NEW YORK (Reuters) - The trustee seeking money on behalf of Bernard Madoff’s victims announced yesterday a $1 billion settlement with liquidators for three large “feeder funds,” boosting payouts to the swindler’s former customers.Irving Picard said the agreement reduces the claims that the Fairfield funds, which had been affiliated with Fairfield Greenwich Group, have against a fund he administers for former Madoff customers. The claims will be reduced to about $230 million from $1.2 billion, he said.Picard said the liquidators also agreed to pay $70 million to the customer fund and to stop pursuing their own claims against Fairfield’s owners and management. The trustee is seeking money for former customers of Bernard L Madoff Investment Securities LLC.“The trustee is confident that combining forces with the joint liquidators enables the potential recovery of billions in additional dollars for the ultimate benefit of the BLMIS customer fund,” Picard’s lawyer David Sheehan said in a statement.Last week, Picard asked US Bankruptcy Judge Burton Lifland for permission to put $2.6 billion of recovered money into the customer fund and pay an initial $272 million to former Madoff customers whose claims he approved.Kenneth Krys, a licensed insolvency practitioner of the BVI and one of the joint liquidators of the Fairfield Funds, said of the agreement: “We are very pleased with the result.“These negotiations were hard given the significant issues between the parties and took significant time and resources to reach a conclusion. We are of a view that the final result is very good for the stakeholders in the three Fairfield Funds.“It provides certainty to stakeholders as to how recoveries will be received and allocated to the estates and will allow the Joint Liquidators to now focus their efforts and resources on recovery efforts rather than being hindered and diverted by the impact that the claims by the Bernard L Madoff Investment Securities trustee may have on the Fairfield Funds’ estates.”