US trustee will not participate in High Court case

IRISH ACTION:THE US trustee handling the liquidation of the business of $50 billion fraudster Bernard Madoff has told the High Court he has decided not to participate "at this stage" in court proceedings here by two Irish-listed investment companies for the return of some €1 billion given to the Irish arm of banking giant HSBC and passed on to Madoff companies.

Trustee Irving Picard indicated in a statement to the High Court that he has “wide-ranging” remedies under US law to challenge transactions involving Bernard L Madoff Investment Securities (BLMIS). 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 court 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 plaintiffs.

The court heard the trustee has demanded the return of over $25 million 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 trustee’s statement was read by his counsel Rossa Fanning to Mr Justice Peter Kelly in proceedings by Thema International Fund plc and AA (Alternative Advantage) plc, both of Fitzwilton House, Wilton Place, Dublin, against two HSBC companies, HSBC Securities Services (Ireland) Ltd and HSBC Institutional Trust Services (Ireland) Ltd, Grand Canal Square, Dublin.

Mr Justice Kelly said the defendants’ attitude was they were not making claims to the funds and saw themselves as custodians of them. In those circumstances, the interlocutory application was virtually unopposed. There were many issues which could not be resolved yet, but he would deal with the injunction application today.

The plaintiff companies have contended the proceedings are governed by Irish law and the US trustee cannot properly exercise jurisdiction relating to any payments out of accounts in question.