On October 10, 2014, Law360 reporter Jeff Sistrunk filed an article, entitled "Solus, Optimal Can't Get $7M Refund From Madoff Trustee," that named BakerHostetler Partners David J. Sheehan, Marc E. Hirschfield, Deborah H. Renner and Associate Seanna Brown, as well as SIPA Trustee and BakerHostetler Partner Irving H. Picard.
This important Bankruptcy Court decision ruled that SPV Optimal SUS Ltd. and Solus Recovery Fund LP are not able to seek $7 million in refunds from the Picard v. JPMorgan Chase settlement, based on an equal treatment clause. Mr. Sistrunk wrote, “Optimal and Solus had acquired the customer claims and rights of former BLMIS customers Optimal Strategic U.S. Equity Ltd. and Optimal Arbitrage Ltd., respectively, under the hedge funds' $233.8 million settlement in 2009 of preference claims asserted by BLMIS trustee Irving H. Picard. The deal included a most favored nations clause requiring Picard to refund a portion of the settlement payment if he ‘entered into similar future settlements with other defendants for a lower percentage of the claimed amount,' according to court documents.
"According to Optimal and Solus, JPMorgan's $325 million settlement with Picard over the trustee's avoidance claims triggered the clause, but U.S. Bankruptcy Judge Stuart M. Bernstein disagreed, saying that the circumstances of the two cases are not sufficiently similar. 'In summary, the JPMorgan settlement did not trigger the applicants’ right to a refund,' Judge Bernstein wrote. 'The nature and circumstances of the avoiding power claims asserted against JPMorgan were significantly different, more difficult to prove and the outcome less certain than the preference and fictitious profit claims that SUS and Arbitrage settled.'"
The article references two cases: Picard v. JPMorgan Chase & Co., case number 10-bk-04392 and the Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, case number 08-01789 in the U.S. Bankruptcy Court for the Southern District of New York.
Mr. Sistrunk concluded the story regarding the decision by saying, "The judge concluded in Friday's order that the JPMorgan settlement doesn't satisfy the similarity factors set forth in the MFN clause and that Optimal and Solus are therefore not entitled to refunds."
Read the article (Subscription required).