Irving H. Picard v. Saul B. Katz et al

Filing 13

DECLARATION of Fernando A. Bohorquez Jr. in Opposition re: 1 MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 10-5287A, 08-1789 (BRL).. Document filed by Irving H. Picard. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M)(Bohorquez, Fernando)

Exhibit D

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES INVESTOR PROTECTION
CORPORATION,
Adv. Pro. No. 08-01789 (BRL)
Plaintiff,
SIPA Liquidation
v.
(Substantively Consolidated)
BERNARD L. MADOFF INVESTMENT
SECURITIES LLC,
Defendant.
In re:
BERNARD L. MADOFF,
Debtor.

ORDER SCHEDULING ADJUDICATION OF “NET EQUITY” ISSUE
This matter came before the Court on September 9, 2009 on the motion (the “Motion”)1
of Irving H. Picard, Esq. (the “Trustee”), as trustee for the liquidation of the business of Bernard
L. Madoff Investment Securities LLC (“BLMIS” or “Debtor”) under the Securities Investor
Protection Act, 15 U.S.C. §§ 78aaa, et seq., and as trustee for the estate of Bernard L. Madoff
(“Madoff”), for entry of an order to schedule a hearing on the Net Equity issue, as more fully set
forth in the Motion; and the Court having jurisdiction to consider the Motion and the relief
requested therein in accordance with section 78eee(b)(4) of the Securities Investor Protection
Act, 15 U.S.C. §§ 78aaa, et seq. (“SIPA”), and the Protective Decree, entered on December 15,
2008 by the United States District Court for the Southern District of New York in Case No. 08
CV 10791, and 28 U.S.C. §§ 157 and 1334; and it appearing that the relief requested by the
Motion is necessary and in the best interests of the estate, its customers, its creditors, and all

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Capitalized terms not otherwise defined herein shall have the meanings given to them in the Motion.

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parties in interest; and upon consideration of the responses and objections filed in this Court in
response to the Motion, including those filed by the following parties: the James H. Cohen
Special Trust and its nine beneficiaries; Mary Albanese, Brow Family Partnership, Allan
Goldstein, Laurence Kaye, Suzanne Kaye, Rose Less and Gordon Bennett; Martin Rappaport,
Paul J. Robinson, Judith Rock Goldman, Anita Karimian, and Albert J. Goldstein, U/W FBO
Ruth E. Goldstein TTEE; and Marsha Peskin IRA, Michael Mann, and Barry Weisfeld
(collectively, the “Objections”); whereas the Objections raised various issues, such as (1)
reducing the time allotted for the briefing of this issue for those supporting the Trustee’s
position; (2) requesting that the order specifically consider of the value of transfers between
accounts in the net equity determination; (3) exclusion of certain issues, including (a) the manner
by which customer claims should be determined when the account of a current BLMIS customer
was acquired by assignment, transfer, succession, or otherwise from a former BLMIS customer;
(b) where a single BLMIS customer account has two or more co-owners, beneficiaries, partners,
or other interested persons, whether there is more than one customer claim for purposes of the
SIPC advance pursuant 15 U.S.C. § 78fff-3(a) and allocations of customer property pursuant to
15 U.S.C. § 78fff-2(c)(1)(B); (c) where a single customer account is held in the name of a feeder
fund, fund of funds, or other similar entity, whether beneficial owners of interests in or claims
against such entities have customer claims under 15 U.S.C. § 78fff-3(a); (d) the effect, if any, of
any knowledge a customer may have had about the operation of BLMIS; (e) any avoidance
power or other claims the BLMIS trustee may have against a customer; (f) how customer claims
should be determined when the account of a current BLMIS customer resulted from the division
of or transfer from another BLMIS customer; and (4) requesting that the net equity dispute be
decided within the class action adversary proceeding captioned Albanese, et al. v. Picard,

