IRS Madoff Trustee Settlement Notice and Motion Refund of Withholding Dividend Income Tax

8/3/2019 IRS Madoff Trustee Settlement Notice and Motion Refund of Withholding Dividend Income Tax

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Baker dkHostetler LLP Hearing Date: December 21, 2011 at 10:00 a.m.

45 Rockefeller Plaza Objection Deadline: December 15, 2011

New York, New York 10111

Telephone: (212) 589-4200Facsimile: (212) 589-4201

David J. SheehanEmail: dsheehan bakerlaw,comMare E. Hirschfield

Email: mhirschfield bakerlaw,com

Elizabeth A. Smith

I: :~ i

Elyssa S, Katesb l

Amy E, Vanderwal

Email: avanderwal bakerlaw.com

Attorneys for Irving H. Picard, Trustee forthe Substantively Consolidated SIPA

Liquidation of Bernard L. Madoff

Investment Securities LLC and Bernard L .

Ma doff

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK

SECURITIES INVESTOR PROTECTION Adv. Pro. No. 08-1789 (BRL)

CORPORATION,SIPA Liquidation

Plaintiff-Applicant,(Substantively Consolidated)

BERNARD L. MADOFF INVESTMENT

SECURITIES LLC,

Defendant.

In re:

BERNARD L. MADOFF,

Debtor,


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NOTICE OF MOTION FOR ENTRY OF AN ORDER PURSUANT TO SECTION

105(a) OF THE BANKRUPTCY CODE AND RULES 2002 AND 9019 OF THKFEDERAL RULES OF BANKRUPTCY PROCEDURE APPROVING AN

AGREEMENT BY AND BETWEEN THK TRUSTEE AND UNITED STATES OFAMERICA ON BEHALF OF THK INTERNAL REVENUE SERVICE

PLEASE TAKE NOTICE that Irving H. Picard (the "Trustee" ), as trustee for the

liquidation of the business of Bernard L. Madoff Investment Securities LLC under the

Securities Investor Protection Act , 15 U .S.C . $$ 78 aaa et seq. ("SIPA"), and the

substantively consolidated estate of Bernard L. Madoff, by and through his undersigned

counsel, will move (the "Motion" ) before the Honorable Burton R. Lifland, United States

Bankruptcy Judge, at the United States Bankruptcy Court, the Alexander Hamilton Customs

House, One Bowling Green, New York, New York 10004-1408, on December 21, 2011 at

10:00 a.m., or as soon thereafter as counsel may be heard, seeking entry of an order (the

"Order" ), pursuant to section 105(a) of the United States Bankruptcy Code, 11 U.S.C. $$ 101

etseq., and Rules 2002 and 9019 of the Federal Rules of Bankruptcy Procedure (the

"Bankruptcy Rules" ), approving that certain agreement (the "Agreement" ) by and between

the Trustee and the United States of America, on behalf of the Internal Revenue Service, as

more particularly set forth in the Motion.

PLEASE TAKE FURTHER NOTICE that objections, if any, to the Motion must (i)

be in writing; (ii) conform to the Banlauptcy Rules, Local Bankruptcy Rules and General

Orders (which Lo cal B ankruptcy Rule s and Ge neral Ord ers may b e f o un d a t

http: //www.nysb.uscourts,gov/); (iii) specify the name of the objecting party and state with

specificity the basis of the objection(s) and the specific grounds therefor; (iv) be filed in

accordance with the electronic filing procedures for the United States Bankruptcy Court for

the Southern District of New York, with a proof of service, and a courtesy copy delivered to

the Chambers of the Honorable Burton R. L if land, United States Banlauptcy Court, the


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Alexander Hamilton Customs House, One Bowling Green, New York, New York 10004

1408; and (v) be served upon Baker k H ostetler LLP, counsel for the Trustee, 45

Rockefeller Plaza, New York, New York 10111, Attn: Elizabeth A. Smith, Esq. and Elyssa

S. Kates, Esq., so as to be received no later than4:00 .m. On December 15 2011.

Dated: New York, New York Respectfully submitted,

November 22, 2011

Is/Elyssa S. Kates

Baker & Hostetler LLP

45 Rockefeller Plaza

New York, New York 10111

Telephone: (212) 589-4200

Facsimile: (212) 589-4201David J. Sheehan

Email: dsheehan bakerlaw.com

Mare E, Hirschfield

Email: mhirschfield c bakerlaw.com

Elizabeth A. Smithi : ~ b

Elyssa S. Kates

il: ~ b IAmy E. VanderwalEmail; avanderwal c bakerlaw.com

Attorneys for Irving H, Picard,

Trustee for the Substantively Consolidated

SIPA Liquidation of Bernard L MadoffInvestment Securities LLC and Bernard L.

Madoff


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[PAGE INTENTIONALLY LEFT BLANK]


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Baker dkHostetler LLP Hearing Date: December21, 2011 at 10:00 a.m.

45 Rockefeller Plaza Objection Deadline: December 15, 2011

New York, New York 10111Telephone: (212) 589-4200Facsimile: (212) 589-4201

David J, SheehanEmail: dsheehan bakerlaw.comMare E. Hirschfield


Elizabeth A. Smith'! ~ i h b I

Elyssa S. Kates4 I

Amy E. Vanderwal

Email: avanderwal c bakerlaw.com

Attorneys for Irving H. Picard, Trustee forthe Substantively Consolidated SIPA

Liquidation of Bernard L. Madoff

Investment Securities LLC and Bernard L.

Ma doff

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK



Plaintiff-Applicant,(Substantively Consolidated)


SECURITIES LLC,

Defendant,

In re:

BERNARD L. MADOFF,

Debtor.


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TRUSTEE'S MOTION FOR ENTRY OF AN ORDER PURSUANT TO

SECTION 105(a)OF THK BANKRUPTCY CODE AND RULES 2002 AND 9019

OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE APPROVING

AN AGREEMENT BY AND BETWEEN THK TRUSTEE AND UNITED STATESOF AMERICA ON BEHALF OF THK INTERNAL REVENUE SERVICE

TO: T H E HO NORABLE BURTON R. LIFLAND

UNITED STATES BANKRUPTCY JUDGE

Irving H, Picard (the "Trustee" ), as trustee for the liquidation of the business of

Bernard L. Madoff Investment Securities LLC ("BLMIS") under the Securities Investor

Protection Act, 15 U.S.C. $) 78aaa etseq. ("SIPA"), and the substantively consolidated

estate of Bernard L. Madoff ("Madoff," and together with BLMIS, collectively, the

"Debtors" ), by and through his undersigned counsel, respectfully submits this motion (the

"Motion" ) seeking entry of an order (substantially in the form annexed hereto as Exhibit

"A"), pursuant to section 105(a) of the United States Bankruptcy Code, 11 U.S.C. $$ 101 et

seq. (the "Bankruptcy Code" ), and Rules 2002 and 9019 of the Federal Rules of Bankruptcy

Procedure (the "Bankruptcy Rules" ), seeking approval of an agreement (the "Agreement" )'

by and between the Trustee and the United States of America, on behalf of the Internal

Revenue Service (referred to herein as the " IRS"), and, in support thereof, the Trustee

respectfully represents as follows:

PRELIMINARY STATEMENT

The Trustee has reached an agreement with the IRS that allows for the

recovery of transfers made by BLMIS and/or Madoff to the IRS purportedly on behalf of

foreign account ho lders (the "F oreign Accountholders") al legedly pursuant to th e

requirements of sections 1441 and 1442 of the Internal Revenue Code of 1986 (the "Code" ).

This settlement (the "IRS Settlement" ) will b ri ng approximately $326 mi ll ion (t he

' The form of Agreement is annexed hereto as Exhibit "B."


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"Settlement Payment" ) into the BLMIS estate for eventual distribution to customers with

valid claims. The Settlement Payment represents a significant recovery by the Trustee for

the benefit of the fund of customer property (the "Customer Fund" ). Thus, the Trustee

submits that the IRS Settlement falls well within the range of reasonableness mandated by

the relevant legal standard and therefore, the Trustee respectfully requests that the Court

approve the settlement.

BACKGROUND

2, On D ec em ber 11, 2008 (the "F il ing Date" ), th e U.S . Securities and

Exchange Commission ("SEC") filed a complaint in the United States District Court for the

Southern District of New York (the "District Court" ) against the Debtors (Case No. 08 CV

10791). The complaint alleged that the Debtors engaged in fraud through investment

advisory activities of BLMIS.

3. On De cember 15, 2008, pursuant to section 78eee (a)(4)(A) of SIPA, the SEC

consented to a combination of its own action with an application of the Securities Investor

Protection Corporation ("SIPC"). Thereafter, pursuant to section 78eee(a)(3) of SIPA, SIPC

filed an application in the Distr ict Court alleging, inter alia, that BLMIS was not able to

meet its obligations to securities customers as they came due, and accordingly, its customers

needed the protection afforded by SIPA.

4, On th a t date, the District Court entered the Protective Decree, to which

BLMIS consented, which, in pertinent part:

(i) appo inted the Trustee for the liquidation of the business ofBLMIS pursuant to section 78eee(b)(3) of SIPA;

' In this case, the Filing Date is the date on which the SEC commenced its suit against BLMIS,

December 11, 2008, which resulted in the appointment of a receiver for the firm. See section

78lll(7)(B) of SIPA.


