Second distribution

Update 1/24/24:

All settling defendants paid on January 22, 2024.

164 checks representing victims’ pro rata shares of a $14,500,000 distribution are now on their way via U.S. Priority Mail (because many recipients’ addresses are post office boxes) and should deliver within three business days.

This second distribution relies on the same accounting and method of distribution as the first distribution, as explained in the motion to approve second distribution.

Each victim’s pro rata share is approximately 27% of what the Receiver has called Priority 1 losses. The Receivership Estate now has distributed $32,000,000, for a total repayment of approximately 60% of such losses.

Some victims have asked: What is the difference between Priority 1 losses and net losses? There is no difference. The Receivership Estate necessarily prioritizes repaying each victims’ principal—that is, principal still due after subtracting any interest paid. What the Receiver here call Priority 1 losses, other receivers call net losses.

For context, the Madoff trustee, 15 years into that case, has distributed approximately $13.8 billion to victims who collectively hold approximately $19.5 billion worth of “allowed claims” (calculated using a “net equity,” or net loss, method). The Stanford receiver, 14 years into that case, has recovered (not distributed) approximately $2.7 billion of $7.2 billion in losses.

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Update 1/10/24:

The Receiver had hoped to have all settling defendants’ agreed funds by now. Each settling defendant’s settlement agreement provides that, upon finality, the settling defendant has a certain number of days to make payment. By the Receiver’s counsel’s calculations, the latest any settling defendant may pay under any settlement agreement is January 10, 2024. The settling defendants’ counsel calculated January 22, 2024 instead.

The Receiver is disappointed by this disagreement but believes litigating it would waste more time.

The solution is as follows: The Receiver will accept payment on January 22, 2024, but only with interest. The Receiver’s counsel’s letter to the settling defendants’ counsel which evidences this offer and calculates each settling defendant’s interest is here:

2023-12-29 Letter to Settling Defendants

The Receiver will still make a distribution as soon as she receives all settling defendants’ agreed funds, which she now expects (with interest) no later than January 22, 2024.
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Update 12/19/23:

No party filed an appeal on or before December 14, 2023, and on December 18, 2023, the motion to alter or amend that had been filed on December 12, 2023 was withdrawn.

The settlements are final, and the second distribution is pre-approved.

The Receiver will make a distribution as soon as all settling defendants pay.

The Receiver’s counsel is in contact with counsel for the settling defendants. Some settling defendants are waiting on payments from their own insurers so that they in turn may pay the Receivership Estate. Accounting for legal holidays, the latest any settling defendant may pay under any settlement agreement is January 10, 2024, but the Receiver’s counsel does not expect payment to take that long.

Many victims have asked, for tax planning or other purposes, whether the distribution will be made before December 31, 2023. The Receiver had hoped to make the distribution before year-end, but given the necessity of waiting on all settling defendants to pay, likely it will be the first week of January.

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On November 14, 2023, the Court approved settlements totaling $19.2 million. If no objector appeals, the Court’s orders will become final on December 14, 2023.

The Receiver wants to be in a position to make a second distribution as soon as possible. On November 15, 2023, the Receiver filed a motion that asked the Court to pre-approve a proposed second distribution. The Court granted that motion on December 1, 2023.

This means that, assuming the settlements’ finality on December 14, 2023, the Receiver will not have to return to court to ask permission to make a second distribution. She will make a distribution when she receives all settling defendants’ agreed funds.

The Receiver cannot say with certainty when she will receive all settling defendants’ agreed funds. Each settling defendant’s settlement agreement provides that, upon finality (December 14, 2023, if no objector files an appeal), the settling defendant has a certain number of days to tender the agreed funds. Because the settlement agreements were separately negotiated, the number of days is different in each. Some settling defendants might pay immediately; others might take several days.

The Receiver will not make piecemeal distributions; she will wait until all settling defendants have paid to make a single distribution. She will not delay a distribution unnecessarily. She could still make a distribution before the end of the year.

The Receiver will post any updates here.

Below are relevant filings:

2023-12-18 [402] Birdie Cooperwood’s Notice of Withdrawal of Motion to Alter Judgment

2023-12-18 [401] Receiver’s Response to Motion to Alter Judgment

2023-12-12 [399] Birdie Cooperwood’s Motion to Alter Judgment

2023-12-01 [398] Order Approving Second Distribution

2023-11-15 [397] Motion to Approve Second Distribution

2023-11-14 [395] Partial Final Judgment and Bar Order – Vinson and Chisholm

2023-11-14 [394] Partial Final Judgment and Bar Order – Trustmark

2023-11-14 [393] Partial Final Judgment and Bar Order – Southern Bancorp

2023-11-14 [392] Partial Final Judgment and Bar Order – RiverHills Bank

2023-11-14 [391] Partial Final Judgment and Bar Order – BankPlus