Irving H. Picard as Trustee for the business of Bernard L. Madoff Investment Securities LLC (In SIPA Liquidation)


Reference:

Date:
1st February 2010

Court:
Grand Court, Cayman Islands

Comment:

The successful application by Petition under section 241(1)(a) of the Companies Law (2009 Revision) of the Cayman Islands for recognition of Irving H. Picard as the foreign representative of Bernard L. Madoff Investment Securities LLC (in SIPA Liquidation).

 

Given the Judge’s conclusion that given the nature and scale of BLMIS’s business and the fraud committed by Bernard L. Madoff, he ordered that the hearing of the petition be advertised both locally (in the Caymanian Compass) and Internationally (in the Wall Street Journal).

 

Following the hearing the application, the judgment of Mr Justice Andrew Jones QC clarified a number of issues under the relatively new Cayman Islands legislation dealing with recognition and other ancillary applications in respect of foreign bankruptcies. A declaration under section 241(1)(a) takes effect for all purposes and is binding on all persons within the territorial jurisdiction of the Grand Court. However, that section, which took effect in its previous incarnation under the Companies Law (2007 Revision), did not change the pre-existing conflict of laws rules relating to this subject. It is simply intended to provide foreign representatives with a convenient and expeditious method of establishing their credentials and right to act on behalf of a debtor within the jurisdiction; rather than having to prove that right against every party in respect of which it sought to being proceedings.

 

The Cayman Islands conflicts of laws rules in this area are well established. All matters concerning the constitution of a company are governed by its place of incorporation; in this case, New York. The law of the place of incorporation determines who is entitled to act on behalf of the company; in this case, the Trustee. Finally, the authority of a bankruptcy trustee or liquidator appointed under the laws of the company’s place of incorporation is recognised in the Cayman Islands.

 

In all the circumstances, there was no doubt that Mr Picard is entitled to recognition in the Islands as the sole person having the right to act on behalf of BLMIS.


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