Huge Litigation Win for S&W’s Bank Austria Team
Almost 20 months ago, Sullivan & Worcester briefed and argued on behalf of all defendants in the Madoff litigations that the clawback provisions of the Bankruptcy Code and the Securities Investors Protection Act had no extraterritorial reach.
On Sunday of July 4th weekend, U.S. District Judge Jed Rakoff ruled that those provisions do not reach beyond U.S. borders for purely foreign transactions. This was the first time any court has ruled on whether the clawback provisions of the Bankruptcy Code applied to purely extraterritorial transfers in light of the U.S. Supreme Court’s 2010 landmark decision in Morrison v. National Australia Bank, which set the benchmark for courts to determine whether U.S. statutes have extraterritorial application. The decision will almost certainly have significant impact on transnational bankruptcies.
This is the firm's fourth major victory on behalf of Bank Austria in the Madoff litigations. In 2012, S&W won a dismissal of $59 billion in RICO claims and in 2011 we obtained the dismissal of approximately $6 billion in common law claims asserted by the Madoff Trustee against Bank Austria and others. Also, in December 2011, S&W obtained the dismissal of two class actions against the Bank. The only claims remaining against Bank Austria were clawback claims. The recently issued Judge Rakoff decision may be the death knell for those remaining claims.