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(ii) appo inted Baker & Hostetler LLP as counsel to the Trusteepursuant to section 78eee(b)(3) of SIPA; and

(iii) re m oved the case to this Court pursuant to section 78eee(b)(4)of SIPA.

At a plea hearing (the "Plea Hearing" ) on March 12, 2009, in the criminal

action filed against him by the United States Attorney's Office for the Southern District of

New York, Madoff pled guilty to an 11-count criminal information, which counts included

securities fraud, money laundering, theft and embezzlement. At the Plea Hearing, Madoff

admitted that he "operated a Ponzi scheme through the investment advisory side of

[BLMIS]." (P lea Hr'g Tr. at 23:14-17). On June 29, 2009, Madoff was sentenced to a term

of imprisonment of 150 years.

6. On Apr i l 13 , 2009, an involuntary bankruptcy petition was filed against

Madoff. On Ju ne 9, 2009, this Court entered an order substantively consolidating the

Chapter 7 estate of Madoff into the BLMIS SIPA proceeding.

7. Purs uant to section 78fff-1(a) of SIPA, the Trustee has the general powers of

a bankruptcy trustee in a case under Chapter 7 of the United States Bankruptcy Code, as

amended from time to time (the "Bankruptcy Code" ), as well as the powers granted pursuant

to SIPA. Chapters 1, 3, 5 and subchapters I and II of Chapter 7 of the Bankruptcy Code

apply to the SIPA Proceeding to the extent consistent with SIPA, Under SIPA, the Trustee

is charged with the responsibility of marshaling and liquidating the assets of BLMIS, and

recovering customer property for distribution to BLMIS' customers in satisfaction of

allowed customer claims, including through the recovery of avoidable transfers.

TRANSFERS MADE PURPORTEDLY ON ACCOUNT OF WITHHOLDING

8. The T r ustee, in the course of his investigation, identified certain payments

(the "Payments" ) made by BLMIS or Madoff to the IRS, purportedly on behalf of the


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Foreign Accountholders, allegedly pursuant to the requirements of sections 1441 and 1442

of the Code, which requires persons who pay income to non-resident aliens and foreign

corporations to withhold tax equal to thirty percent (30%) of that income.

9. Sinc e January 1, 2003, BLMIS made Payments on behalf of 145 Foreign

Accountholders (identified on Exh ibi t "C" hereto) wh ich tota led approximately $330

mill ion. The Payments were reported to the IRS as federal income tax withholding relating

to dividends paid to the accounts of the Foreign Accountholders, With respect to three of

these Foreign Accountholders, the IRS erroneously paid certain refunds pursuant to claims

made against the IR S r el ating to t h e P ayments (the "E rroneously Paid Foreign

Accountholders"). The total amount paid to the Erroneously Paid Foreign Accountholders is

$4,224,884. 10.

10, Th e Trus tee's investigation has revealed that there is no record of BLMIS

having purchased or sold any securities for the benefit of the Foreign Accountholders, and in

addition, there is no record of any dividends actually having been paid with respect to

accounts held by the Foreign Accountholders. See Affidavit in Support of Trustee's Motion

for Entry of an Order Pursuant to Section 105(a) of the Banluuptcy Code and Rules 2002

and 9019 of the Federal Rules of Bankruptcy Procedure Approving an Agreement by and

Between the Trustee and United States of America on Behalf of the Internal Revenue

' The Code imposes an income tax withholding on certain categories of income paid to foreign investors

including dividends, derived from U.S. sources. The wi thholding tax is payable to the United States Treasury.

Pursuant to section 871 of the Code, a tax of 30 percent (30%) is imposed on the amount received from sourcesin the United States by a nonresident alien indiv idual as dividends, S imi lar ly, pursuant to section 881 of the

Code, a tax of 30 percent is imposed on the amount received from sources within the United States by a foreigncorporation as dividends. W ith respect to non-resident alien individuals or a foreign partnership, section 1441of the Code requires a withholding tax from dividends equal to 30 percent (30%) thereof; similarly, with

respect to foreign corporations, section 1442 of the Code requires a withholding tax from dividends equal to 30percent (30%) thereof. See Treas. Reg, sections 1,1441-1 and 1.1442-1, The obligation to withhold applies to

the payor of the dividend, whether it pays the dividend annually or at other intervals. See Treas. Reg. section1.1441-2(b)(i) and (ii).


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Service (the "Trustee's Affidavit" ) at $ 6. Thus, the Payments made to the IRS falsely

identified the funds as income tax withholding, presumably to give the investment advisory

arm of BLMIS an air of legitimacy and to avoid any inquiries from the IRS; by making the

"withholding" payments, it would appear to the outside world that real stock was held in the

accounts at BLMIS and real dividends had been paid, In furtherance of his Ponzi scheme,

Madoff annually filed Forms 1042, "Annual Withholding Tax Return for the United States

Source Income of Foreign Persons" falsely reporting millions of dollars as "taxes" withheld

and paid to the IRS for the years prior to 2008. Id. at) 6 and Exhibit "A".

11. Up o n learning of the fraudulent payment and reporting of the Payments by

Madoff, the Trustee made a claim against the IRS for return to the Trustee of the value of

the Payments made to the IRS since January 1, 2003, for eventual distribution to customers

with allowed claims. The IRS Settlement, as described below, involves the repayment of the

vast majority of the Payments. This represents a significant recovery for the victims of the

Ponzi scheme,

THK AGRKKMKNT AND CHANNELING IN JUNCTION

12. Th e p r inc ipal terms and conditions of the Agreement are contained in the

form of Agreement attached as Exhibit "B" and should be reviewed for a complete account

of its terms,4

13, TheAgreement provides, in part, that:

The IR S wi l l pay $326 million to the Trustee in complete satisfactionand settlement of all claims by the Trustee against the IRS with

respect to payments made by BLMI S and/or Madoff allegedly

pursuant to the requirements of Code sections 1441 and 1442 with

Terms not otherwise defined in this Motion shall have the meaning ascribed in the Agreement. Inthe event of any inconsistency between the terms provided in this Motion and the terms of the

Agreement, the Agreement shall prevail.


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respect to the Foreign Accountholders. The Settlement Payment is

being made for the benefit of BLMIS' customers with valid claims;

Interest will accrue on the Settlement Payment if the SettlementPayment is not received by the Trustee within 180 days of the date the

IRS Settlement is approved;

The Trustee will continue any pending actions against certain ForeignAccountholders, To the extent the Trustee has commenced actions

against the Erroneously Paid Foreign Accountholders, the Trustee

s hall continue those actions wi thout an y a dj ustment of t h e

Erroneously Paid Foreign Accountholders' account balances. The

Trustee shall adjust all o ther Foreign Accountholders' BL MI S

account balances for purposes of any claims allowance or otherpending proceedings and will credit all Payments out of the accounts

for alleged withholding payments made to the IRS to the extent of

those payments;

The Trustee will release the IRS and its employees, attorneys,representatives, advisors and agents from any and all past, present and

future claims or causes of action and from any and all allegations of

liability or damages of whatever kind, nature or description, direct or

indirect, in law, equity or arbitration, absolute or contingent, known

or unknown, that are, have been, could have been or might in thefuture be asserted by the Trustee against the IRS and that are based

on, arise out of or relate in any way to any of the Payments allegedly

made on behalf of Foreign Accountholders by BLMIS pursuant to the

requirements of sections 1441 and 1442 of the Code;

T he Trustee wil l r eserve approximately $103 mi ll ion o f t h e

Settlement Payment (the "Reserve" ) for the purpose of satisfying any

potential administrative decisions, settlements or judgments against

the IRS or the Trustee that have been or may hereafter be entered withrespect to the Payments. The Reserve shall not be available to satisfy

certain excepted claims (the "Excepted Claims" ) which are defined

below and in paragraph 5 of the Agreement. The Trustee may release

the balance of the Reserve for distribution on the day that is two years

and sixty days from the Settlement Approval Date (defined below),but shall retain a sufficient amount in the Reserve to satisfy any

claims or actions that are still pending;

The Trustee shall seek, and the Agreement shall be contingent upon,

the issuance of a final and non-appealable Order by the Court that:

(i) approves the Agreement; and (ii) contains a provision permanentlyenjoining (the "Channeling Injunction" ) any person, including any

Foreign Accountholder (and including Erroneously Paid ForeignAccountholders), and anyone acting on his/her/its behalf or in concert


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of participation with such Foreign Accountholder, from asserting any

claim or action against the IRS or the Trustee which arises from or

relates to any Payments allegedly made on behalf of a Foreign

Accountholder and Erroneously Paid Foreign Accountholder by

BLMIS pursuant to the requirements of Code sections 1441 and 1442,

provided however, that such Channeling Injunction shall not barclaims or actions brought against the BLMIS estate by creditors or

against the SIPA customer fund as customers so long as such creditors

or customers filed claims in th e SIPA Pr oceeding prior to th e

statutorily mandated cla ims bar date (the "Ex cepted Cla ims" ).Additionally, the injunction will not affect the rights and defenses of

any Foreign A ccountholders and E r ro neously Pai d F o re ign

Accountholder presently engaged in litigation with the Trustee;

If the Channeling Injunction provision in the Order is held to be

invalid, i na pplicable o r un enforceable ag ainst an y F o reig n

Accountholder and Erroneously Paid Foreign Accountholder and acourt permits an action to proceed with respect to the Payments other

than an Excepted Claim, any such accountholder seeking to assert a

claim shall assert such claim in the Bankruptcy Court against theTrustee and not the IRS;

The Or d er shall provide that if the IRS is rendered or adjudged liable

to any person or entity, including any Foreign Accountholder and

Erroneously Paid Foreign Accountholder, in respect of any claims oractions arising from or relating to the Payments, such liability will be

satisfied by the Trustee from the Reserve; and

The A gr e ement is subject to the entry of the Order and the Order

becoming final and non-appealable (such date, the "SettlementApproval Date" ).

