Herald Fund SPC Hits Milestone Returns
26 March 2018
At the time of the arrest of Bernard L. Madoff on 11 December 2008 and the subsequent 12 December 2008 suspension of its shares, only US$20 million cash was held by the Cayman registered fund, Herald Fund SPC, with the balance of its net cash subscriptions having been transferred to Bernard L. Madoff Investment Securities LLC.
However, within seventeen months of their 23 July 2013 appointment as Principal Liquidators of Herald, Russell Smith and Niall Goodsir-Cullen, along with BDO CRI (Cayman) Ltd. co-director, Declan Magennis, had negotiated a benchmark Settlement Agreement with Irving H. Picard, the U.S. Trustee appointed over Bernard L. Madoff Investment Securities LLC. The Settlement Agreement was subsequently approved in both the Cayman and U.S. courts and includes a Securities Investor Protection Act, 15 U.S.C. claim in favour of Herald for approximately US$1.64 billion.
By way of claims against Herald, the Trustee required the reimbursement of US$578 million, representing cash transfers made by Bernard L. Madoff Investment Securities LLC to Herald within the six years prior to 11 December 2008. These 'claw back' claims, brought by the Trustee in the United States, were negotiated by the Principal Liquidators as part of the Settlement Agreement and were included within it at the significantly discounted sum of US$467 million.
With the Principal Liquidators' recent receipt of the Trustee's ninth interim distribution, in the sum of US$62.4 million, total gross distributions resulting from the approved Herald claim have now exceeded US$1 billion and presently stand at US$1,047,959,742.48. This currently represents 63.9% of recovery based on the US$1.64 billion approved claim.
Following full discharge of the discounted claw-back claim from initial distribution proceeds, the Principal Liquidators have, to date, secured surplus cash recoveries in the liquidation of US$580 million, with significant further recoveries anticipated.
Read more on the Principal Liquidators' Settlement approach here.