US trustee opts out of Irish Madoff case
The proceedings are by two Irish-listed investment companies for the return of some e1bn given to the Irish arm of banking giant HSBC and passed on to Madoff companies.
However, trustee Irving Picard indicated in a statement to the High Court yesterday he has “wide-ranging” remedies under US law to challenge transactions involving Bernard L Madoff Investment Securities (BLMIS) prior to the start of the Madoff bankruptcy.
The trustee intended, wherever possible, to pursue those remedies in the US courts to ensure equality of treatment among Madoff creditors.
It was for the Irish courts to decide whether to stay the actions here, pending the outcome of any claims the trustee may make over, for example, redemption monies currently held by the defendant HSBC companies for the two plaintiffs, it was stated.
The court heard Picard has demanded the return of over $25m in redemption monies paid by BLMIS, prior to its bankruptcy, to a sub-fund, the Landmark fund, operated by one of the plaintiff companies, on grounds those monies were recoverable under the US Bankruptcy Code.
The trustee also indicated he is still considering his position on other Madoff-related proceedings before the Irish courts.
The statement on behalf of the trustee was read by his counsel Rossa Fanning to Justice Peter Kelly in proceedings by Thema International Fund and AA (Alternative Advantage), both of Fitzwilton House, Wilton Place, Dublin, against two HSBC companies — HSBC Securities Services (Ireland) and HSBC Institutional Trust Services (Ireland), Grand Canal Square, Dublin.
Thema operates the Thema sub-fund, said to have had assets of $1.1bn on November 28, most in BLMIS. Its administrator is HSBC Securities and its trustee and custodian is HSBC Institutional.
AA operates the Landmark Investment Ireland Fund and other sub-funds.
Both AA and Thema suspended dealings in their funds when the Madoff collapse emerged.
AA claims the HSBC defendants must return a total of e107 million relating to the Landmark fund and other sub-funds.
The trustee indicated in his statement yesterday his view that any redemption monies currently held by HSBC are the property of the BLMIS estate and should be returned to it in accordance with US law.
In relation to unissued subscription monies, the trustee said these should be returned to investors in accordance with principles reflecting US law set out by the trustee to the plaintiffs and defendants.
In Thema’s case, it appeared HSBC was holding some $728,000 and e308,000 in one or more accounts outside Ireland, and the trustee said those monies belong, under US law, to BLMIS.
The statement also noted Thema and AA had not engaged with the trustee concerning unissued subscription monies or the principles outlined.
The trustee said he was inviting them to engage as there appeared to be “unresolved issues” concerning such monies.
Michael Cush SC, for the defendants, said they were not objecting to the orders sought. The defendants had previously not objected to interim orders restraining them from dissipating any monies standing to the credit of the plaintiffs in certain accounts, including custody accounts and transit accounts, operated by the HSBC companies.
