Forward Motions: Madoff Investor Settlement Goes Up For Approval

A Manhattan bankruptcy judge will consider a settlement Tuesday that raises millions of dollars for Bernard Madoff‘s cheated investors.

Under the deal, real-estate developer Edward Blumenfeld, as well as his family and company, will return $32.75 million in cash that they received from investing with Mr. Madoff before the 2008 collapse of his Ponzi scheme.

They’ll also surrender $29.35 million in claims against Mr. Madoff’s investment firm.

The settlement, the product of multiple mediation sessions, resolves litigation that trustee Irving Picard brought in December 2010 to recover $88 million that Mr. Blumenfeld and the other defendants received from Mr. Madoff in the six years before his arrest, including $27 million in false profits. The lawsuit also sought to knock out the claims the defendants brought against Mr. Madoff’s firm.

Mr. Blumenfeld and his fellow defendants disputed the lawsuit and denied that they received the payments from Mr. Madoff’s investment firm with any knowledge or suspicion of fraud.

Mr. Picard, who is overseeing the liquidation of Mr. Madoff’s firm, says the deal will avoid the need for costly and time-consuming litigation.

Mr. Picard has recovered or struck deals to recover more than $9.8 billion of the $17.3 billion in principal that Mr. Madoff was convicted of stealing from investors. More than half of the recovered funds have been returned to investors.

James River Coal heads to U.S. Bankruptcy Court in Richmond, Va. on Wednesday to secure a judge’s sign-off on the takeover of its pension plan by U.S. regulators.

The Pension Benefit Guaranty Corp., the federal agency that steps in when employers can’t pay out promised pension benefits, agreed in September to take over James River’s plan, which covers the retirement benefits for 2,000 people and is underfunded.

James River sold its coal-mining facilities to a unit of Kentucky’s Blackhawk Mining LLC for $52 million after a bankruptcy auction that drove up the purchase price by $2 million. But Blackhawk didn’t take over James River’s pension plan, leading the PBGC to step in.

The PBGC says James River’s plan is 61% funded, with $74 million in assets to pay $121 million in benefits. The regulator said it expects to cover $44.6 million of the $47.1 million shortfall.

Thursday, West Texas Guar Inc. will ask a judge to confirm a bankruptcy plan that relies on a settlement with Oklahoma and Texas farmers.

The settlement allows farmers who support the plant’s proposed sale to a New York investment firm to recover about 75 cents for every dollar they’re owed. Some farmers will also be in line to split another $2.95 million.

The deal paves the way for the proposed buyer, Cor Capital Group LLC, to pay $9.2 million for a majority ownership stake in West Texas Guar. The company’s processing facility near Lubbock, Texas, separates the guar bean’s outer shell from the seed-like pods inside. The pods can be crushed into a powder that thickens everything from peanut butter to toothpaste, and natural gas drillers add it to the fluids they pump into the ground to unlock oil and gas reserves.

The processing plant’s bankruptcy troubles began in March when more than 200 unpaid farmers who delivered more than 50 million pounds of guar beans to the plant moved to push the plant into Chapter 11.

-Patrick Fitzgerald, Jacqueline Palank and Katy Stech contributed to this post.

Write to Sara Randazzo at [email protected]. Follow her on Twitter at @sara_randazzo.