Deutsche Bank AG agreed to settle a lawsuit in which it accused a pair of offshore feeder funds of wrongfully backing out of a deal to sell the German lender $1.6 billion in claims against Bernard Madoff’s bankrupt investment advisory business.
(Bloomberg) — Deutsche Bank AG agreed to settle a lawsuit in which it accused a pair of offshore feeder funds of wrongfully backing out of a deal to sell the German lender $1.6 billion in claims against Bernard Madoff’s bankrupt investment advisory business.
Lawyers for Deutsche Bank and the funds — Kingate Global Fund Ltd. and Kingate Euro Fund Ltd — filed a joint letter Thursday in federal court in Manhattan saying they’d struck a deal but didn’t disclose any terms.
Neither Deutsche Bank‘s lawyer Andrew W. Hammond nor the funds’ lawyer Andrew Dunlap immediately responded to calls for comment after regular business hours.
The Kingate funds, which funneled client money to Madoff’s firm for years before his Ponzi scheme collapsed in 2008, had agreed to sell the claims to Deutsche Bank Securities Inc. for 66 cents on the dollar in 2011, according to the lawsuit filed in 2019. Deutsche Bank claimed the funds got “sellers’ remorse” because the value of the claims had grown since they struck their purported deal.
The suit was heading toward a trial after US District Judge Edgardo Ramos in March 2021 denied the funds’ motion to dismiss the case.
The trustee liquidating Madoff’s defunct investment-advisory business in 2019 reached a separate $860 million settlement with the Kingate funds. That arrangement essentially forced the funds to use their recoveries from the Madoff bankruptcy case to finance the agreement.
The Kingate funds were founded in the British Virgin Islands in 1994 by two Italian investment advisers operating out of London. Picard sued the funds in 2019, not long after Madoff’s $20 billion Ponzi scheme collapsed. Among Madoff’s biggest offshore “feeder” funds, they had invested about $1.7 billion with Madoff for their clients.
The case is Deutsche Bank Securities Inv. v. Kingate Global Fund, 19-cv-10823, US District Court for the Southern District of New York (Manhattan)
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