Brief of Professors of Conflict of Laws As Amici Curiae in Support of Appellants, in Re. Irving H. Picard, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC
36 Pages Posted: 25 Jan 2018
Date Written: January 17, 2018
This amicus brief was filed with the Second Circuit Court of Appeals in the Madoff bankruptcy case. The brief was written by Professor William S. Dodge and joined by Professors George A. Bermann, Hannah L. Buxbaum, Zachary D. Clopton, Anthony J. Colangelo, Maggie Gardner, Ralf Michaels, Aaron D. Simowitz, and Christopher A. Whytock.
The question on appeal is the geographic scope of Bankruptcy Code § 550(a), which allows a trustee to recover the property of an avoided transfer not just from the initial transferee but also from “any immediate or mediate transferee of such initial transferee.” Many of the investments in Madoff Investment Securities were made through feeder funds. Some of these funds withdrew money in New York, which they subsequently distributed to their own customers. The Trustee seeks to recover payments made to the subsequent transferees. The bankruptcy court dismissed most of the Trustee’s claims against subsequent transferees based on the choice-of-law analysis adopted in Maxell Communications (which the court called “international comity”) and the presumption against extraterritoriality.
The amicus brief argues that under the presumption against extraterritoriality, Section 550(a) applies to the subsequent transferees for two reasons. First, the property to which Section 550(a) refers includes property “wherever located,” providing an affirmative indication that Section 550(a) applies extraterritorially. Second, and in the alternative, the focus of Section 550(a) is the initial transfer that depleted the estate in the United States. The amicus brief also argues that application of Section 550(a) is reasonable under Maxwell Communications because the debtor is American, the initial transfer depleted the estate in the United States, and there are no parallel foreign proceedings.
Keywords: presumption against extraterritoriality, international comity, bankruptcy, Madoff
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