NEW YORK (December 10, 2018) - On December 6, the United States Bankruptcy Court for the Southern District of New York issued a decision allowing the 305 adversary proceedings brought by Brown Rudnick clients Kenneth Krys and Charlotte Caulfield of KRyS Global, the Joint Liquidators of Fairfield Sentry Limited (in liquidation) (“Sentry”), Fairfield Sentry Limited (in liquidation) (“Sigma”), and Fairfield Sentry Limited (in liquidation) (“Lambda,” and collectively the “Funds”) to proceed.

Following the collapse of Bernard L. Madoff Investment Securities LLC (“BLMIS”), Sentry, the largest of the BLMIS “feeder funds,” and Sigma and Lambda, which operated as “funds of funds,” were placed into Liquidation in the British Virgin Islands (“BVI”).

Beginning in 2010, as the Fairfield Liquidators obtained Chapter 15 recognition of the BVI liquidation proceedings in the Bankruptcy Court, the Liquidators commenced over 305 adversary proceedings before the Bankruptcy Court, seeking to recover over $6.3 billion in overpaid redemption payments made to shareholders of the Funds as a result of the Madoff fraud (the “U.S. Redeemer Actions”).

Since the commencement of these proceedings more than eight years ago, the Liquidators have faced and withstood numerous challenges to their claims from the defendants, in the United States as well as in the BVI courts, including challenges before the Eastern Caribbean Court of Appeal and the Judicial Committee of the Privy Council in London, the highest court overseeing the BVI.

In October 2016, the Liquidators sought leave to amend their complaints filed in the U.S. Redeemer Actions. The U.S. Redeemer actions asserted BVI avoidance claims as well as common law and contract based claims against the defendants. The defendants in the U.S. Redeemer Actions opposed the Liquidators' amendments and sought dismissal of the U.S. Redeemer Actions on a variety of grounds.

The December 6th ruling issued by Judge Stuart M. Bernstein, which granted in part and denied in part the defendants' motions to dismiss and the Liquidators' motions for leave to amend, allows all of the 305 U.S. Redeemer actions to proceed. Judge Bernstein denied defendants' motion to dismiss the BVI avoidance claims, subject to further briefing if the defendants so elect. The Bankruptcy Court dismissed the Liquidators’ common law claims and contract claims except where the complaints allege a constructive trust claim against those defendants that had knowledge that the value of the redemptions was inflated at the time that they redeemed (the “Knowledge Defendants”). Finally, the Bankruptcy Court granted the Liquidators’ leave to amend their complaints to assert constructive trust claims against the Knowledge Defendants and BVI avoidance claims against all defendants.

Liquidator Kenneth Krys commented “Ironically the decision came days prior to the 10th year anniversary of Bernie Madoff’s arrest. Our sole objective since we were appointed was to maximize the assets realized for the benefit of creditors and members of the Fairfield Funds. The decision from the U.S. Bankruptcy Court, along with the Madoff’s Trustee’s ongoing efforts, will hopefully provide an impetus for the defendants to settle their claims and permit us to distribute further assets into the hands of Madoff’s victims.”

Brown Rudnick partner David Molton, who has represented the Fairfield Liquidators on the U.S. Redeemer Actions since the litigation's inception, said “we are pleased that after so many years and challenges, during which the Fairfield Liquidators have been steadfastly resolved to pursue recoveries for the benefit of those who invested in Madoff through the Fairfield Funds, these cases will be proceeding toward conclusion.”

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About KRyS Global

Founded in 2007 in the Cayman Islands, KRyS Global is an international asset recovery firm with an expertise in offshore focused fraud investigations, cross-border insolvency and restructurings, and litigation support. The firm has grown to over 50 outstanding professionals working from seven offices worldwide, predominantly situated in offshore financial centres, KRyS Global has built an enviable reputation for timely, proactive and innovative solutions, particularly in situations of uncertainty, leveraging the knowledge and experience of our professionals and incorporating practical common sense in ensuring positive outcomes for our clients.



Partner, Brown Rudnick LLP



Executive Chairman & Founder, KRyS Global

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David J. Molton

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