WHEN JUSTICE DEMANDS RECOVERY AND DISTRIBUTION OF BILLIONS IN STOLEN ASSETS TO VICTIMS

Overview

  • Notorious financier Bernard L. Madoff was arrested in December 2008 for orchestrating the largest Ponzi scheme in history
  • The hard work of unraveling Madoff’s labyrinthine business and recovering the assets he stole began with the appointment of Irving H. Picard as trustee overseeing the liquidation of Bernard L. Madoff Investment Securities (BLMIS)
  • The Securities Investor Protection Corporation (SIPC) retained AlixPartners as claims agent and financial advisor to assist in recovering and distributing the bulk of the estimated $17.5 billion principal stolen from Madoff’s investors. The firm’s role has since expanded to include assisting with the resolution of thousands of highly complex litigation matters.

The Madoff case demonstrates the wide range of expertise and capabilities that AlixPartners can draw upon to solve monumental problems

THE SITUATION: A GIGANTIC CRIME LEAVES A GIGANTIC PUZZLE TO SOLVE

SIPC and his team of court-appointed counsel initially retained AlixPartners as claims agent and financial advisor. In these roles, we managed (and continue to manage) the preservation and analysis of all BLMIS data to support the bankruptcy claims process and the criminal and civil investigations and litigation that followed. Determining the extent of the theft required a full understanding of all cash movements in each customer account, which in turn entailed reconstructing over three decades (four terabytes) of books and records from electronic, microfilm and paper records.

THE APPROACH: ATTACKING A FINANCIAL TANGLE WITH TECHNOLOGY

Once the data had been collected and standardized, AlixPartners drew on our deep investigative, technology and data management skills to institute a robust claims management process that included setting up a fully secured online repository and establishing controls that allow for a seamless claims review and resolution process. The repository enabled the trustee to review all details submitted by the claimant and link them to financial details extracted from BLMIS books and records. Numerous parties, including hundreds of the trustee’s lawyers and representatives from SIPC, had 24x7 access to this repository. The state-of-the-art technology allowed minute-by-minute reporting that incorporated all details from resolution of each claim.

In addition, we have assisted the trustee in recovering various assets and maintain the books and other records for the liquidation. As accountants and consultants, we continue to help the trustee manage the complex day-to-day operational challenges of the recovery process, including the determination of claims, resolution of litigation, management of recoveries, distribution of recoveries to eligible claimants, and the liquidation of BLMIS’ assets.

THE SOLUTION: MAKING ORDER FROM CHAOS TO RECOVER STOLEN ASSETS

The AlixPartners team has helped the Trustee generate positive outcomes for claimants, facilitating the review and resolution of more than 16,500 claims. As of January 2022, the trustee had recovered more than $14.5 billion of the estimated $17.5 billion principal lost and distributed approximately $14.3 billion to eligible claimants. AlixPartners has also supported the trustee’s numerous lawsuits, including clawbacks, and has assisted the federal government in its investigations and prosecutions. Meanwhile, the Trustee has successfully sold BLMIS’s market making business and recovered sizable assets.

when it really matters alixpartners 2019

WHEN IT REALLY MATTERS: EBITDA IMPROVEMENT IN SEVEN MONTHS—AND A HIGHLY PROFITABLE EXIT IN FIVE YEARS

The performance improvement achieved at our client’s newly acquired portfolio company—an $11 million increase in annual EBITDA in just seven months—speaks volumes about the importance of implementation planning early in the investment game.

  • The outcomes of this case show how AlixPartners’ approach is distinctive in other respects as well. Specifically:
  • We support our PE clients throughout all stages of the investment lifecycle, including pre-transaction, pre-close planning, value creation, and achievement of full potential. 
  • We help clients with crisis management in all stages of the lifecycle—such as determining how to turn around a target that’s in bankruptcy or getting a struggling transformation program back on track at a newly acquired business.
  • We identify, drive, and help secure sustainable improvements in portfolio companies’ performance.
  • We work side-by-side with PE sponsors and their portfolio companies’ management teams to ensure that deals deliver the intended value. 

Our unique approach enabled this client to quickly restore their distressed portfolio company’s EBITDA performance to levels that attracted a buyer willing to pay a handsome price—one that nearly doubled the investment value at exit.

The performance improvement achieved at our client’s newly acquired portfolio company—an $11 million increase in annual EBITDA in just seven months—speaks volumes about the importance of implementation planning early in the investment game.

  • The outcomes of this case show how AlixPartners’ approach is distinctive in other respects as well. Specifically:
  • We support our PE clients throughout all stages of the investment lifecycle, including pre-transaction, pre-close planning, value creation, and achievement of full potential. 
  • We help clients with crisis management in all stages of the lifecycle—such as determining how to turn around a target that’s in bankruptcy or getting a struggling transformation program back on track at a newly acquired business.
  • We identify, drive, and help secure sustainable improvements in portfolio companies’ performance.
  • We work side-by-side with PE sponsors and their portfolio companies’ management teams to ensure that deals deliver the intended value. 

Our unique approach enabled this client to quickly restore their distressed portfolio company’s EBITDA performance to levels that attracted a buyer willing to pay a handsome price—one that nearly doubled the investment value at exit.

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When it really matters in the life of a company, AlixPartners works side by side with our clients.