More than half the organizations and investors targeted for clawback payments in the Tom Petters-related bankruptcy case have asked to be dismissed from the case, signaling the likelihood of a prolonged and complicated legal battle to recover upwards of $1.745 billion.

George Singer, attorney for bankruptcy trustee Doug Kelley, told U.S. Bankruptcy Judge Gregory Kishel Tuesday that dismissal is being sought in at least 109 out of 202 lawsuits filed last fall to recover, or claw back, so-called phantom profits paid to business interests and individuals who invested with Petters in what turned out to be a $3.8 billion Ponzi scheme.

The dismissal motions were not unexpected and will be the subject of hearings and arguments later this spring. The Petters bankruptcy proceeding, including the clawback litigation, is expected to take at least another year. The bankruptcy was filed in 2008.

Singer said many of the cases have common legal issues, such as timeliness of the claim and statute of limitations questions, which will be addressed on a joint basis, probably in May. How those cases proceed has yet to be resolved, however.

Singer said the Petters bankruptcy estate and former Petters employees also plan to conduct a consolidated mediation proceeding for 45 to 50 ex-Petters employees whose bonuses and other special payments are subject to clawback suits totaling $44 million.

At least 50 lawyers were on hand for the procedural hearing. Most represented interests involved in clawback lawsuits.

Meanwhile, a report filed in bankruptcy court last week said Kelley has received partial payments from six nonprofit organizations that received contributions or gifts from Petters.

The payments range from $18,750 out of $25,000 given by Petters to the University of Minnesota Foundation to $2,800 out of $15,000 donated to St. Jude's Children's Research.

Petters, convicted of fraud, money laundering and conspiracy charges more than a year ago, is serving a 50-year prison sentence in Kansas.

David Phelps • 612-673-7269