Liquidators were appointed over Fairfield Sentry Limited,
Fairfield Sigma Limited and Fairfield Lambda Limited (together
"the Funds") by orders of the BVI High Court dated 21
July 2009, 21 July 2009 and 23 April 2009 respectively. Fairfield
Sentry Limited was the largest "feeder" fund to Bernard L
Madoff Investment Securities LLC ("BLMIS") and invested
approximately 95% of its assets with BLMIS. BLMIS was placed into
liquidation proceedings in the United States in December 2008,
after it was revealed that Bernard Madoff operated BLMIS as a Ponzi
scheme for many years. Fairfield Sigma Limited and Fairfield Lambda
Limited were both sub-funds of Fairfield Sentry Limited and
invested all of their assets with Fairfield Sentry Limited.
Over the course of the last few months, the liquidators of
Fairfield Sentry Limited have issued proceedings against over 160
redeemed investor Defendants in the BVI Commercial Court and over
160 redeemed investor Defendants in the New York State Supreme
Court. We understand from Counsel to the liquidators of Fairfield
Sentry Limited that those claims were originally issued on a
protective basis given possible limitation issues in order to stop
time running on those claims. We also understand that it was for
similar reasons that the liquidators obtained permission from the
BVI High Court to serve those proceedings on the various named
Defendants out of the jurisdiction. We understand from the
liquidators that steps are now being taken to serve proceedings on
the various named Defendants in the BVI proceedings pursuant to the
provisions of the Hague Convention on the Service Abroad of
Judicial and Extrajudicial Documents in Civil or Commercial
Justice Bannister QC, the Commercial Court Judge in the BVI, has
been very closely connected to Fairfield Sentry Limited's
liquidation and has asked the liquidators to consult with him
before taking any significant step in the liquidation. He has also
asked the liquidators to provide him with copies of all legal
advice in advance of giving the liquidators direction. This
necessarily means that the Court file is now populated with
affidavits containing privileged legal advice; it is for this
reason that the Judge made an order sealing the Court file. The
sealing order was extended to all documents on the Court file,
including those documents that members of the general public would
otherwise usually be entitled to see. This created something of a
problem for the Defendants to the BVI proceedings: they could see
from the Commercial Court cause list that proceedings had been
issued against them but they were not in a position to ascertain
the nature of those proceedings. Following representations to the
Judge from our litigation department, the Judge has now agreed that
the Claim Forms and Orders on the Court fileshould be open to
It would appear from the Claim Forms that have been issued in
the BVI that the liquidators are bringing claims in mistake and
restitution against Fairfield Sentry Limited's redeemed
investors on the basis that the redemption proceeds that were
historically paid to those investors were based on misstated net
assets values as a result of the Madoff fraud. We will not be in a
position to confirm the true nature of those proceedings until such
time as we have seen copies of the Statements of Claim.
The liquidators have indicated to the Defendants to the BVI
proceedings that they may be willing to enter into standstill
agreements with the investors following service of proceedings.
Ogier's litigation department is now in the process of
negotiating an acceptable form of standstill agreement with the
liquidators. We are presently advising eight of the named
institutional Defendants to the BVI proceedings although we are not
instructed to accept service of proceedings on behalf of any of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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