUE 2
SUBSEQUENT TRANSFEREE DEFENDANTS DEMONSTRATE THAT
NEITHER GROUP’S INTERPRETATION OF SECTION 550 IS CORRECT
The Issue 1 Subsequent Transferee Defendants argue that the Trustee cannot pursue an
action against them until he first obtains a final, litigated judgment of avoidance against the
initial transferees. In other words, this group of defendants argues that the Trustee’s claims are
too early, and he must wait before suing subsequent transferees.
13 As noted in the Issue 2 Subsequent Transferee Defendants’ brief, at the bankruptcy court hearing to approve the Fairfield Settlement Agreement, the Trustee specifically acknowledged that a subsequent transferee could assert any defenses available to the initial transferee. Defs’ Issue 2 Br. at 4. But as noted above, the converse is also true: a subsequent transferee cannot assert defenses to the avoidability of an initial transfer to the extent that defense is not available to the initial transferee.
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 34 of 37
27
But in contrast, the Issue 2 Subsequent Transferee Defendants argue that the Trustee is
too late, and that he should not have waited to pursue his claims against them. This group of
subsequent transferees argues that the Trustee’s recovery proceedings against them are time-
barred because he did not commence actions against them within the two-year period set forth in
Section 546 of the Code to avoid the initial transfers to Fairfield and/or Kingate.
Thus, not only do the majority of courts disagree with the arguments of both the Issue 1
and the Issue 2 Subsequent Transferee Defendants, the two groups of defendants actually
disagree with each other. The two conflicting arguments are the best evidence that neither group
of defendants is advancing a proper construction of Section 550. Both advance a construction of
the statute that isolates a subpart of Section 550, without regard to the fact that their construction
conflicts with other subparts of that same provision. In addition, the defendants ignore other
related statutory provisions without regard to the purposes of the statutory scheme as a whole.
This is in direct contravention to fundamental principles of statutory construction. See U.S. Nat’l
Bank of Oregon v. Indep. Ins. Agents of America, Inc. 508 U.S. 439, 455 (1993) (“Over and over
we have stressed that ‘[i]n expounding a statute, we must not be guided by a single sentence or
member of a sentence, but look to the provisions of the whole law, and to its object and
policy.’”) (internal citations omitted); Auburn Hous. Authority v. Martinez, 277 F.3d 138, 144
(2d Cir. 2002) (“The meaning of a particular section in a statute can be understood in context
with and by reference to the whole statutory scheme, by appreciating how sections relate to one
another. In other words, the preferred meaning of a statutory provision is one that is consonant
with the rest of the statute”); K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988) (“In
ascertaining the plain meaning of the statute, the court must look to the particular statutory
language at issue, as well as the language and design of the statute as a whole.”).
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 35 of 37
28
The Bankruptcy Code, particularly the avoidance and recovery provisions of Chapter 5 of
the Code, works as a cohesive whole to replenish a debtor’s estate with assets fraudulently
conveyed by debtors in order to provide for the fair treatment of creditors. Pirie v. Chicago Title
& Trust Co., 182 U.S. 438, 449 (1901) (“all the sections of the [Bankruptcy Act] must be
construed together as means to effect its purpose”). The only construction of Section 550 that is
in harmony with the avoidance and recovery statutory scheme as a whole, as well as Congress’
purpose in enacting Chapter 5 of the Code – and SIPA – is an interpretation that does not result
in a forfeiture of a trustee’s ability to recover fraudulently conveyed assets for the benefit of
defrauded creditors. See Enron, Tr. at 34:10-13; see generally In re AVI, Inc., 389 B.R. at 735.
IV. THE TRUSTEE HAS ADEQUATELY STATED A CLAIM AGAINST
DEFENDANTS FOR RECOVERY OF SUBSEQUENT TRANSFERS
For the purposes of these motions to dismiss, the Trustee need only state a claim, not
prove his entire case. See, e.g., Silverman v. K.E.R.U. Realty Corp. (In re Allou Distribs., Inc.),
379 B.R. 5, 20-24 (Bankr. E.D.N.Y. 2007). In In re Allou Distribs. Inc., the court denied the
defendants’ motion to dismiss where avoidance actions against initial transferees had reached the
stage of default judgments, settlements, and summary judgment, finding that the trustee had
stated a claim against the subsequent transferees. Id. In reaching its conclusion, the court
determined that at the motion to dismiss phase, “the question posed at this stage in the
proceedings is whether the Amended Complaint states a claim, not whether the Trustee has
established all of the elements necessary for an ‘actual recovery’ from the Movants.” Id. As
demonstrated above, because the Trustee has adequately stated a claim against Defendants for
recovery pursuant to Section 550, the motions to dismissed should be denied.