1 4. A s s e t forth above, as part of the Agreement, the Trustee is seeking a

Channeling Injunction from this Court, pursuant to Section 105(a) of the Bankruptcy Code.

The Trustee is seeking such relief because the IRS will turn over the Settlement Payment to

the Trustee. Therefore, the Trustee will obtain control over the funds that could be the

subject of any future refund action by a Foreign Accountholder.


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ARGUMENT

THE AGREEMENT IS FAIR AND EQUITABLE

AND IN THE BEST INTERESTS OF THE BLMIS ESTATE

I. The T e rms of the Agreement Are Fair and Reasonable and Will Confer aSignificant Benefit on the Customer Fund.

15. Ba n kruptcy Rule 9019(a) provides, in pertinent part, that "[o]n motion by the

trustee and after notice and a hearing, the court may approve a compromise or settlement."

Courts have held that in order to approve a settlement or compromise under Bankruptcy

Rule 9019(a), a bankruptcy court should f ind that the compromise proposed is fair and

equitable, reasonable, and in the best interests of a debtor's estate. In re Ionosphere Clubs,

Inc,, 156 BR 414, 426 (S.D.N, Y. 1993),aff'd, 17 F.3d 600 (2d Cir. 1994) (citingProtective

Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424

(1968)),

16. The Second Circuit has stated that a bankruptcy court, in determining

whether to approve a compromise, should not decide the numerous questions of law and fact

raised by the compromise, but rather should "canvass the issues and see whether the

settlement 'fal l[s] below the lowest point in the range of reasonableness.'" In re W. T. Grant

Co., 699 F.2d 599, 608 (2d Cir.), cert. denied sub nom. Cosoff v, Rodman, 464 U,S. 822

(1983) (quoting Newmanv. Stein, 464 F.2d 689, 693 (2d Cir.), cert. denied sub nom, Benson

v. Newman, 409 U.S. 1039 (1972)); accord Nellisv, Shugrue, 165 B,R. 115, 121-22

(S.D.N.Y. 1994); In re Ionosphere Clubs, 156 B.R. at 426; In re Purofied Down Prods,

Corp,, 150 B.R. 519, 522 (S.D,N.Y. 1993) (" [T]he court need not conduct a 'mini-trial' to

determine the merits of the underlying l itigation" ); In re Drexel Burnham Lambert Group,

Inc., 134 B,R. 499, 505 (Bankr. S,D.N.Y. 1991).


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17. In d e c id ing whether a particular compromise falls within the "range of

reasonableness," courts consider the following factors:

a. the p robabil ity of success in the litigation;

b. the d i f f icu lties associated with collection;

c. the complexity of the litigation, and the attendant expense,

inconvenience, and delay; and

the paramount interests of the creditors (or in this case,

customers).Nellisv. Shugrue, 165 B.R. at 122 (citing In re Drexel

Burnham Lambert Group, Inc., 960 F.2d 285, 292 (2d Cir.

1992), cert. dismissed, 506 U.S, 1088 (1993)).

18. Th e bankruptcy court may credit and consider the opinions of the trustee or

debtor and their counsel in determining whether a settlement is fair and equitable, See In re

Purofied Doivn Prods., 150 B,R, at 522; In re Drexel Burnham Lambert Group, Inc., 134

B.R. at 505. The competency and experience of counsel supporting the settlement may also

be considered. Nellisv. Shugrue, 165 B.R, at 122, Finally, the court should be mindful of

the principle that "the law favors compromise." In re Drexel Burnham Lambert Group, Inc.,

134 B.R. at 505 (quoting In re Blair, 538 F.2d 849, 851 (9th Cir. 1976)),

19. Th e Trustee believes that the terms of the IRS Settlement fall well above the

lowest point in the range of reasonableness and, accordingly, the Agreement should be

approved by this Court. The Agreement resolves all issues regarding the Payments (the

"Claims" ) without the need for lit igation. O the r than a small deduction for amounts

erroneously paid by the IRS to the Erroneously Paid Foreign Accountholders, the IRS

Settlement provides for the return of the vast majority of transfers made by Madoff since

January 1, 2003, purportedly as income tax withholding with respect to foreign accounts.

SeeTrustee's Affidavit at $ 7.

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20. The A greement also furthers the interests of the customers of BLMIS by

adding a substantial amount of money to the Customer Fund, Id. Specifically, as a result of

the IRS Settlement, approximately $326 million should be available for distribution to

customers. Id.

21. A s n o te d above, for purposes of any claims allowance or other pending

adversary proceedings involving the Foreign Accountholders, the Trustee will adjust the

Foreign Accountholders' BLMIS account(s) balance(s) by crediting back all recovered

transfers comprising the IRS Settlement out of the accounts for the alleged withholding

payments made, to the extent of those payments. The Trustee will credit each Foreign

Accountholders' account (wi th t h e e x ception o f t h e E r roneously Pai d F or eign

Accountholders) for each Payment that was made and will adjust the account balance as of

the date of the specific payment. Utilizing this methodology, five Foreign Accountholders

which were "net w inners" previously become break-even accounts, O n e F ore ign

Accountholder changes from a "net winner" to a "net loser". The Foreign Accountholders

(with the exception of the Erroneously Paid Foreign Accountholders) will receive credit for

the monies recovered by the Trustee.

22. Gi v en the time, cost and complexities involved in proceeding with lit igation,

the Trustee has determined that the proposed settlement with the IRS represents a fair

compromise of the Claims. The Trustee's analysis of the proposed settlement shows that the

BLMIS estate will recover the significant majority of the funds owed to the estate by the

IRS. The IRS will have returned more than ninety-eight percent of the Payments that it

received from BLMIS since January 1, 2003, for distribution to BLMIS' customers with

allowed claims, without the Trustee having to incur the time and costs of litigation, an

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unquestionably positive result. In light of those facts, the Trustee submits that it is in the

best interests of the estate to settle with the IRS according to the terms set forth in the

Agreement.

23, The Trustee maintains that he would have prevailed at trial in recovering all

Payments to the IRS. Yet, there is always a litigation risk. The Agreement allows the

Trustee to avoid potentially protracted litigation, The abi lity to avoid the time and expense

associated with litigating this matter, combined with the fact that the Agreement will result

in a very substantial recovery, makes the settlement embodied by the Agreement extremely

beneficial to BLMIS' customers.

II. An I n j unct ion under Section 105(a) Is Warranted and Necessary.

24. The T rustee seeks a narrowly tailored injunction, which, given the unique

circumstances of the BLMIS liquidation in general and the IRS Settlement in particular, is

both appropriate and necessary.

25. The Agreement requires the Trustee to use his best efforts to obtain approval

of the Order as promptly as practicable, which shall contain a permanent injunction from the

Banluuptcy Court, pursuant to Section 105(a) of the Bankruptcy Code "permanently

enjoining any person, including any Foreign Accountholder (including for the avoidance of

doubt, any Erroneously Paid Foreign Accountholder), and anyone acting on its behalf or in

concert or participation with such Foreign Accountholder, from asserting any claim or action

against the IRS, the United States or the Trustee which arises from or relates to any

Payments allegedly made on behalf of a Foreign Accountholder by BLMIS pursuant to the

requirements of Code sections 1441 and 1442... " subject to certain exceptions. Agreement,

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a. The I n j unction Is Narrowly Tailored and All Claims Subject to theInjunction Are Derivative of the Trustee's Claims.

26. Thi s Court has subject matter jurisdiction to grant the injunction because the

claims that the Trustee seeks to enjoin are direct claims over which the Trustee has

"exclusive standing" to assert.

27, Pur suant to 28 U.S.C. ) 1334(b), district courts (and therefore bankruptcy

courts) have original jurisdiction over civil proceedings "arising under" and "arising in" and

"related to" cases under title 11. 28 U.S.C. $ 1334(b), See also In re Adelphia Comme'ns

Corp., 2006 WL 1529357, at ~6 (Bankr. S.D.N.Y. June 5, 2006). "Related to" jurisdiction

to enjoin a third party dispute exists where the subject of the third party dispute is property

of the estate or the dispute would have an effect on the estate, In re Johns Manville Corp.,

517 F.3d 52, 65 (2d Cir. 2008), acatedck remanded on other grounds, -U,S, -, 129

S,Ct, 2195, 174 L.Ed.2d 99 (2009), crffg in partck rev'g in part, 600 F,3d 135 (2d Cir.

2010); In re Delta Airlines, Inc., 374 B.R. 516, 525 (S,D.N, Y. 2007).

