![]() ![]() In the overturned Bayou cases, the bankruptcy court granted summary judgment against transferees who, by virtue of certain red flags, were found by the bankruptcy court to have been on inquiry notice and who were therefore required, but failed, to conduct any investigation. ![]() District Court for the Southern District of New York reversed the bankruptcy court’s decision and found that summary judgment should not have been granted on issues surrounding the “good faith” defenses of transferees who received a return of their principal investment from a Ponzi scheme-like fraud perpetrated by a group of hedge funds. To date, much of the discussion of whether such an investor received its transfer in “good faith” was based upon standards set in a bankruptcy court decision from the Southern District of New York involving Bayou Group, LLC and its affiliates. However, the law provides that an investor has no entitlement to fictitious profits-although the calculation of such profits, implications of the statute of limitations, burden of proof and other defenses are less than clear. ![]() The law generally provides that an investor’s principal investment is protected so long as it is received in good faith and for value. Given the overarching Madoff Ponzi scheme as well as other mini-Madoff schemes that surfaced in its wake, many have been following issues arising from the ability of a trustee to claw back transfers (either as preferential or as fraudulent transfers) from investors who redeemed their interests in a private investment fund or managed account that turned out to be a Ponzi scheme. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |