Investors Push Towards Madoff Bankruptcy

Five of Bernard Madoff’s investors filed a petition to force Madoff into an involuntary Chapter 7 bankruptcy on Monday. The petition comes after U.S. District Judge Louis Stanton of the Southern District Court of New York ruled on Friday that bankruptcy would be the best way for investors to reclaim their lost assets and lifted a stay obtained by the Securities and Exchange Commission (SEC) to block any litigation against Madoff. Although the SEC and Department of Justice fought the lifting of the stay claiming that an involuntary bankruptcy would only delay recovery and add to administrative costs, Judge Stanton stated that those concerns were “speculative” and “outweighed by the benefits to Mr. Madoff's victims of a bankruptcy trustee's orderly and equitable administration of his individual estate." The number of investors included as creditors under the petition will undoubtedly increase as five is merely the minimum number of creditors required to file an involuntary bankruptcy under the U.S. Bankruptcy Code.