28. ThisCourt's recent decision inIn re Dreier LIP,

2010 WL 1707737 (Bankr.

S.D.N.Y. April 28, 2010), is instructive on the issue of subject-matter jurisdiction in a

situation similar to that created by Madoff s Ponzi scheme. Mare S, Dreier ("Dreier"), who

was the sole equity partner of Dreier LLP ( "Dreier LLP"), committed an extensive fraud

against his clients by sell ing them sham promissory notes (the "Notes" ) from 2004 to 2008,

Id. at ~1. GSO, an investment manager for certain purchasers of Notes, transferred over a

hundred million dollars to Dreier LLP accounts. Id . at ~3. When the fraud was revealed,

Dreier and Dreier LLP filed bankruptcy cases. In an effort to settle potential avoidance

actions against GSO, the Chapter 11 Trustee and Chapter 7 Trustee, along with GSO,

entered into a settlement agreement, whereby GSO would contribute approximately $10

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million, plus artwork with an approximate value of $3 million, to the debtors' estates in

exchange for a release and injunction against third-party claims. Id, at ~4.

29. In con sidering subject-matter jurisdiction, the Court fi rst found that it

"plainly" had jurisdiction to bar general creditors of the estates from seeking to recover their

claims from the funds at issue the funds transferred by Dreier LLP to GSO, Id . at ~15.

The Court explained that principles stated in Hirschv, FDIC (In re Colonial Realty Co,),

980 F,2d 125 (2d Cir. 1992), which recognized that the automatic stay barred an action by

the FDIC to recover property that the debtor had transferred before bankruptcy, and Keene

Corp. v. Coleman (In re Keene Corp.), 164 B,R. 844, 850 (Banla. S,D,N.Y. 1994), which

held that a bankruptcy trustee alone has standing to maintain avoidance actions, supported

the Dreier holding. Id . at ~1 5-16. B a sed on these principles, the Court reasoned, the

bankruptcy court could permanently enjoin "derivative" creditor claims on avoidance funds

because "[a]bsent that power, the Trustees will be hampered in their ability to pursue and

ultimately settle fraudulent transfer claims from a transferee fearful of paying twice for the

same transfer once on the Trustees' claim and a second time on the derivative claim," Id.

at ~16 (citing SECv, Drexel Burnham Lambert Group, Inc. (In re Drexel Lambert Group,

Inc,), 960 F,2d 285, 293 (2d Cir. 1992).

' The Court in Dreierwent on to determine that the injunction sought exceeded the Court's

jurisdiction for reasons not applicable in this case. Specifically, the Court found that the Dreiei

injunction did not sufficiently identify the entities being released and was not limited to claimsaffecting the property of the estate or the administration of the estate. In re Dreier LLP, 2010 WL

1707737, at *16-17. Fol lowing this decision, the Dreier trustee filed a renewed motion for approval

of the settlement agreement with a more tailored injunction. By order dated June 8, 2010, the Courtapproved the settlement and entered the injunction sought by the Dreie>trustee [Case No. 08-15051

(SMB) ECF No. 610]. The injunction entered enjoined all creditors and parties in interest in the casefrom commencing or continuing any action against any of the released parties where the action is

based on Mare Dreier's or Dreier LLP's misconduct and for which there is no independent basis to

bring suit. The order granting the modified injunction was recently upheld by the District Court. SeeIn re Dreier LLP, 2010 WL 3835179, at *4-5 (S.D.N.Y. Sept. 10, 2010).

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30. Here , the Trustee has "exclusive standing" to assert the causes of action

because they belong to the Debtors' estate. Picked v. Fox,2010 WL 1740885, at ~5 (Bankr.

S.D.N, Y. May 3, 2010); McHalev.Alvarez (In re The103I Tax Group, LLC), 397 B,R. 670,

679 (Bankr. S.D.N.Y. 2008); Goldinv, Primavera Familienstiftung, Tag Assocs, Ltd. (In re

Granite Partners L.P,), 194 B.R. 318, 324-25 (Bankr. S.D.N.Y. 1996). The Second Circuit

has stated that "[i]f a claim is a general one, with no particularized injury arising from it, and

if that claim could be brought by any creditor of the debtor, the trustee is the proper person

to assert the claim, and the creditors are bound by the outcome of the trustee's action."

Picard v. Fox, 2010 WL 1740885, at *5 (quoting St. Paul Fireck Marine Ins. Co. v.

PepsiCo, Inc., 884 F.2d 688, 701 (2d Cir. 1989)).

31. In addition to the above authorities, the proposed injunction is consistent with

the injunction recently entered by the Court in Dreier, which excluded from the scope of the

injunction actions where there is an independent basis on which to bring suit. In re Dreier

LLP, 2010 WL 1707737, at ~16-17, aff'd, 2010 WL 3835179, at *4-5 (S.D.N.Y. Sept. 10,

2010) (upholding injunction and endorsing pro rata distribution for similarly situated

victims of a Ponzi scheme). The Trustee, in exercising his exclusive jurisdiction, has

reached an agreement regarding the settlement of certain claims that belong to the Debtors'

estate. An injunction is appropriate to avoid the re-litigation of claims asserted on behalf of

all customers and creditors that have been resolved by the Trustee, particularly where the

Trustee has resolved those claims in a manner enormously beneficial to the Estate.

32. Fur t her , the claims that the Trustee seeks to enjoin are those that would

impact the administration of the liquidation. Courts have repeatedly enjoined suits against

non-debtor third parties to protect the administration of the estate. See, e.g., In re Adelphia,

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2006 WL 1529357, at *4 (" The Bankruptcy Court's injunctive powers. . . i n cl ude 'the

power to enjoin the Defendants from proceeding against non-debtor third parties .. . where,

as here, the actions against such third parties have at least a conceivable effect upon the

Debtors or implicate the interpretation or enforcement of this Court's orders,'") (internal

citation omitted); In re AP Indus., 117 B,R. at 801 02 (" The large majority of the courts

which have considered the question have held that the bankruptcy courts have the power to

restrain legal action by creditors of the debtor against non-debtor third parties, in certain

circumstances...,") (quoting In re Monroe8'ell Serv., Inc., 67 B.R. 746, 751 (Bankr, E.D.

Pa. 1986)); In re Calpine Corp., 365 B.R, at 409 n,20. Enjoining such claims is necessary to

protect the proper administration of this liquidation.

33. If t h ese claims were allowed to be asserted, claimants would be permitted to

side-step the jurisdiction of this Court, the claims processes this Court has put into place, the

SIPA distribution scheme mandated by Congress, and the statutory bar date as determined

by section 78fff-2(a)(3) of SIPA, See generally SIPCv. BLMIS, 424 B.R. 122 (Bankr.

S,D.N, Y. 2010). In essence, those claimants would be inequitably obtaining property that

should not be available to them based on the previous decisions of this Court regarding the

claims administration process and the net equity calculation, to the detriment of other

' The standard for a Rule 7065 injunction is inapplicable when an injunction is sought under section

105 of the Bankruptcy Code. See In re Lyondejl Chem. Co., 402 B.R. 571, 588 n.37 (Bankr.

S.D.N.Y. 2009). The Court may enjoin actions against the IRS if (i) a third pa>ty suit would impairthe couit's jurisdiction with respect to a case before it or (ii) the third party suits threaten to thwaite or

frustrate the debtor's reorganization effotts and the injunction is necessary to preserve or protect thedebtor's estate. See In re Keene Corp., 162 B.R. 935, 944 (Bankr. S.D.N.Y. 1994); In re Calpine

Corp., 354 B.R. 45, 48 (Bankr. S.D.N.Y. 2006); Garri~ v. Lefflev (In re Newnan), 71 B.R. 567, 571

(S.D.N.Y. 1987), The Second Circuit recently upheld an anti-litigation injunction in the receivershipcontext, finding tha t the in junction assisted the receiver in managing the receivership and

maintaining control over receivership assets. SECv, Byers, 609 F.3d 87, 92-93 (2d Cir. 2010).

Similarly, in th e i nstant case, the in junction sought wo uld pr event in terference with theadministration of the BLMIS estate,

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claimants who follow the Court's rules. See SIPCv. BJMIS, 424 B.R. 122 (Bankr. S.D,N.Y.

2010); Order on Application for an Entry of an Order Approving Form and Manner of

Publication and Mailing of Notices, Specifying Procedures For Filing, Determination, and

Adjudication of Claims; and Providing Other Relief entered on December 23, 2008 [ECF

No, 12]. As this Court noted with respect to the defendants in Picard v, Fox, "any judgment

awarded to the fFor defendants] would exceed their entitlement to BLMIS distribution

under SIPA and this Court's Net Equity Decision," Picardv. Fox, 2010 WL 1740885, at

~10. Indeed, permitting those with allowable customer claims to pursue the IRS outside of

the liquidation would create the potential for double recovery. Thus, in the absence of an

injunction, potential claimants would be able to eviscerate the equitable distribution

architecture that lies at the core of both SIPA and the Bankruptcy Code to their own

individual benefit.

34, M or eover, the Trustee is recovering the significant majority of the amount of

the Payments made by BLMIS or Madoff to the IRS. It would be pointless to bring suit

against the IRS when the IRS, by making the Settlement Payment, will have already

returned the vast majority of the Payments to the Trustee. Once the Settlement Payment is

made, the IRS will have relinquished control over the funds. It would be unjust to subject

the IRS to the possibility of double exposure and protracted lit igation with va rious

claimants, particularly when the Order provides a mechanism for claimants to fairly enjoy

the benefits of the Settlement Payment.

35. Fin a l ly, the injunction is narrowly tailored, protecting the IRS only in relation

to the Payments. The injunction and release are "narrowly drawn and are necessary to

prevent relitigation of p recisely the claims that were negotiated and resolved by the

17


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Settlement Agreement," In re Delta Airlines, Inc., 374 B,R. at 526, Accordingly, this Court

has the authority to grant the injunction sought.

b. The C ustomer Fund Will Receive Substantial Benefit from the IRS

Settlement and the Unique Circumstances of the Case Make theInjunction Appropriate.

