NEW YORK (Reuters) - A U.S. judge said on Friday Deutsche Bank AG may sue two offshore funds for allegedly reneging on an agreement to sell the German bank $1.6 billion of claims in the bankruptcy of swindler Bernard Madoff’s namesake firm. Deutsche Bank had accused the Kingate Global Fund and Kingate Euro Fund, which funneled client money to Madoff before his Ponzi scheme collapsed in 2008, of having “sellers’ remorse” for agreeing to sell the claims at 66 cents on the dollar in 2011, only to see their value later rise substantially. In refusing to dismiss the lawsuit, U.S. District Judge Edgardo Ramos in Manhattan pointed to language that the agreement was “firm, irrevocable and binding,” though a formal contract was never signed and much time had passed. ADVERTISEMENT “Here, two sophisticated parties agreed of their own free will to be bound,” Ramos wrote. Ramos said Deutsche Bank can also pursue a claim that the Kingate funds acted in bad faith by filing for protection under Chapter 15 of the U.S. bankruptcy code in September 2019 to escape possible litigation by the bank. Lawyers for the Kingate funds did not immediately respond to requests for comment. A spokesman for Deutsche Bank declined to comment. ADVERTISEMENT In June 2019, the Kingate funds agreed to return $860 million in a settlement with Irving Picard, the court-appointed trustee liquidating Madoff’s former firm, Bernard L. Madoff Investment Securities LLC. Madoff, 82, is serving a 150-year prison term. The case is Deutsche Bank Securities Inc v. Kingate Global Fund Ltd et al, U.S. District Court, Southern District of New York, No. 19-10823. Reporting by Jonathan Stempel in New York; Editing by Richard Chang Our Standards: The Thomson Reuters Trust Principles.