A global settlement has been reached between various litigating groups in the Bernard Madoff bankruptcy case which will return around $206 million collectively and over time to several defrauded investor groups, according to a law firm involved in the case.

Herrick, Feinstein, a New York-based firm representing hedge fund clients, said the settlement means that investors in the Beacon/Andover feeder funds will receive “nearly 100 per cent or more” of their investment, based on the anticipated 65 per cent distribution rate for allowed claims from the Madoff SIPA trustee.

“This settlement is probably the most favorable outcome for any investor who invested with Madoff through an investment feeder fund,” said Arthur Jakoby, counsel for the funds and partner at Herrick, Feinstein.

The global settlement is made up of two principal settlements, one of which is the Ivy Asset Management settlement negotiated in conjunction with the New York Attorney General and other parties, as reported here yesterday.

The first settlement was negotiated between Herrick, Feinstein and the Madoff trustee, Irving Picard, who had begun a lawsuit seeking to disallow the Beacon/Andover funds’ net equity claim of around $141 million and clawback $28.31 million which the funds had withdrawn from their Madoff accounts over the years.

Under the settlement reached, the Madoff trustee has granted a total allowed net equity claim to the funds of around $165 million and has approved nearly $63 million in catch-up distributions to be paid once the settlement has been approved by the court. Based on a 65 per cent distribution rate, this will return over $100 million of investor losses in the funds.

The $165 million allowed claim includes $24 million of payments which the funds will make to the trustee under the agreement.

The settlement involves a condition whereby Beacon/Andover management will forgo any management or similar fees from the distributions made to them by the Bernard L Madoff Investment Securities estate.

The second settlement - relating to the funds’ former outside investment advisor, Ivy Asset Management - was negotiated with the NYAG as well as the Department of Labor and several class action law firms. This will see the Beacon/Andover Funds, net of certain fees and expenses, receive approximately $99 million, according to Herrick, Feinstein.

“The crimes perpetrated by Bernard Madoff against the Beacon/Andover Funds were financially devastating to our investors but this settlement provides our investors with justice and will restore to our investors their hard earned monies,” said Jakoby, who is also co-chair of Herrick, Feinstein’s securities and commodities litigation and regulatory practice group.