36. The IRS Settlement will bring approximately $326 million into the Customer

Fund for dist ribution to customers with allowed claims. T h i s amount represents a

significant recovery for the benefit of customers. As such, the principles set forth in the

controlling Second Circuit case,Deutsche Bank AGv, Metromedia Fiber Net>ork Inc. (In re

Metromedia Fiber Netivork, Inc.), 416 F.3d 136 (2d Cir. 2005), are satisfied. In

Metromedia, the Second Circuit held that nonconsensual nondebtor releases and injunctions

are proper "in truly unusual circumstances" where, among other things, the debtor's estate

has received substantial consideration. 416 F.3d at 141-143; see also SECv. Drexel

Burnham Lambert Group, Inc. (In re Drexel Lambert Group, Inc.), 960 F.2d 285, 293 (2d

Cir. 1992); Class Five Nev. Claimantsv. Doe> Corning Corp, (In re Dovi Corning Corp.),

280 F.3d 648, 657-58 (6' Cir. 2002).

37. The IRS Settlement represents a significant milestone in this liquidation

proceeding. The Settlement Payment constitutes a significant recovery of the Trustee's

demand amount against the IRS for the recovery of amounts paid by BLMIS to the IRS as

backup withholding on behalf of Foreign Accountholders since January 1, 2003. The

' Al though certain of the cited case law addresses injunctions in the context of a p la n of

reorganization, it is clear that injunctions pursuant to section 105 are not limited to reorganization

proceedings. See, e,g., Apostolou, 155 F.3d at 882 (section 105 injunction applicable in liquidation

proceeding); In re AP Indus., 117 B.R. at 201 (" The court will have ample power to enjoin actionsexcepted fiom the automatic stay which might interfere in the rehabilitative process whether in a

liquidation or in a reorganization case."). The same principles apply to injunctions required insettlement agreements. See In re Dreier LLP, 2010 WL 1707737 (Bankr. S.D.N.Y. April 28, 2010);

see also In re Mrs. steinberg 's Kosher Foods, Inc.,278 B.R. 358 (Bankr. S.D.N.Y. 2002),

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increase in customer property by virtue of the IRS Settlement is dramatic and would

constitute a significant increase in the amounts available for future pro rata distributions that

will be made to BLM IS customers with allowed claims. A s t h is Court has already

recognized in the Picardv. Foxproceedings, the IRS Settlement would provide a unique

benefit to the estate that is certainly worthy of the protection of a carefully tailored

injunction. As the Court observed, an injunction pursuant to section 105(a) "is appropriate

and necessary to preserve the integrity of the SIPA proceedings and the Trustee's settlement

negotiations for the benefit of the BLMIS estate and all of its customer claimants." Picard

v, Fox, 2010 WL 1740885, at *9.

38. The re is no doubt that the injunction is necessary and fair. The IRS has made

it clear to the Trustee that the in order to achieve a settlement, and as a precondition to such

a settlement, the IRS and the U.S, Treasury must be protected from paying out the same

claims more than once. The proposed injunction is, therefore, an essential part of the

settlement. Given the value of the proposed settlement, and that the Settlement Payment

represents virtually all of the amount of the Payments, it is not surprising that the IRS wishes

to have finality and be certain that it will not be required to satisfy the same claims twice.

As this Court noted in Picardv. Fox, without an injunction, the IRS would be "fearful of

paying twice for the same transfer." Picardv. Fox, 2010 WL 1740885, at ~9 (quoting In re

Dreier I IP, 2010 WL 1707737, at ~16). The Second Circuit has held that an injunction is

appropriate in a situation where, but for the injunction, the settlement would be less likely to

occur. See e,g., SECv. Drexel Bzvnham Lambert Group, Inc,, 960 F.2d at 293. In such

circumstances, the Court may use its powers to enjoin in order to foster the conclusion of a

settlement by providing the f inality sought by the IRS, See, e,g., In re Johns-Mansville

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Corp., 68 B.R. 618, 626 (Bankr, S.D.N.Y. 1986) (Lifland, J.) (enjoining further actions

against settling defendants under ) 105(a) in order to "preserve the rights of all asbestos

claimants by establishing a corpus of funds from which all can collect" and to "prevent[] the

inequitable, piece-meal dismemberment of the debtor's estate... "), aff'd, 78 B.R. 407

(S.D.N.Y. 1987), aff'd sub nom Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir.

1988).

39. A cc ordingly the terms of the injunction seek to satisfy the requirements set

forth in Metromedia:the opportunity offered to the estate by the IRS Settlement must be

considered "unusual circumstances" and the IRS Settlement will provide a substantial

benefit to the BLM IS estate and in turn, BLMI S's customers. As su ch, the narrow

injunction sought by the Trustee should be granted.

CONCLUSION

40. The T r ustee submits that the Agreement should be approved for tw o

overarching reasons: (a) to avoid lengthy and burdensome litigation, and (b) and because it

represents a reasonable compromise of the claims that benefits the estate and the customers

of BLMIS. Accordingly, since the Agreement is well within the "range of reasonableness"

and confers a substantial benefit on the estate, the Trustee respectfully requests that the

Court enter an Order (i) approving the Agreement, and (ii) issuing the permanent injunction.

NOTICE

41. In accordance with Bankruptcy Rules 2002 and 9019, notice of this Motion

has been given to (i) SIPC; (ii) the SEC; (iii) the IRS; (iv) the United States Attorney for the

Southern District of Ne w Y ork ; and (v ) th e Foreign Accountholders (including the

Erroneously Paid Foreign Accountholders), The Trustee shall notify, by way of the ECF

filing that wi ll be made, each person or entity that has fi led a notice of appearance in this

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case. Additionally, the Trustee will post this Motion, proposed order and Settlement

Agreement on the Trustee's website, www.madofftrustee,com. The Trustee submits that no

other or further notice need be given and respectfully requests that the Court find that such

notice is proper and sufficient.

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WHEREFORE, the Trustee respectfully requests entry of an Order (i) approving the

settlement agreement between the Trustee on the one hand and the United States of

America, on behalf of the IRS, on the other and (ii) enjoining customers and creditors of

BLMIS who filed or could have filed claims in the liquidation from pursuing claims against

the IRS, substantially in the form of Exhibit "A".

Dated; New York, New York Respectfully submitted,

November 22, 2011

/s/Elyssa S. I atesBaker & Hostetler LLP

45 Rockefeller PlazaNew York, New York 10111

Telephone: (212) 589-4200Facsimile: (212) 589-4201

David J, Sheehan

Email: dsheehan bakerlaw.comMare E, Hirschfield


Elizabeth A. Smith

b lElyssa S. Kates

b kAmy E. Vanderwal

Email: avanderwal r bakerlaw.com

Attorneys for Irving H, Picard, Trustee for theSubstantively Consolidated SIPA Liquidation

of Bernard L. Madoff Investment SecuritiesLLC and Bernard L. Madoff

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EXHIBIT A


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UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NKW YORK



Plaintiff-Applicant,

(Substantively Consolidated)


SECURITIES LLC,

Defendant.

In re:

BERNARD L, MADOFF,

Debtor.

ORDER PURSUANT TO SECTION 105(a)OF

THK BANKRUPTCY CODE AND RULES 2002 AND 9019 OF

THE FEDERAL RULES OF BANKRUPTCY PROCEDURE APPROVING ANAGREEMENT BY AND BETWEEN THE TRUSTEE AND THE UNITED

STATES OF AMERICA ON BEHALF OF THK INTERNAL REVENUE SERVICE

Upon the motion dated November 22, 2011 (the "Motion" ) of Irving H. Picard (the

"Trustee" ), as trustee for the liquidation of the business of Bernard L. Madoff Investment

Securities LLC ("BLMIS") under the Securities Investor Protection Act, 15 U.S,C. ($ 78aaa et

seq. ("SIPA"), and the substantively consolidated estate of Bernard L. Madoff ("Madoff," and

together with BLMIS, collectively, the "Debtors" ), seeking entry of an order, pursuant to

sections 105(a) of the United States Bankruptcy Code, 11 U.S.C, $) 101 et sece. (the "Bankruptcy

Code" ) and Rules 2002 and 9019 of the Federal Rules of B an kruptcy Procedure (the

"Bankruptcy Rules" ), approving the agreement dated as of November 21, 2011, by and among

the Trustee on the one hand, and the United States of America (collectively with its agencies,

offices and employees, the "United States" ), on behalf of the Internal Revenue Service (the


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"IRS"), on the other hand, (the "Agreement" )' [at ECF No. , at Ex hi bit " "] ; and the Court

having considered the Affidavi t of Irving H, Picard executed on November 22, 2011 in support

of the Motion [ECF No. ; al l ob jections to the Motion and responses thereto (collectively, the

"Objections" ); and it further appearing that the relief sought in the Motion is appropriate based

upon the record of the hearing held before this Court on December 21, 2011, to consider the

Motion; and after due deliberation and sufficient cause appearing therefor; the Court hereby

makes the following findings of fact and conclusions of law. The f indings and conclusions set

forth herein constitute the Court's findings of fact and conclusions of law pursuant to Bankruptcy

Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014, To the extent

any of the following findings of fact constitute conclusions of law, they are adopted as such. To

the extent that any of the following conclusions of law constitute findings of fact, they are

adopted as such.

