As reported on September 21, 2012 in Installment 84 of this blog series, Trustee Irving Picard distributed nearly $2.5 billion in checks on September 19, 2012 (the “2012 Picard Distribution”) to victims in the Madoff scandal. (Capitalized terms not otherwise defined herein have the meanings as defined in Installment 84.) It was not, however, until more than a week later on September 28, 2012, that the Trustee’s Web site reported the actual dollar impact on the Wilpon Liabilities of the 2012 Picard Distribution and the earlier, much smaller, Picard Distribution on October 5, 2011:
Under terms of the settlement, the Defendants’ [the Wilpons’] allowed claims of approximately $178 million . . . will be unconditionally assigned to the SIPA Trustee [Picard] until the $162 million settlement number is reached. Distributions made to the allowed claims assigned to the SIPA Trustee will reduce the amount owed by the Defendants and will be added to the Customer Fund. On September 28, 2012, the first and second pro rata interim distribution payments of approximately $67.3 million were made with respect to the allowed claims assigned to the SIPA Trustee and added to the Customer Fund. The remaining balance of the settlement payment is approximately $94.7 million.
Installment 84 and earlier Installments in this blog series have been discussing the potential impacts that such Picard Distributions may have on the diverse economic, business, charitable, family, trust and individual interests among the Wilpons and how the Wilpons might reasonably address such impacts. Installment 84 had also conjectured, albeit incorrectly, that perhaps up to $123 million of the aggregate Wilpon Liabilities may have been offset as a result of the first two Picard Distributions, substantially in excess of the actual amount of approximately $67.3 million later reported by Picard. (Perhaps the Trustee will be able to post more contemporaneously with future Picard Distributions the dollar amount of reduced Wilpon Liabilities that will result therefrom.) Even though the actual amount of reduced Wilpon Liabilities turned out to be substantially lower than the amount discussed in Installment 84, the $67.3 million was certainly material for the Wilpons. In fewer than four months after court approval of the Wilpon/Picard Settlement Agreement, 41.5% of the Wilpon Liabilities had disappeared.
While the external liabilities of the Wilpons are being materially reduced by Picard Distributions, an internal reshuffling of assets among the Wilpons may also be occurring. Installment 82 had suggested that, to minimize conflicts and controversies and with adequate advice of counsel to the involved parties, an Allocation Agreement be entered into among all the Wilpons that are affected by the Settlement Agreement with Picard, in order to provide for Allowed Entities to be compensated for the use of their Allowed Claims (already $67.3 million to date) for the benefit of the Wilpons as a group and the specific Liable Defendants. It will be interesting to see what further developments may surface in this continuing saga and whether the ownership of various Wilpon assets, including the New York Mets, could ultimately be affected by the Picard Distributions.