Saturday, 1 October 2016
Last updated 16 hours ago
Mar 30 2009 | 1:14am ET
Arthur Nadel’s lawyers aren’t the only ones having a hard time getting paid in a hedge fund fraud-related courtroom battle.
A top Wall Street law firm, representing a Bernard Madoff feeder fund, has asked a judge to free up some money to pay a $154,626 bill, The New York Times reports. Schulte Roth & Zabel is overseeing part of the liquidation, including some corporate governance work, of J. Ezra Merkin’s Ariel Fund, which lost about 40% of its value due to its Madoff links.
“At this point, Ariel Fund and its counsel, who are separate and distinct from Mr. Merkin, is unable to pay its lawyers,” Schulte Roth’s Howard Schiffman complained at a hearing on March 13. Schulte says a Dec. 24 restraining order against Ariel is unfair, because the fund itself has not been accused of wrongdoing.
New York University, which says it lost $24 million of its investment in Ariel, disagrees, and is fighting to keep the fund from spending a dime of the $700 million it has left to pay costs associated with the lawsuit. The school also says Ariel doesn’t deserve the benefit of any doubt, having already breached the restraining order.
Early indications are the judge in the case might agree. Justice Richard Lowe said at the hearing “there is a major question” as to whether Ariel and Merkin, the former GMAC Financial chairman and a long-time friend of Madoff’s, are, in fact, separate and distinct.