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(Banrk. S.D.N.Y.) (09-1265) (BRL).
Due notice of the Motion having been given, and it appearing that no other or further
notice need be given; and upon a hearing and the proceedings before the Court and after due
deliberation, it is hereby:
ORDERED, that the relief requested in the Motion is granted as set forth herein; and it is
further
ORDERED, that on or before October 16, 2009, the Trustee shall file motion(s) to affirm
certain customer claims determinations, specifically with regard to the Trustee’s Net Equity
determinations (the “ Net Equity Motion(s)”); and it is further
ORDERED, that the Net Equity Motion(s) shall identify those claimants who have filed
objections to his determination of their customer claims for which the Trustee intends to
schedule a hearing on the Net Equity issue (the “Objecting Claimants”); and it is further
ORDERED, that in support of the Net Equity Motion(s), the Trustee shall file a
memorandum of law and supporting papers setting forth the factual and legal bases for the
Trustee’s construction of the term Net Equity on or before October 16, 2009; and it is further
ORDERED, that SIPC shall file any brief with reference to the Net Equity Motion(s) on
or before October 16, 2009; and it is further
ORDERED, that the Objecting Claimants shall file their responses to the Net Equity
Motion(s) on or before November 13, 2009; and it is further
ORDERED, that any Interested Parties who wish to file a brief in opposition to the

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Trustee’s Net Equity Motion(s) shall file their briefs on or before November 13, 2009; and it is
further
ORDERED, that any Interested Parties who wish to file a brief in support of the
Trustee’s Net Equity Motion(s) shall file their briefs on or before December 11, 2009; and it is
further
ORDERED, that to the extent that Interested Parties who filed briefs in accordance with
the preceding paragraph raise new issues, whether factual or legal, that have not been previously
raised, Interested Parties who filed a brief in opposition to the Trustee’s Motion(s) may file a
reply brief addressing such issues on or before December 21, 2009.
ORDERED, the Trustee and SIPC shall file their reply papers on or before January 15,
2010; and it is further
ORDERED, that, consistent with the record of the hearing held on September 9, 2009,
the briefing to be submitted to the Court pursuant to this Order shall be limited to discussing the
proper interpretation of “net equity,” specifically the following two issues:
1.

Whether a customer’s “net equity” under SIPA is equal to “cash in/cash
out”; or

2.

Whether a customer’s “net equity” under SIPA is equal to the value of the
securities positions and credit balance reflected in the customer’s last
statement.

The Trustee and Interested Parties shall reserve all rights, claims, and defenses as to any issues
and/or arguments not resolved by the Court in connection with the briefing described herein on
the Net Equity Issue.
ORDERED, the Court shall hold a hearing on the Net Equity Motion(s) on February 2,
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2010, at 10:00 a.m., or such other time as the Court determines; and it is further
ORDERED, that Interested Parties that are permitted to file briefs in accordance with
this Order shall be limited to customers of BLMIS who have filed a customer claim with the
Trustee, or any governmental unit or division. Such briefs may be filed without seeking leave
from the Court; and it is further
ORDERED, that any claimant who files a brief regarding the Net Equity Motion(s) in
accordance with this proposed scheduling order shall submit a copy of or otherwise identify their
filed customer claim at the time of filing their brief. Counsel filing a brief on behalf of any
Interested Party shall identify all such Interested Parties they represent; and it is further
ORDERED, that any party, other than governmental units, who did not file a customer
claim but wishes to file a brief regarding the Net Equity Motion(s) in accordance with this
proposed scheduling order must seek leave of court prior to filing such a brief and must identify
their interest in this matter, including, but not limited to, whether they had an account at BLMIS.
If any such party had an account at BLMIS, or if counsel is representing one or more persons
who had an account(s) or an interest in an account(s) at BLMIS, they must identify all holders of
the BLMIS accounts in their motion for leave to file briefs in accordance with this paragraph;
and it is further
ORDERED, that the Trustee’s proposed form of notice is approved. The Trustee shall
serve the notice by mailing to all persons who have filed customer claims in the above-captioned
action, and shall place the notice on his web site; and it is further
ORDERED, that the Objections are denied, to the extent not adopted above or

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withdrawn at the hearing; and it is further
ORDERED, that the Trustee shall confer with counsel regarding the other issues that
should be the subject of separate scheduling orders, and shall propose a conference or hearing to
set schedules for such issues; and it is further
ORDERED, that this Court shall retain jurisdiction with respect to all matters relating to
the interpretation or implementation of this Order.
Dated: New York, New York
September 16, 2009

_______/S/ Burton R. Lifland
HONORABLE BURTON R. LIFLAND
UNITED STATES BANKRUPTCY JUDGE

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