Statement from the office of Irving H. Picard, SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS)
Attributable to Amanda Remus, spokeswoman for the SIPA Trustee & his Counsel at BakerHostetler:
On Monday, April 29, 2013, the Securities Investor Protection Act (SIPA) Trustee and his Counsel at BakerHostetler filed their 11th Interim Fee Application with the United States Bankruptcy Court for the Southern District of New York for their work on the global liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS) between July 1, 2012 and November 30, 2012.
• The Application seeks approval of fees representing more than 135,003 hours of professional and paraprofessional services, which were billed at an average, public interest discounted rate of approximately $363.89 per hour.
• The public interest discount applied represents a reduction of 10 percent from standard rates and it resulted in a total voluntary reduction during the five-month compensation period of $5,458,553.80. In addition to the public interest discount, the SIPA Trustee and BakerHostetler also adjusted fees by writing off an additional $3,330,646.50 for the five-month period as well as expenses in the amount of $417,152.32.
• The fees requested are reasonable based on the customary compensation charged by comparably skilled practitioners in Chapter 11 matters as well as comparable bankruptcy and non-bankruptcy cases in the competitive national legal market.
• After applying the public interest discount, the total fees requested for the period were $49,126,984.20 representing an average of approximately 33,750 hours worked per month on the international and domestic investigations, negotiations and litigation resulting from the largest financial fraud of its kind in U.S. history.
One hundred percent of the SIPA Trustee's recoveries will be allocated to the Customer Fund for distribution to BLMIS customers with allowed claims. The costs associated with the SIPA Trustee’s recovery and settlement efforts are paid by the Securities Investor Protection Corporation (SIPC), which administers a fund drawn upon assessments on the securities industry. No fees or other costs of administration are paid from recoveries obtained by the SIPA Trustee for the benefit of BLMIS customers with allowed claims.
As of April 29, 2013 the SIPA Trustee has recovered or entered into agreements to recover more than $9.3 billion, representing 53 percent of the estimated $17.5 billion in principal lost in the Ponzi scheme by BLMIS customers who filed claims. This recovery far exceeds any prior restitution effort related to Ponzi schemes both in terms of dollar value and percentage of stolen funds recovered.
To date, the SIPA Trustee has distributed approximately $5.451 billion to BLMIS customers with allowed claims, which includes distributions from the Customer Fund and funds advanced by SIPC. The first pro rata interim distribution commenced on October 5, 2011, and to date equals approximately $501.04 million. A second pro rata interim distribution commenced on September 19, 2012, which to date equals approximately $3.635 billon. A third pro rata distribution commenced on March 29, 2013 and to date equals $507.48 million.In addition, SIPC has made advances available to the court-appointed SIPA Trustee to distribute to accounts with allowed claims (up to $500,000 maximum), as a way to expedite financial relief to those account holders. As of April 22, 2013, SIPC has committed more than $807.2 million to the BLMIS liquidation for this purpose. SIPC-committed advances will continue to increase as claims that are currently in litigation are allowed as a result of settlements or the conclusion of litigation. Under SIPA, SIPC must be reimbursed for its advances to customers. To date, SIPC has received $102.8 million in reimbursement.
The Bankruptcy Court hearing for approval of the Fee Application has been scheduled for May 29, 2013, at 10 a.m.
The BakerHostetler attorneys who worked with the SIPA Trustee Irving H. Picard on the Fee Application include David J. Sheehan, Seanna Brown and Heather Wlodek.
The filing is available on the Bankruptcy Court’s website: www.nysb.uscourts.gov; Case No. 08-01789. The Fee Application as well as additional information on recoveries, settlements and court filings can be found on the SIPA Trustee’s website: www.madofftrustee.com.
Statement Regarding Eleventh Fee Application