08-01789-smb Doc 19502 Filed 04/28/20 Entered 04/28/20 13:08:36 Main Document Pg 1 of 66 BAKER & HOSTETLER LLP 45 Rockefeller Plaza New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Irving H. Picard Email: [email protected] David J. Sheehan Email: [email protected] Seanna R. Brown Email: [email protected] Heather R. Wlodek Email: [email protected] Attorneys for Irving H. Picard, Trustee for the Substantively Consolidated SIPA Liquidation of Bernard L. Madoff Investment Securities LLC and the Chapter 7 Estate of Bernard L. Madoff UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK SECURITIES INVESTOR PROTECTION CORPORATION, Plaintiff-Applicant, Adv. Pro. No. 08-01789 (SMB) v. SIPA Liquidation BERNARD L. MADOFF INVESTMENT (Substantively Consolidated) SECURITIES LLC, Defendant. In re: BERNARD L. MADOFF, Debtor. TRUSTEE’S TWENTY-THIRD INTERIM REPORT FOR THE PERIOD OCTOBER 1, 2019 THROUGH MARCH 31, 2020 4812-5216-8375.2 08-01789-smb Doc 19502 Filed 04/28/20 Entered 04/28/20 13:08:36 Main Document TABLEPg OF 2 CONTENTSof 66 Page I. EXECUTIVE SUMMARY .................................................................................................1 II. BACKGROUND .................................................................................................................3 III. FINANCIAL CONDITION OF THE ESTATE ..................................................................3 IV. CLAIMS ADMINISTRATION ...........................................................................................4 A. Claims Processing ....................................................................................................4 i. Customer Claims ..........................................................................................4 ii. General Creditor Claims ..............................................................................5 iii. The Trustee Has Kept Claimants Informed Of The Status Of The Claims Process .............................................................................................5 iv. The Hardship Program .................................................................................6 B. Objections To Claims Determinations .....................................................................7 C. Settlements Of Customer Claims Disputes ..............................................................8 V. PROCEEDINGS RELATED TO THE INTERPRETATION OF SIPA .............................8 A. Net Equity Dispute ...................................................................................................8 B. Time-Based Damages ............................................................................................10 C. “Customer” Definition ...........................................................................................11 D. Inter-Account Transfers .........................................................................................12 E. Profit-Withdrawal Issue .........................................................................................14 VI. LITIGATION .....................................................................................................................15 A. The District Court—Motions to Dismiss and Related Appeals .............................16 B. Good Faith Actions ................................................................................................16 i. Resolution of Good Faith Avoidance Actions ...........................................16 ii. Summary Judgment Motions .....................................................................16 (a) South Ferry/Lowrey Motions .........................................................16 iii. Trial-Related Motion Practice ....................................................................18 (a) Nelson Actions ...............................................................................18 (b) Michael Mann Action ....................................................................21 (c) Edward A. Zraick Action ...............................................................23 (d) James Greiff Action .......................................................................23 (e) Chaitman LLP Actions ..................................................................24 C. Subsequent Transfer Actions .................................................................................25 D. Actions Relating to BLMIS Feeder Funds.............................................................27 i. Extraterritoriality ........................................................................................27 ii. Limited Discovery Motion .........................................................................28 iii. Picard v. ABN AMRO ...............................................................................29 i 4812-5216-8375.2 08-01789-smb Doc 19502 Filed 04/28/20 Entered 04/28/20 13:08:36 Main Document TABLEPg OF 3 CONTENTSof 66 (continued) Page iv. Picard v. ABN AMRO (Ireland) Ltd. (Fortis) ...........................................32 v. Picard v. Citibank .......................................................................................33 vi. The HSBC Action ......................................................................................35 vii. The Luxalpha Action .................................................................................37 viii. Picard v. Kingate ........................................................................................38 ix. Picard v. Fairfield Greenwich ....................................................................39 x. Picard v. Rye/Tremont ...............................................................................43 xi. Picard v. Square One ..................................................................................45 E. Other Bad Faith Actions ........................................................................................46 i. Picard v. Avellino & Bienes ......................................................................46 ii. Picard v. Andrew H. Madoff and Picard v. Mark D. Madoff ....................47 iii. Picard v. Cohmad Sec. Corp. .....................................................................48 iv. Picard v. Magnify Inc. ...............................................................................49 v. Picard v. Stanley Shapiro ...........................................................................52 vi. Picard v. Legacy.........................................................................................53 VII. INTERNATIONAL INVESTIGATION AND LITIGATION ..........................................55 A. Austria ....................................................................................................................56 B. Bermuda .................................................................................................................56 C. BVI .........................................................................................................................56 D. Cayman Islands ......................................................................................................56 E. England ..................................................................................................................57 F. France .....................................................................................................................57 G. Ireland ....................................................................................................................57 H. Israel .......................................................................................................................57 I. Liechtenstein ..........................................................................................................57 J. Switzerland and Luxembourg ................................................................................57 VIII. RECOVERIES AND CONTINGENCIES ........................................................................58 A. Recoveries Accomplished During Prior Report Periods .......................................58 B. Recoveries Accomplished During This Report Period ..........................................58 IX. THE TRUSTEE’S ALLOCATION OF FUNDS AND DISTRIBUTIONS TO CUSTOMERS ...................................................................................................................59 A. The Customer Fund................................................................................................59 B. The General Estate .................................................................................................60 X. FEE APPLICATIONS AND RELATED APPEALS ........................................................61 A. Objections to Prior Fee Applications .....................................................................61 - ii – 4812-5216-8375.2 08-01789-smb Doc 19502 Filed 04/28/20 Entered 04/28/20 13:08:36 Main Document TABLEPg OF 4 CONTENTSof 66 (continued) Page B. Thirty-First Fee Application ..................................................................................61 C. Thirty-Second Fee Application ..............................................................................62 XI. CONCLUSION ..................................................................................................................62 - iii – 4812-5216-8375.2 08-01789-smb Doc 19502 Filed 04/28/20 Entered 04/28/20 13:08:36 Main Document Pg 5 of 66 TO THE HONORABLE STUART M. BERNSTEIN UNITED STATES BANKRUPTCY JUDGE: Irving H.