Irving Picard, the trustee unwinding Bernard L. Madoff Investment Securities LLC, should exempt from a July claim deadline investors who may have to return cash withdrawn before the firm's failure, according to court papers, Bloomberg reported.
Investors may have a claim against the Madoff firm if they are forced to return the funds, some customers said in a filing today in U.S. Bankruptcy Court in Manhattan.
The Lucerne Foundation, Collingwood Enterprises and Douglas Rimsky want the deadline pushed back, according to court papers. While investors who withdrew money before Madoff Securities collapsed in December don't have claims now, they could be entitled to make a claim should Picard sue them for the funds. The trustee can seek a so-called clawback if he believes the money was a preferential payment or fraudulent transfer.
"While we filed this motion on behalf of three of our clients that need this relief, we recognize that this is an issue of importance to hundreds, if not thousands of investors," plaintiffs' attorney Philip Bentley said in a phone interview. "We hope the court will enter an order that will resolve the dilemma facing a large number of Madoff investors."
Since Picard hasn't told investors how clawback claims would be handled, people who withdrew their money before the firm imploded may be compelled to file documents before the July 2 deadline to preserve their claim. If they do, they may lose their right to a jury trial if Picard sues seeking return of the money.
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