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 36 of 37
29
CONCLUSION
For the foregoing reasons, the Trustee respectfully requests the Court deny the Motions.
Dated: November 13, 2012 New York, New York
/s/ Regina Griffin_______
David J. Sheehan Regina Griffin Thomas L. Long Stacey A. Bell Amanda E. Fein BAKER & HOSTETLER LLP New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Attorneys for Irving H. Picard, Trustee
for the Substantively Consolidated SIPA
Liquidation of Bernard L. Madoff Investment
Securities LLC and Bernard L. Madoff
Case 1:12-mc-00115-JSR Document 410 Filed 11/13/12 Page 37 of 37
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
SECURITIES INVESTOR PROTECTION
CORPORATION,
Plaintiff-Applicant,
v.
BERNARD L. MADOFF INVESTMENT
SECURITIES LLC,
Defendant.
In re:
BERNARD L. MADOFF,
Debtor.
Case No. 12-mc-00115 (JSR)
ECF Case
Electronically Filed
AFFIDAVIT OF SERVICE
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KERIN DONAHUE, being duly sworn, deposes and says: I am over eighteen years age,
not a party to this action and am employed by the law firm of Baker & Hostetler LLP, located at
45 Rockefeller Plaza, New York, NY 10111.
On November 13, 2012, I served the TRUSTEE'S MEMORANDUM OF LAW IN
OPPOSITION TO DEFENDANTS' MOTIONS TO DISMISS CONCERNING SECTION
550(a) ISSUES 1 AND 2 AS ORDERED BY THE COURT ON AUGUST 21, 2012 by emailing
the interested parties true and correct copies via electronic transmission to the email addresses
designated for delivery to those parties as set forth on Schedule A.
Case 1:12-mc-00115-JSR Document 410-1 Filed 11/13/12 Page 1 of 3
TO: See Attached Schedule A
Sworn to before me this 131
h day ofNovember, 2012
セ ォ j セNotary Public 7
CHRISTINA I. BELANGER NOTARY PUBLIC, State of New York
No. 01BE-4845827 Qualified in Suffolk County
Cel"tilicate f ゥ ャ セ 、 in New York County
」 ⦅ L ュ ュ エ セ ウ ゥ 」 ョ e ク ッ ゥ イ ッ セ Sept. 30, エ I I セ
Case 1:12-mc-00115-JSR Document 410-1 Filed 11/13/12 Page 2 of 3
Case No. 12-mc-00115 (JSR) Schedule A:
[email protected]; [email protected]; [email protected];
[email protected]; [email protected]; [email protected];
[email protected]; [email protected]; [email protected];
[email protected]; [email protected]; tmoloney @cgsh.com; [email protected];
[email protected]; [email protected]; [email protected];
J [email protected]; [email protected]; [email protected]; [email protected];
コ ャ 。 ョ 、 ウ ュ 。 ョ セ 「 ・ 」 ォ ・ イ ァ ャ ケ ョ ョ N 」 ッ ュ [ [email protected]; [email protected];
[email protected]; [email protected]; [email protected];
george. ウ ィ オ ウ エ ・ イ セ キ ゥ ャ ュ ・ イ ィ 。 ャ ・ N com; tel ynch@j onesday. com; sj friedman@j onesday. com;
[email protected]; [email protected]; [email protected];
[email protected]; ・ イ ゥ 」 ォ 。 ケ セ ア オ ゥ ョ ョ ・ ュ 。 ョ オ ・ ャ N 」 ッ ュ [
[email protected]; ォ 、 。 ョ M セ ウ エ ・ ー エ ッ ・ N 」 ッ ュ [ [email protected]; [email protected]; ュ ・ キ ゥ ャ ・ ウ セ 、 ・ 「 ・ カ ッ ゥ ウ ・ N 」 ッ ュ [ [email protected];
Kent. Y 。 ャ ッ キ ゥ エ コ セ 。 ー ッ イ エ ・ イ .com; [email protected]; [email protected];
[email protected]; [email protected]; [email protected];
[email protected]; イ ャ 。 」 ォ セ ヲ ォ ャ 。 キ N 」 ッ ュ [ [email protected];
[email protected]; [email protected];
erin. valentine@chaffetzlindsey. com; rcirillo@kslaw. com; j edgemon@kslaw. com;
[email protected]; [email protected]; [email protected]; [email protected];
[email protected]; [email protected]; [email protected];
[email protected]; [email protected]; [email protected]
Case 1:12-mc-00115-JSR Document 410-1 Filed 11/13/12 Page 3 of 3