Reporters seemingly need to rename things. The remedies of Reimbursement and Recoupment remain unchanged in substance in Court, however. See Joanna Chung, "Madoff Trustee Files First 'Claw Back' Suit" (Financial Times.com, Thursday, April 9, 2009).
The Bankruptcy Trustee in the Madoff business Bankruptcy has asked the Court to apply two settled rules of Reimbursement and Recoupment there. One rule is the "preference rule," by which anyone coming into possession of funds subject to the Bankruptcy Proceeding, in this instance reportedly within 90 days before Mr. Madoff's arrest, may have no defense to turning those proceeds over to the Court. The other rule is the "fraudulent conveyance rule," by which the proceeds received from fraudulent transfers made by Mr. Madoff's business, simply stated, must be returned to the Court registry. See id. The Trustee is reportedly not alleging at this time that recipients of proceeds engaged in any wrongdoing themselves. Id.
It should be noted that there are now two Bankruptcy proceedings. Recently the same Bankruptcy Judge ordered that Mr. Madoff personally be subjected involuntarily to Bankruptcy in order to give all creditors a shot at reimbursement and recoupment.
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