Picard-Wilpons Settlement: Impact Of Distributions

August 10, 2012Articles Law 360
There have been recent media reports respecting efforts of trustee Irving Picard to make a substantial distribution of up to several billion dollars to Madoff victims in the near future. This article will discuss a potential impact that such a distribution may have on the diverse and somewhat divergent interests among the Wilpons that are parties to the global settlement agreement with Picard and how the Wilpons may address such an impact.

There are concerns about the inclusion of the Wilpons' private charitable foundations in the settlement agreement, and a possible dichotomy between the interests of the Wilpons' private charitable foundations and the individuals who are their fiduciaries.[1]

What is clear is that many individual Wilpons beyond the foundation fiduciaries should be addressing concerns respecting potential duties of loyalty and the need to avoid conflicts of interest, including fiduciaries of the numerous business entities, family trusts that may even include minors and unborn children as beneficiaries, estates and other entities or multiparty arrangements that are affected by the settlement agreement (collectively, the “entities”). Numerous signatories of the settlement agreement were acting not only in their individual capacities, but as partners, officers, trustees, executors or members or in some other fiduciary capacity.

Simply stated, how can the Wilpons as a group fairly treat the entities and individuals who are signatories to the settlement agreement and have been recognized by Picard (the “allowed parties”) to have $178 million in aggregate allowed net equity claims against the Madoff estate (“allowed claims”)?

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