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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

04 FEB 2010

Madoff's boat and jurisdiction to hear claims - Byers & Ors (Liquidators of Madoff Securities International Ltd) v Yacht Bull Corporation & Anor (Rev)

The Vice-Chancellor has handed down his judgment in Byers & Ors (Liquidators of Madoff Securities International Ltd) v Yacht Bull Corporation & Anor (Rev 1) [2010] EWHC 133 (Ch) (01 February 2010). The case relates to assets in the Madoff affair, in particular, a Leopard 23m sport yacht called the Bull. As Sir Andrew Morritt goes on to observe: "the Bull ("the Bull") was registered in the Cayman Islands in the register of British shipping in the name of the first respondent Yacht Bull Corporation ("YBC") under number 740064. YBC is a company incorporated in the Cayman Islands formerly owned or controlled by Mrs Ruth Madoff, the wife of Mr Bernard Madoff. The Bull had been acquired with money, some $7m, emanating from Madoff Securities International Ltd ("MSIL"), a company incorporated in England then owned and controlled by Mr Bernard Madoff ("BM"). BM also owned and controlled Bernard Madoff Investment Securities LLC ("BMIS"), a company incorporated in New York. On 11th December 2008 BM admitted to having carried on a 'Ponzi' scheme, primarily through BMIS, whereunder some 5,000 investors were defrauded of $65bn."

The learned judge goes on to give a thorough exposition on various matters of jurisdiction touching on a number of provisions in the Insolvency Act. He notes, "On 8th July 2009 the JLs applied to the Companies Court in England under ss.112 and 234 Insolvency Act 1986 for a declaration that MSIL is the sole beneficial owner of the Bull, an order that YBC do co-operate with the applicants and a declaration that FM was precluded by s.130(2) Insolvency Act 1986 and Articles 4, 16 and 17 of EC Regulation 1346/2000 ("the Insolvency Regulation") from commencing or continuing proceedings against it..."

Sir Andrew concludes his lengthy analysis by noting:

"For all these reasons I will:
  1. declare that this court has no jurisdiction to hear or determine the claims advanced by paragraphs 1 and 2 of the Ownership Application;
  2. stay all further proceedings in respect of paragraphs 3 to 5 of the Ownership Application until such time as the issues raised in paragraphs 1 and 2 have been finally determined by the Courts in France or otherwise disposed of by compromise or abandonment.
I will hear further argument on the form of my order and on questions of costs."
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