FINDINGS OF FACT

A. The U n i ted States is a sovereign nation that exists pursuant to the Constitution of

the United States of America.

B. The IRS is a bureau of the Department of the Treasury of the United States and is

authorized to carry out the responsibilities of the Secretary of the Department of the Treasury

pursuant to section 7801 of the Internal Revenue Code (the "IRC").

C. Pur suant to an order (the "Protective Order" ) entered by the Honorable Louis L,

Stanton, U,S.D.J., in the matter captionedSecurities and Exchange Commissionv, Madoff, etal,,

Case No. 08 CV 10791 (LLS) (the "District Court Matter" ) [Docket No. 4], the Trustee was

'All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement.'References herein to "ECF No. " s hall refer to docket entry numbers in the above-captioned matter, 08-1789

(BRL),


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"appointed trustee for the liquidation of the business of [BLMIS] with all the duties and powers

of a trustee as prescribed in SIPA.".

D. Pri o r to December 11, 2008 (the "Filing Date" ), BLMIS and/or Madoff made

payments (the "Payments" ) to the IRS, purportedly on behalf of the foreign accountholders (the

"Foreign Accountholders") set forth on Exhibit "C" to the Motion, allegedly pursuant to the

requirements of sections 1441 and 1442 of the IRC as a withholding tax on income allegedly

earned by the Foreign Accountholders. However, there is no known record of BLMIS having

purchased or sold any securities for the benefit of the Foreign Accountholders, and in addition,

there is no record of any dividends actually having been paid with respect to accounts held by the

Foreign Accountholders. Therefore, the Foreign Accountholders did not earn any income

through their accounts with BLMIS (the "Accounts" ) and the Payments made to the IRS falsely

identified the funds as income tax withholding.

E. The I R S has previously paid certain refund claims relating to the Payments to

certain Foreign Accountholders.

F. The T rustee believes that all of the Payments are recoverable. The United States

disputes that it is liable for the return of all the Payments. After a review of the relevant records

and extensive discussions with counsel for the United States concerning the factual background

and certain legal arguments, and a consideration of the costs and uncertainty inherent in any

litigation, the Trustee, in the exercise of his business judgment, and the United States have

determined that it is appropriate to resolve this matter rather than litigate the avoidance or refund

of the Payments.

G. The sett lement (the "IRS Settlement" ) involves the repayment of approximately

Three Hundred and Twenty-Six Mi l li on Un ite d States Do llars ($326,000,000.00) (the


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"Settlement Payment" ) to the Trustee for the benefit of BLMIS customers with allowed claims.

This represents a significant recovery for the victims of the Ponzi scheme, while at the same time

avoiding the potentially significant costs of protracted litigation.

H. The T r ustee believes that the terms of the IRS Settlement fall wel l above the

lowest point in the range of reasonableness and, accordingly has stated that the Agreement

should be approved by this Court.

CONCLUSIONS OF LAW

1. This Cour t has subject matter jurisdiction to consider the Motion and the relief

requested therein, including granting the permanent injunction sought, in accordance with 28

U.S.C. $$ 157 and 1334 and the Standing Order of Referral of Cases to Bankruptcy Judges of the

United States District Court for the Southern District of New York dated July 10, 1984 (Ward,

Acting C,J,).

2. Venu e of this case in this district is proper pursuant to 28 U,S.C. ) 1409.

3. Prop er, timely, adequate and sufficient notice of the Motion, the hearing thereon,

and the related objection deadline has been given in accordance with Bankruptcy Rules 2002 and

9019. Such notice constitutes good, appropriate and sufficient notice, and no other or further

notice need be given.

4. The Co ur t ha s considered the probability of s uccess in any li ti gation, the

complexity of any li ti gation, and the attendant expense, inconvenience, and delay, and the

paramount interest of the customers and other creditors. In addition, the Court may credit and

consider the opinion of the Trustee and his counsel in determining whether a settlement is fair

and equitable.


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5. The C ourt concludes that the IRS Settlement falls well above the lowest point in

the range of reasonableness, and is fair, reasonable, equitable and in the best interests of the

BLMIS estate.

6, The A g r eement wil l confer a significant benefit on BL MI S customers with

allowed claims,

7. A n inj u nct ion under Sections 105(a) and 362(a) of the Bankruptcy Code is

warranted and necessary. I ssuance of the permanent injunction, precluding prosecution of

actions by third parties against the IRS or the United States that are duplicative or derivative of

claims belonging to the Trustee, is necessary and appropriate to carry out provisions of the

Bankruptcy Code, to prevent any entity from exercising control or possession over property of

the estate, to preclude actions that would have a conceivable effect or adverse impact upon the

Debtors' estate or on the administration of the liquidation proceeding, and/or to avoid relitigation

or li tigation of cla ims that were or could have been asserted by the Trustee on behalf of al l

customers and creditors.

For all of the foregoing reasons, it is hereby

ORDERED, that the Motion is granted in its entirety; and it is further

ORDERED, that the Agreement between the Trustee on the one hand and the United

States on the other hand is hereby approved, and the parties to the Agreement are authorized and

directed to take such action as is necessary to effectuate the terms of the Agreement; and it is

further

ORDERED, that any BLMIS customer or creditor of the BLMIS estate who filed or

could have filed a claim in the liquidation proceeding (including, but not limited to, the Foreign

Accountholders and the Erroneously Paid Foreign Accountholders), or anyone acting on their


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behalf or in concert or participation with them, or anyone whose claim in any way arises from or

is related to BL MI S or the Madof f Ponzi scheme (the "Enjoined Entities" ), is hereby

permanently enjoined from asserting any claim against the IRS, the United States or the Trustee

which arises from or relates to payments allegedly made by BLMIS pursuant to IRC sections

1441 and 1442, or that is duplicative or derivative of the claims that have or could have been

brought by the Trustee against the United States or the IRS (collectively, the "Enjoined Claims" ),

rovided however, that the foregoing shall not bar claims or actions brought against the BLMIS

estate by creditors or against the customer fund by customers, provided that such creditors or

customers filed claims in the SIPA Proceeding prior to the statutorily mandated claims bar date

(the "Excepted Claims" ); and it is further

ORDERED, that if notwi thstanding the foregoing provisions of the Order, the United

States or the IRS is nonetheless rendered or adjudged liable to any person or entity, including

any Foreign Accountholder, in respect of any claims or actions arising from or relating to

payments allegedly made by BLMIS pursuant to IRC sections 1441 and 1442, whether by a final

and non-appealable order, judgment, settlement agreement or otherwise, such liability shall be

satisfied by the Trustee from the Reserve (as that term is defined in the Agreement); and it is

further

ORDERED, that to the extent that the injunction set forth in this Order is held to be

invalid or inapplicable or unenforceable against any Enjoined Entity, and/or a court permits an

action to proceed with respect to Payments other than an Excepted Claim, any such Enjoined

Entity seeking to assert an Enjoined Claim shall assert any such Enjoined Claim in the

Bankruptcy Court against the Trustee, and not against the United States or the IRS; and i t i s

further


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ORDERED, that this Court shall retain exclusive jurisdiction over any and all disputes

arising under or otherwise relating to this Order and the Settlement Agreement.

Dated: New York, New York

, 2011

HONORABLE BURTON R. LIFLANDUNITED STATES BANKRUPTCY JUDGE


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EXHIBIT B


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SKTTLKMKNT AGRKKMK%T

This SETTLEMENT A GREEMBNT (t he "A gr eement"}, d a ted as of

November 21, 2011, is made by and between Irving H. Picard, in his capacity as the trustee (the

"Testee") for the substantively consolidated liquidation proceedings of Bernard L, MadoffInvestment Securities LLC ("BLMIS"} under the Securities Investor Protection Act of 1970, asamended from time to time ("SIPA"), and estate of Bernard L. Madoff ("Madoff"}, on the one

hand, and the United States of America {the "United States" ), on behalF of the Internal RevenueService {the "IRS"), on the other hand (each of the Trustee and the IRS shall be referred to

individually as a "~Part ", and collectively as the "Parties" ),

BACKGROUND

A. BLM IS and its predecessor were registered broker-dealers and members of the

Securities Investor Protection Corporation ("SIP C"),

B, O n December 11, 2008, Madoff was arrested by federal agents for criminaloffenses including securities fraud, investinent adviser &aud, and mail and wire fraud. OnDecember 11, 2008, the United States Secunties and Exchange Commission {the"Commission")filed a complaint in the United States District Court for the Southern District of New York (the"District Court" ) against, among others, BLMIS and Madoff captioned SEC v, BLMIS et al.,

No, 08-CV-10791(LLS).

C. O n December 15, 2008, pursuant to section 78eee{a){4)(A) of SIPA, the

Commission consented to a combination of its own action with the application of SIPC.Thereafter, SIPC filed an application in the District Court under section 78eee(a)(3) of SIPAalleging, interah'a, that BLMIS was not able to meet its obligations to securities customers as

they caine due and, accordingly, its customers needed the protections afforded by SIPA. On

December 15, 2008, the District Coint granted the SIPC application and entered an order underSIVA, which, in pertinent pait, appointed the Trustee for the liquidation of the business ofBLMIS under section 78eee{b){3) of SIPA and removed the case to the United States BankruptcyCourt for the Southern District of New York (the "Bankru tc Court" ) under section 78eee(b}(4)

a 1 " i i I' " . -07 o ) ( " d'The Trustee is duly qualified to serve and act on behalf of the estate of BLMIS.

