Picard Pushes To Appeal Order Threatening Clawbacks

Ponzi schemer Bernard Madoff’s trustee Wednesday reinforced his bid to appeal a New York federal judge’s decision that could threaten his clawback suits against investors affected by the massive scheme, saying that without the Second Circuit’s input, the bankruptcy court could reach bogus conclusions in dozens of related cases. Irving Picard argued in court filings that U.S. District Judge Jed S. Rakoff’s May decision to allow defendants to seek dismissal of his claims because he had failed to adequately show they were motivated by a lack of good faith was completely out of step with other courts. Judge Rakoff was the first in more than 40 years to hold investors suing under the Securities Investor Protection Act to heightened standards of proof when attempting to claw back avoidable transfers, Picard said. “The questions of law resolved by [Judge Rakoff's] order are novel,” Picard argued in his Wednesday reply. “Without an appeal now, the Bankruptcy Court may apply possibly erroneous conclusions of law in scores of cases with varying facts, all of which will result in multiple appeals anyhow. … The Order involves threshold legal determinations that are common across the adversary proceedings, warranting immediate review on appeal.” More on Law360 here.