On a single day, April 2, 2012, 202 motions (including 108 second motions) to withdraw the reference were filed in the Madoff SIPA adversary “claw back” proceedings. This spike brought to 983 the number of motions were filed by defendants seeking to have their cases heard by the U.S. District Court, rather than the U.S. Bankruptcy Court, for the Southern District of New York. Out of the 1140 Madoff adversary proceedings, defendants in 760 have sought transfer to the District Court.
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In re Bernard L. Madoff and BLMIS SIPA Liquidation Avoidance Actions Adversary Proceedings APScans report of recent filings
The April 2 spike was precipitated by a deadline set by a Bankruptcy Court order entered on March 5, 2012. In that order, U.S. Bankruptcy Judge Burton R. Lifland told defendants that the District Court would “regard as untimely” any motions to withdraw the reference filed after April 2. The deadline was set to out of the need for “administrative efficiency”.
Irving H. Picard, as trustee for the liquidation of the Bernard L. Madoff Investment Securities LLC, filed in December 2010 the vast majority of the 1140 adversary proceedings filed to date. Initially, there was no rush to go to the District Court. The first motion to withdraw the reference was filed in February 2011. By the end of June 2011, only 29 reference motions had been filed and the numbers stayed a trickle through October: July – 35; August – 3, September – 10; October – 44.
The dam burst in November, 2011, with the filing of 249 motions to withdraw the reference and by the end of February, 2012, there still was no indication that the steady stream of motions was going to end. Faced with the prospect of a scheduling nightmare, the District Court gave the fence-sitters a push. It worked.