Madoff Victims Need To Protect Recouped Assets
In the midst of their misfortune, some Madoff investors have achieved some small mitigation of their losses through the receipt of periodic profit distributions or the partial return of capital prior to the Madoff fund’s implosion. However, these Madoff investors will likely suffer insult on top of injury, as even these meager assets may soon be taken from their victimized owners. Madoff bankruptcy trustees will almost definitely seek to “clawback” these distributions from their owners as preferential transfers, under the U.S. Bankruptcy Code.
The rightful owners of these assets need to seek the immediate protection of their assets from the inevitable clawback attempts, by placing those assets into protective entities. Strategies exist that will protect assets from the reach of bankruptcy trustees and also withstand the scrutiny of U.S. courts. Successful, legally sound strategies may even serve to discourage clawback attempts, thereby minimizing litigation costs.
Such strategies involve the conversion of assets from “non-exempt” to “exempt” status under bankruptcy law. If such strategies are undertaken for other valid reasons — not purely for asset protection purposes — even if asset protection is a by-product, they are likely to be sanctioned by U.S. courts and withstand clawback attempts.
For advice regarding legal asset protection strategies, contact Rubinstein & Rubinstein, LLP., at www.assetlawyer.com, or (212) 888-6600