Kenneth Krys and Charlotte Caulfield, Joint Liquidators of Fairfield Sentry, secured a further victory in their long-running litigation with US hedge-fund Farnum Place LLC before the US Second Circuit of Appeals.
In a Summary Order issued today, the US Court of Appeals for the Second Circuit in New York denied an appeal by Farnum Place LLC seeking to overturn a previous decision of the Bankruptcy Court, on remand from an earlier Second Circuit decision in favor of the Joint Liquidators, to disallow a sale of Sentry's allowed $230 million SIPC claim in the liquidation estate of Bernard L Madoff Investment Securities Inc to Farnum Place LLC, saying "We have considered Farnum's remaining arguments and conclude that they are without merit.".
By way of background, Farnum Place LLC were seeking to ask the Court to require the Liquidators to complete a "trade confirmation" agreement whereby they would be assigned the interest in the SIPC claim for an amount of $78 million. The Liquidators have successfully argued that such a sale is no longer in the interests of the liquidation of Fairfield Sentry and therefore should be disapproved, pursuant to Section 363 of the US Bankruptcy Code. To date, the SIPC claim has distributed in excess of $130 million in distributions, with further distributions anticipated.
Kenneth Krys, one of the liquidators commented: "We had hoped that the US Second Circuit Court of Appeals would dispense with Farnum's "Ave Maria" application without too much difficulty. However, the speed at which they produced the Summary Decision, just 6 days following oral argument, surprised even us. We were very pleased with the decision as this will ultimately mean more assets to distribute to Fairfield's shareholders. I want to extend my thanks to the superb legal team acting for putting forward the arguments so well."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