D. O n M arch 12, 2009, in connection with his scheme to conduct a massive

Ponzi scheme through BLMIS, Madoff pleaded guilty to an 11 count information filed by theUnited States Attorney's Office for the Southern District of New York, which charged him withsecurities fraud, investment advisor fraud, mail fraud, wire fraud, two counts of international

money laundering, money laundering, false statements, perjury, false filings with the SEC, andtheft from an employee benefit plan, On June 12, 2009, Madoff was sentenced principally to150 years' imprisonment,

E, P ursuant to section 78fff-1{a) of SIPA, the Trustee has the general powers of a

bankruptcy trustee in a case under Chapter 7 of the United States Bankruptcy Code, as amendedRom time to time (the "Bankru tc Code" ), as well as the powers granted pursuant to SIPA.


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Chapters 1, 3, 5 and subchapters I and II of Chapter 7 of the Bankruptcy Code apply to the SIPAProceeding to the extent consistent with SIPA,

F. U n der SIPA, the Trustee is charged with the responsibility to marshal and

liquidate the assets of BLMIS, and to recover customer property for distribution to BLMIScustomers in satisfaction of allowed customer claims, including through the recovery fromBLMIS customers of preference payments and fraudulent transfers made to them by BLMIS.

6. P r io r t o D ecember 15, 2008, BLMIS and/or Madoff made payments("~pa cuts") to the IRS, purportedly on behalf of foreign entities or persons which had accounts

with BLMIS (the "Forei A c countholders"), allegedly pursuant to the requirements of sections1441 and 1442 of the Internal Revenue Code of 1986, as amended and in effect (the "Code*'),which require persons who pay income to nonresident aliens and foreign corporations to

withhold tax equal to 30% of the income.

H. T h ere is no known record of BLMIS having purchased or sold any securities

for the benefit of the Foreign Accountholders, and in addition, there is no record of anydividends actually having been paid wi th respect to accounts held by t he ForeignAccountholders. Thus, the Payments made to the IRS falsely identified the funds as income taxwithholding to give the investment advisory arm of BLMIS an air of legitimacy and to avoid anyinquiries from the IRS.

I, T h e IRS has erroneously paid certain refimd claims relating to Payments to

certain Foreign Accountholders ("Erroneousl Paid Forei n Accountholders").

.J. B a sed on the foregoing, the Trustee and the United States wish to resolve thematters described above without the expense, delay, and uncertainty of litigation.

NO%, THKRKIt'ORK, in consideration of the foregoing, of the mutualcovenants, promises and undertakings set forth herein, and for good and valuable consideration,the mutual receipt and sufficiency of which are hereby acknowledged, the Trustee and the United

States agree as follow.

AGREEMENT

1, Pa ment to Trustee. Wi th respect to payments made by BLMIS and/or

Madoff allegedly pursuant to the requirements of Code sections 1441 and 1442, which requirepersons who pay income to nonresident aliens and foreign corporations to withhold tax equal to

30% of the income, in complete satisfaction and settlement of all claims by the Trustee againstthe United States, whether brought as a claim or suit for refmd under the Code or an avoidanceor other action under the Bankruptcy Code, or any other action which could be brought, theTrustee and the United States agree that the United States will make a payment of ThreeHundred and Twenty-Six Mill ion United States Dollars ($326,000,000.00) (the "Settlement

~Pa ment" ) to the Trustee for the benefit of BLMIS customers with valid claims. The SettlementPayment shall be paid to the Trustee by the United States in a reasonable period of time after theSettlement Approval Date, as defined in paragraph 6 herein. If the Settlement Payment is not

received by the Trustee within 180 days of the Settlement Approval Date, then interest willaccrue on the Settlement Payment beginning on the 181" day following the Settlement Approval


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Date, at the applicable Federal rate published for short-term debt instruments bearing annualinterest for the calendar month in which such interest begins to accrue, as set forth in section

1274 of the Code.

2. For ei n Accountholders Account Balances.To the extent the Trustee hascommenced actions in the Bankruptcy Cour t against the Erroneously Paid Foreign

Accountholders seeking, among other things, recovery of Payments which ultimately resulted inthe refund claims eironeously paid by the IRS, the Trustee shall continue those actions withoutany adjustment of the account balance. For pinposes of any claims allowance or other pending

adversary proceedings involving all other Foreign Accountholders, the Trustee shall adjust theForeign Accountholders' BLMIS account balance by crediting all Payments out of the accountsfor alleged withholding payments made to the IRS to the extent of those payments.

3, Rel ease b Trustee. In consideration for the covenants and agreements set

forth in this Agreement and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, except with respect to any rights arising under

this Agreement, the Trustee shall release, remit and forever discharge the United States and itsagencies {including the IRS), and its employees, attorneys, representatives, advisors and agentsfrom any and all past, present and future claims or causes of action (including any suit, petition,demand, or other claim in law, equity or arbitration) and fiom any and all allegations of liabilityor damages (including any allegation of duties, debts, reckonings, contracts, controversies,agreements, promises, damages, responsibilities, covenants, or accounts), of whatever kind,

nature or description, direct or indirect, in law, equity or arbitration, absolute or contingent, intort, contract, statutory liability or otherwise, based on strict liability, negligence, grossnegligence, fraud, breach of fiduciary duty or otherwise (including attorneys' fees, costs or

disbursements), known or unknown, that are, have been, could have been or might in the futurebe asserted by the Trustee against the United States or the IRS and that are based on, arise out of

or relate in any way to any Payments allegedly made on behalf of Foreign Accountholders byBLMIS pursuant to the requirements of sections 1441 and 1442 of the Code, The release

contained herein shall become effective upon the Trustee's actual receipt of the SettlementPayment without any further action by any of the Parties or the Bankruptcy Court.

4, Reserve of Settlement Pa ment b Trustee.Upon payment of the SettlementPayment by the United States to the Trustee, OneHundred and Two Million, Nine Hundred and

Ninety-Three Thousand, Seven Hundred and Twenty-Nine United States Dollars and TwentyOneCents ($102,993,729.21) of the Settlement Payment {the "Reserve" ) shall be set aside by theTrustee for the purpose of satisfying any potential administrative decisions, settlements or

judgments against the IRS, the United States or the Trustee that have been or may hereaAer beentered with respect to any Payments; provided however, that the Reserve shall not be available

to satisfy any Excepted Claims, as defined in paragraph 5 hereof, On the date that is two yearsand sixty days from the Settlement Approval Date, the Trustee may release for distribution toBLMIS customers the balance of the Reserve, provided however, that to the extent that on suchdate there exists any pending claim(s) or actions(s) with respect to the Payments, eitheradministratively or judicially, an amount sufficient to satisfy such pending claims or actions shallcontinue to be maintained in the Reserve. At such tune, the Trustee will confer with the UnitedStates to determine the appropriate amount, if any, for any continuing Reserve. The remaining


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balance of the Reserve, if any, will be available for distribution to BLMIS customers only afterthe final resolution of all such pending claims and actions with respect to the Payments.

5. Cha nnelin In 'unction,The Trustee shall seek, and this Agreement shall be

contingent upon, the issuance of a final and non-appealable order by the Bankmptcy Court thatapproves this Agreement (the "Order" ) and meets the conditions set forth in this paragraph,Specifically, such Order shall contain a provision permanently enjoining any person, including

any Foreign Accountholder (including for the avoidance of doubt any Erroneously Paid ForeignAccountholder), and anyone acting on its behalf or in concert or participation with such ForeignAccountholder, from asserting any claim or action against the IRS, the United States or the

Trustee which arises from or relates to any Payments allegedly made on behalf of a ForeignAccountholder by BLMIS pursuant to the requirements of Code sections 1441 and 1442;tsrovide1 however, that such injunction shall not bar claims or actions brought against theBLMIS estate by creditors or against the SIPA customer fund as customers, provided that such

creditors or customers filed claims in the SIPA Proceeding prior to the statutorily mandatedclaims bai. date (the "Exce ted Claims" ). Mor eover, nothing herein affects the H.ghts anddefenses of any of the Foreign Accountholders, including the Erroneously Paid ForeignAccountholders, presently engaged in litigation with the Trustee. The Order shall furtherprovide that, to the extent that the foregoing provisions of the Order are held to be invalid or

inapplicable or unenforceable against any Foreign Accountholder, including the ErroneouslyPaid Foreign Accountholders, and a court permits an action to proceed with respect to Paymentsother than an Excepted Claim, any such Foreign Accountholder seeking to assert a claim arisingfiom or relating to Payments shall assert any such claim in the Bankruptcy Court against the

Trustee, and not against the United States or the IRS because pursuant to this Agreement theUnited States is remitting funds to the Trustee (with the exception of the amounts paidpreviously to Erroneously Paid Foreign Accoimtholders). Further, the Order shall provide that if,notwithstanding the foregoing provisions of the Order, the United States or the IRS is

nonetheless rendered or adjudged liable to any person or entity, including any ForeignAccountholder, in respect of any claims or actions arising from or relating to Payments allegedly

made on behalf of a Foreign Accountholder by BLMIS pursuant to Code sections 1441 and1442, whether by a final and non-appealable order, judgment, settlement agreement or otherwise,such liability shall be satisfied by the Trustee from the Reserve, provided however, that the

United States will not accept an offer to settle any claim that will then be payable from theReserve without first meeting and conferring with the Trustee. The Trustee shall provide theUnited States with a proposed form of the Order, which shall be subject to the United States'reasonable approval.

