Hedge funds Perry Capital LLC and Solus Alternative Asset
Management LP are fighting over whether they had a contract when they agreed to
trade $195 million of claims on Bernard Madoff’s bankrupt firm, amid rising
prices on the claims.
Solus sued Perry July 3 for $20 million after the trade fell
apart, saying they had a legally enforceable deal, sealed by phone and “instant
messages” on Bloomberg LP terminals. Perry denied there was a deal, “let alone
one that can be enforced in court.”
In a bankruptcy, a trader can’t get paid without a signed
document showing the seller “unconditionally and irrevocably” sold, transferred
and assigned the claim, with all rights attached. Under New York State contract
law, trillions of dollars in debt trade telephonically with a confirmation by
e- mail or on electronic systems such as a Bloomberg terminal...
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