A May 3, 2010, Law360 article, "Fla. Madoff Suits Stayed Pending Action By Trustee," notes a recent decision in which New York partner Irving Picard, currently serving as the court-appointed trustee under SIPA in the liquidation of Bernard L. Madoff Investment Securities LLC, and a team led by partner David Sheehan, court-appointed counsel to the trustee, and including partner Deborah Renner, secured stays on putative class actions launched by two Florida residents who fell victim to Madoff's Ponzi scheme.
According to the article, Judge Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York granted a motion by the trustee, saying the trustee in the case is the party responsible for seeking and redistributing the funds. Picard and the team sued at the end of March to stop Florida residents Adele Fox and Susanne Marshall from bringing actions to recover money they allegedly lost in Madoff's now infamous investment scheme. Fox and Marshall were attempting to sue the estate of Jeffry M. Picower and related entities, alleging conversion, unjust enrichment and violations of Florida's Racketeer Influenced and Corrupt Organizations Act.
Picard had already sued Picower, seeking the recovery of more than $5 billion. The trustee has since indicated he is on the verge of a settlement with the Picower defendants. The actions violate the automatic stay of the bankruptcy court and could interfere in the process of fostering a fair, uniform and efficient distribution of remaining assets, the trustee argued, according to the article. The judge agreed, finding the trustee has exclusive standing to assert causes of action belonging to the bankrupt estate. He said that by suing the Picower defendants, the plaintiffs had usurped causes of action belonging to the estate as a whole.