The court-appointed receiver for two funds created by hedge fund operator J. Ezra Merkin filed court papers (pdf) Monday seeking authorization to make an interim distribution of $200 million to the funds’ 278 investors. Merkin’s investors lost $1.2 billion because he placed their funds with Bernard L. Madoff, who is serving a prison term of 150 years for creating the largest Ponzi scheme in history, according to a lawsuit brought by the New York attorney general’s office.

Under the $200 million distribution, if approved by Manhattan Supreme Court Justice Richard B. Lowe III, who is presiding over the attorney general’s lawsuit, People v. Merkin, 450879/09, the investors would on average recoup approximately one-third of the losses they suffered in connection with funds Merkin turned over to Madoff, according to claims the receiver, Bart M. Schwartz, has filed in connection with the Madoff bankruptcy (See Schwartz’s affirmation).