(Bloomberg News) The trustee liquidating Bernard L. Madoff's bankrupt brokerage won court approval to make a second customer payment that may reach $2.4 billion, or seven times as much as the con man's investors have received so far.

U.S. Bankruptcy Judge Burton Lifland in New York today granted Irving Picard's request to hold back less money from a fund created to compensate investors for Ponzi scheme losses. Some customers have demanded 9 percent interest on their money. Lifland's ruling that Picard can reserve just 3 percent for interest means the payment to customers may be $1 billion larger than if he had to hold back the bigger amount, Picard has calculated.

"This is a real victory for the trustee and investors, and should accelerate claims trading," said Joseph Sarachek, managing director of claims trading at CRT Capital Group LLC, which buys and sells distressed debt.

Claims on Madoff's estate have been trading at about 65 cents on the dollar after rising from the low 60s as the customer fund swelled, according to Sarachek.

Court challenges have tied up most of the $9.1 billion that Picard has raised since Madoff's 2008 arrest, mostly through settlements. Picard has paid customers $336 million from the compensation fund, according to his website. His law firm, meanwhile, has charged more than $300 million for liquidating Madoff's brokerage.

Challenge Dropped

Money was freed up in June when a former Madoff customer, Adele Fox, dropped her challenge to the Jeffry Picower estate's forfeiture of $5 billion to Madoff's estate and more than $2 billion to the U.S., and the U.S. Supreme Court refused to hear a challenge to Picard's payment formula.

Picard now has $7.3 billion available to put into the fund for Madoff customer payments and has approved $7.5 billion of claims meriting payment, according to his website. In all, customers who filed claims lost about $17.3 billion of principal, Picard has said.

Picard says the law governing brokerage liquidations doesn't support interest payments on money lost in the Ponzi scheme. He is engaged in court fights with customers who want 9 percent interest as well as the return of lost principal, with the interest representing so-called time-based damages for the December 2008 loss of their money when the Ponzi scheme collapsed. He will hold the 3 percent reserves until a court decides the interest issue.

Picower Money

Part of the $5 billion received from Picower's estate would be used for the second payment, Picard has said. In a lawsuit, Picard accused the deceased Picower, among Madoff's largest investors, of knowing of the fraud.