6. Ban kr u tc C o u rt A roy a l E f f ec tive Date' Termination Reversal on

Appeal. This Agreement is subject to, and shall become effective and binding on the Parties

upon the Order becoming final and non-appealable. The date that the Order becomes final andnon-appealable shall be referred to herein as the "Settlement Approval Date." For purposes ofthis Agreement, the Order shall be considered "final and non-appealable" when (a) the time toappeal the Order has expired, or (b) if any appeal has been taken, any and all such appeals have

been fully and finally resolved without material modification of the Order, The Trustee shall usehis reasonable best efforts to obtain approval of such Order as promptly as practicable after fhedate of this Agreement. The Trustee shall provide the United States with a draft of any motion to

the Bankruptcy Court for approval of this Agreement, which shall be subject to the United


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States' reasonable approval, I f this Agreement does not become effective {a) this Agreement(other than this paragraph) shall terminate and be null and void for all purposes, (b) all of thestatements, consents and agreements contained in fhe Agreement {other than this paragraph)shall terminate and be null and void, and (c) neither the Trustee nor the United States may use or

rely on any such statement, consent, or agreement in any public statement or litigation involvingthe SIPA Proceeding, any case or proceeding relating to the SIPA Proceeding or any case orproceeding relating to BLMIS or Madoff.

7. ~Coo eration.The Trustee and the United States agree to reasonably cooperate

in connectioii with enforcing this Agreement and the Order to extinguish any claims that may beasserted in violation of the Order,

8. Authority.The Department of Justice signatory represents and warrants to the

Trustee as of the date hereof that she has the full power, authority and legal right to execute anddeliver, and to perform the obligations under, this Agreement and has taken all necessary action

to authorize the execution and delivery of, and the performance of the obligations under, thisAgreement,

9. Fur ther Assurances.The Trustee and the United States shall execute and

deliver any docmnent or instrument reasonably requested by any of them after the date of thisAgreement to effectuate the intent of this Agreement.

10. Ent i re A reement. Th is Agreement constitutes the entire agreement and

understanding between the Parties concerning the subject matter hereof, and supersedes all prioragreements, representations and understandings concerning the subject matter hereof.

11. Ame ndments Waiver.This Agreement may not be terminated, amended or

modified in any way except in a writing signed by the Parties, No waiver of any provision ofthis Agreement shall be deemed to constitute a waiver of any other provision hereof, whether ornot similar, nor shall such waiver constitute a continuing waiver.

12. ~Assi abi lit. No Par ty hereto may assign its rights under this Agreementwithout the prior written consent of the other Party hereto,

13. Successors Bound.This Agreement shall be binding upon and inure to thebenefit of each of the Parties and to the Trustee's successors and permitted assigns.

14, No Thi rd P B enef ic i . T h eParties do not intend to confer any benefit

by or under this Agreement upon any person or entity other than the Parties hereto and theirrespective successors and permitted assigns.

d i ' i ' d'

to this Agreement shall be governed and construed in accordance with federal common law, theCode, the Bankruptcy Code and SIPA, to the extent state law applies, then in accordance withthe laws of the State of New York {without regard to the principles of conflicts of law thereof).Each Patty hereby waives on behalf of itself and its successors and assigns any and all right toargue that the choice of New York law provision is or has become unreasonable in any legalproceeding.


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16. Ex c lus ive Jurisdiction.The Parties agree that any action relating in any way

to this Agreement must be brought only in the Bankruptcy Cont, to the extent that Court hasjurisdiction. No one shall bring, institute, prosecute or maintain any action pertaining in any wayto this Agreement in any court other than the Bankruptcy Court, To the extent that any one

maintains that the Banlvuptcy Court lacks jurisdiction, that dispute must be heard, in the firstinstance, by the Bankruptcy Court.

17. Ca t ions and Rules of Construction. The captions in this Agreement are

inserted only as a matter of convenience and for reference and do not define, limit or describe thescope of this Agreement or the scope or content of any of its provisions. Any reference in thisAgreement to a paragraph is to a paragraph of this Agreement. "Includes" and "including" arenot limiting,

18. Co unte ar ts E l ec tronic Co of Si na tures. Thi s A g reement andattachments may be executed and delivered in any number of counterparts, each of which so

executed and delivered shall be deemed to be an original and all of which shall constitute oneand the same document. The Parties may evidence their execution of this Agreement by deliveryto the other Patties of scanned or faxed copies of their signatures, with the same effect as thedelivery of an original signature.

19. Not ices. Any n ot ices under this Agreement shall be in writ ing, shall be

effective when received and may be delivered only by hand, by overnight delivery service, byfax or by electronic transmission to:

If to the Trustee: If to the IRS:

Irving H. Picard Jeannette Vargas

Baker k Hostetler LLP Chief, Tax k, Bankruptcy Unit

45 Rockefeller Center, Suite 1100 Office of the United States AttorneyNew York, NY 10111 for the Southern District of New York

Fax: (212) 589-4201 86 Chambers Street, Third Floor

Email: ipicard@bakerlaw,corn New York, NY 10007Fax: (212) 637-2686Email: Jeannette. Var gas@usdoj. gov

with a copy to:

Elizabeth A, SmithBaker k Hostetler LLP45 Rockefeller Center, Suite 1100New York, NY 10111

Fax: (212} 589-4201Email; esmith@bakerlaw,corn

fSignature page foltows]


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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be

executed as of the date first above written,

The Trustee for the liquidation proceedings of

Bernard L. Nadoff Investment Securities LLCand the substantively consolidated bankruptcycase of Bernard L, Madoff

By: IRVING H. PICARD Trustee

Sworn and subscribed before me this

Not llc

SPtAYA M.GRAHAMH.~ta;; '"ioiio, Stateof New York

'>. otGR65832$4Q>ga',ilia;!ir< Aaatchaatar

QA1llll'iSiofl EX@i%a: 9It2I20~


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PREET BHA1V~United States Attorney '

Attorney for the United States of America

JE TTE A , VARGASAssistant United States Attorney86 Chamber's Street, Third Flo'orNew York, NY 10007Tel: (212) 637-2678Fax', (212) 637-2686E-mail:[email protected]

Sworn and subscribed before me thisg2nh dayof .: 0 be/ , 2011,

Notary Public

DAVID FARBER,

BIOTA'RY PUBLIC, State of New YorkNo. 01 FA6214554

Quelled in New York CountyCornrnission Expires Deo. 14, 2OS3.


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EXHIBIT C


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ASCOT FUND LTD

CITCO GLOBAL CUSTODY N V FBO FAIRFIELD SENTRY LTD

PHYLLIS GUENZBURGER & FABIAN GUENZBURGER J/T WROSHSBC SECURITIES SERVICES (LUXEMBOURG) SA SPEC CUST ACCT LAGOON INVSMNT

MAYFAIR COPORATION

ORCONSULT

THE YESHAYA HOROWITZ ASSOC

BRIDGEWATER PENSION TSTEES & A MARSHAL AS TRUSTEES PATHFINDER PRIVATE PENSION

GINCO ASSURANCE CO LTD

CITCO GLOBAL CUSTODY N V FBO FAIRFIELD SENTRY LTD

SG HAMBROS BANK & TRUST BAHAMA S LIMI TED

GAURO & MARIA PIA BONAVIA JT WROS ITF CLAUDIA & ARIANA AVDA

MARGARETHA DECLERK KATHE LYNE RA BAEY JT/WROS

JENNIFER PRIESTLEY

KINGATE GLOBAL FUND LTD

IMPACT DESIGNS LIMITED

P B ROBCO INC

ROBERT PINCHOU & FABIAN GUENZBURGER J/T WROS

FARBER INVESTMENTS INC

PERRY FINANCE INC

CLAUDIO ROBERTO ZAGO OR RAYMOND P MC CARTHY OR UVANA TODA

GEO CURRENCIES LTD S A

ALLEN GOULD HOLDINGS INC MILDRED GOULD HOLDINGS INC BEN GOULD HOLDINGS, INC T/I/C

REDEMPTORIST FATHERS OF SAN JUAN INC

ZIN INVESTMENTS LTD

KINGATE EURO FUND LTD

FINANCIERE AGACHE

OPTIMAL MUL TIA DVI SORS LTD

HSBC SECURITIES SERVICES (LUXEMB OURG) SA SPEC CUST ACCT FOR PRIMEO FUND CLASS B

TELFORD LIMITED

HARLEY INTERNATIONAL FUND LTD

THE BANK OF BERMUDA LIMITED HAMILTON, SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE

BENEFIT OF CUST OF BERMUDA TST (DUBLIN) LTD, F/B/0 THEMA

PASIFIN CO INC

PLAZA INVESTMENTS INT'L

THE MIZAR FUND

LEISURE ENTERPRISES INC

OPTIMAL MUL TIA DVI SORS LTD

ASSOCIADOS INVESTIMENTO LTD

RYE SELECT BROAD MARKET INSURANCE PORTFOLIO LDC

HSBC SECURITIES SERVICES (LUXEMBOURG) SA SPEC CUST ACCT LAGOON INVSMNT


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JORGE BESSOUDO & KAREN BESSOUDO

Documents

IRS Madoff Trustee Settlement Notice and Motion Refund of Withholding Dividend Income Tax