Burton R. Lifland
Burton R. Lifland (NYLJ/Rick Kopstein)

Burton Lifland, the longest-serving judge for Southern District Bankruptcy Court, who oversaw court proceedings to wind down Bernard Madoff’s businesses and repay victims of his Ponzi scheme, died Sunday afternoon after a brief battle with bacterial pneumonia. He was 84.

Lifland, who served nearly 15 years as chief of the Southern District bankruptcy court, had been on the bench as recently as two weeks ago, court clerk Vito Genna said. The court has not yet decided who will take over the Madoff proceeding or the rest of Lifland’s docket, Genna said.

Throughout his three decades on the bench, Lifland presided over prominent bankruptcy cases including those of video rental chain Blockbuster, Bethlehem Steel Corporation, Eastern Airways, Bear Stearns Structured Funds, and power company Calpine Corporation. He also oversaw the bankruptcy case of Johns-Manville Corp., a building materials firm, in 1982 over its asbestos liabilities.

Several of his first-impression decisions in these cases were codified, said chief bankruptcy judge Cecelia Morris, including those involving Chapter 15 international insolvency laws, collective bargaining agreements, future claimants and retiree benefits.

“He was most proud of his international insolvency work,” said Morris, who knew Lifland for 27 years. “In the Johns-Manville case, he was the first to allow unknown tort claimants to be represented. That was just one way he was innovative. It hadn’t been done before.”

In 2010, he upheld a controversial method for adjudicating claims of investors in Bernard L. Madoff Investment Securities devised by the trustee charged with recouping victims’ losses. Under the trustee’s approach, investors who withdrew more money from their Madoff accounts than they deposited would not be compensated. Investors who withdrew less than they put in would be compensated by the Securities Investor Protection Corp.

A unanimous panel of the U.S. Court of Appeals for the Second Circuit upheld Lifland’s decision (NYLJ, Aug. 17, 2011).

In July 2011, Lifland dismissed a case involving 27 lawsuits filed by investors in so-called “feeder funds” seeking to force trustee Irving Picard, a Baker & Hostetler partner, to treat them as fund customers and give them part of the monies he’d recovered. But Lifland ruled they were ineligible.

“Under the plain language of SIPA [the Securities Investor Protection Act], the appellants do not qualify as customers of BLMIS regardless of the breadth of the interpretive lens,” Lifland wrote. “The appellants did not have accounts at BLMIS; only the Feeder Funds had accounts at BLMIS.”

The investors appealed the ruling to the district court. Southern District Judge Denise L. Cote agreed with Lifland’s ruling in a January 2012 decision. And in February 2013, the U.S. Court of Appeals for the Second Circuit affirmed Cote’s ruling.

On Monday, the Second Circuit appeals court upheld Lifland’s authority to block private plaintiffs from suing the estate of Madoff investor Jeffry Picower because their claims were derivative to those brought by Picard.

Lifland was appointed to the bankruptcy court bench in 1980 and became its chief judge shortly afterward. He served as chief judge of the Bankruptcy Appellate Panel for the Second Circuit in the late 1990s.

He established fee guidelines for professionals in Chapter 11 cases, implemented a mediation program for the bankruptcy court, and in the mid-1990s started one of the court system’s first electronic case filing systems.

Outside the courtroom, Lifland helped shape the field by helping to develop and write Chapter 15 of the U.S. Bankruptcy Code, the Model Law on Cross-Border Insolvency, and the United Nations Commission on International Trade Law (UNCITRAL) legislative guide on insolvency law. He was a member of the U.S. delegation to UNCITRAL.

Lifland served as a fellow of the American College of Bankruptcy, helped found the International Insolvency Institute, and served as a member of the Judicial Conference Subcommittee on Bankruptcy Case Management.

Lifland earned his undergraduate degree in 1951 from Syracuse University and his J.D. from Fordham University School of Law in 1954. Before he became a judge, he worked as an attorney for three firms: Lifland, Marcus & Angel; Levy, Levy & Ruback; and Finley, Kumble, Wagner, Heine, Underberg & Casey.

He is survived by his wife of more than 60 years, Elaine; two sons, Howard, a doctor, and Craig, a bankruptcy lawyer with Zeisler & Zeisler in Bridgeport, Conn.; five grandchildren and one great-grandchild. Funeral arrangements are private. The court will host a memorial for friends and colleagues at a later date.