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UK Privy Council to Hear Madoff Feeder Fund Appeal

September 2013 Anton Goldstein

In September 2011, the BVI Commercial Court held that investors in Fairfield Sentry Limited (in liquidation) (“Sentry”), a feeder fund for Bernard L. Madoff Investment Securities Limited (“BLMIS”), could not be forced to repay money received from the redemption of their shares in Sentry prior to its liquidation.

The Liquidators of Sentry sought to claw back redemption proceeds that were paid to investors in Sentry in the years leading up to its liquidation. The liquidators argued that such redemptions were made pursuant to mistake of fact, as the net asset value (“NAV”) used to calculate the redemption price was incorrect. However, the Court held that redeeming investors had given good consideration for the redemption by surrendering their shares and this operated to bar the liquidators’ claims.

The Eastern Caribbean Court of Appeal upheld the Commercial Court’s decision but the United Kingdom Privy Council, the highest court for the British Virgin Islands (“BVI”), has agreed to hear a further appeal which will provide final determination concerning the validity of the Sentry redemptions.

 

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UK Privy Council to Hear Madoff Feeder Fund Appeal

 


Anton Goldstein
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