Several former clients of disgraced financier Bernie Madoff want him forced into bankruptcy, a move they claim would improve their chances of recovering some of their lost assets. However, authorities seem firmly opposed to the idea.
In a court document filed Wednesday the Securities and Exchange Commission [SEC] asked a U.S. District Judge in Manhattan to reject a motion to lift a stay in the SEC case against Madoff that prevents the former clients of Bernard L. Madoff Investment Securities LLC from pursing a bankruptcy action against him personally.
The SEC’s justification on the action is that the agency is already working on a plan to reimburse investors that got ripped off by Madoff and that forced bankruptcy at this point is not necessary.
Jonathan M. Landers, a lawyer representing the customers seeking to force Mr. Madoff into bankruptcy, expressed disappointment by the SEC’s opposition.
Neither the SEC or the Justice Department have procedures in place to determine claims, the amount of claims and to pay the money for creditors,” Mr. Landers said. “For that reason, we believe bankruptcy is an important tool in making sure every dollar was taken from customers that can be recovered is recovered and paid to customers.” [via WSJ]