The trustee unwinding Bernard Madoff’s defunct investment firm said he surpassed $10 billion in recoveries for victims — or about 59 percent of the principal lost in the Ponzi scheme — after reaching a settlement with two offshore funds that funneled money to the fraud.

Primeo Fund and Herald Fund, both based in the Cayman Islands, agreed to pay a total of $497 million to end lawsuits over their withdrawals from Madoff’s investment advisory business, the trustee, Irving Picard, said Monday in a statement.

If the deal is approved, the total amount recovered by Picard’s team of lawyers over the past six years will total more than $10.3 billion of the $17.5 billion lost by thousand of investors when Madoff’s scheme unraveled in December 2008.

The judge overseeing the liquidation of the New York-based company will be asked to approve the accord at a hearing scheduled for Dec. 17 in U.S. Bankruptcy Court in Manhattan, according to the statement.

Herald is to return $467 million it withdrew from Madoff’s firm in the six years before it collapsed and receive a $1.6 billion claim in the bankruptcy case, according to the statement. Picard said he’ll pay Herald $258 million, based on the agreed claim, to “catch up” to the amount paid to other claim-holders. Primeo agreed to pay $29 million and forfeit its claim, Picard said.

Both of the funds are being liquidated and have victims of their own to repay, according to the filing.

Billions Recovered

Madoff’s victims, who believed their investments were used to buy securities, have been paid almost $6 billion by Picard since he started distributing the recovered funds. The last distribution was in May, for about $349 million.

A federal jury in Manhattan in March found five former Madoff employees guilty of aiding his fraud for decades by creating fake trading documents and account statements. They were accused of targeting thousands of retirees, wealthy investors, charities and even family and friends, and getting rich in the process. The five ex-workers are scheduled to be sentenced next month.

Madoff, 76, pleaded guilty to fraud in 2009 and is serving a 150-year sentence at a federal prison in North Carolina. At least seven other people have pleaded guilty to roles in the scheme, including his brother Peter Madoff, who is serving a 10- year term.

The liquidation is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-bk-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).