|[November 13, 2012]
Herrick, Feinstein LLP Announces Global Madoff Settlement on Behalf of Its Hedge Fund Clients Beacon Associates, Andover Associates and Affiliates
NEW YORK --(Business Wire)--
Herrick, Feinstein LLP announced a global settlement of various
litigations arising out of the collapse of Bernard L. Madoff Investment
Securities LLC ("Madoff") that will return approximately $206 million,
collectively and over time, to several defrauded investor groups, who
invested in several Madoff feeder hedge funds, collectively known as the
Combined with past distributions by the Beacon/Andover Funds and the
anticipated future distributions from the Madoff Trustee, the settlement
is expected to return to most, if not all, of Beacon/Andover Funds'
individual investors nearly 100%, or more, of their investment, based
upon a current anticipated 65% distribution from the Madoff Trustee of
the Beacon/Andover Funds' allowed bankruptcy claims.
Herrick, Feinstein Partner and Co-Chair of the firm's Securities and
Commodities Litigation and Regulatory Practice Group Arthur G. Jakoby,
counsel for the Beacon/Andover Funds, said, "This settlement is probably
the most favorable outcome for any investor who invested with Madoff
through an investment feeder fund. To achieve a result that approaches
returning approximately 100% or more of our investors' principal
investments is remarkable and, hopefully, will help heal the financial
wounds of our Funds' Madoff victims. The crimes perpetrated by Bernard
Madoff against the Beacon/Andover Funds were financially devastating to
our investors but this settlement provides our investors with justice
and will restore to our investors their hard earned monies."
The global settlementis a combination of two main settlements:
The first is a settlement which Herrick, Feinstein negotiated with the
Madoff Trustee. The Madoff Trustee had commenced a lawsuit by which he
sought to (i) completely disallow the Beacon/Andover Funds' net equity
claim of approximately $141 million which the Funds asserted against the
Madoff Estate, and (ii) recover (or "clawback") $28.31 million that the
Beacon/Andover Funds had withdrawn from their Madoff accounts over the
years. Under the settlement, the Trustee not only agreed to allow the
full amount of the Funds' net equity claim of approximately $141 million
but also agreed to increase the Funds' net equity claim by $24 million
(for a total allowed net equity claim of approximately $165 million) in
connection with $24 million of payments to be made by the Funds and
others to the Trustee under the settlement agreement. The Trustee also
agreed to pay $500,000 to each of the Beacon Fund and Andover Fund
representing the upper limit on the amount of SIPC payments authorized
under current law and approved almost $63 million in "catch-up"
distributions to be paid, immediately upon approval of the settlement by
the court, to the Beacon/Andover Funds in connection with those claims.
The Beacon/Andover Funds were represented by Herrick in this settlement.
Under the second settlement, the Beacon/Andover Funds will, net of
certain fees and expenses, receive approximately $99 million from their
former outside investment advisor, Ivy Asset Management, LLC, which
includes a $3.5 million contribution plus a waiver of certain management
fees from the Beacon/Andover Funds' management.
The second settlement was negotiated collectively and cooperatively by
the New York State Attorney General's Office and the U.S. Department of
Labor along with Herrick, Feinstein and several class action law firms,
including, but not limited to, Lowey Dannenberg Cohen & Hart, lead class
counsel, Cohen Millstein Sellers & Toll, lead ERISA class counsel and
several other law firms representing various investor groups, all of
whom worked together to achieve this unprecedented result.
The Herrick, Feinstein team was led by Mr. Jakoby and included
Bankruptcy Partner Paul Rubin as well as Frederick E. Schmidt, Jr.
The individual investor groups, collectively known as the Beacon/Andover
Funds, include Beacon Associates LLC I, Beacon Associates LLC II, Beacon
Associates LLC, Andover Associates, L.P., Andover Associates LLC I and
Andover Associates (QP) LLC. The defrauded investors in these funds
include hundreds of individual investors and dozens of New York union
pension and welfare plans.
Founded in 1928, Herrick, Feinstein LLP is a prominent 170-lawyer firm
headquartered in New York City providing a full range of legal services,
including securities litigation, bankruptcy and business reorganization,
commercial litigation, corporate law, art law, employment law,
government relations, insurance, intellectual property, real estate,
sports law, and tax and personal planning.
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