The firm meets clients’ bankruptcy and restructuring needs across the country and across the Atlantic and the Pacific Oceans as well. We have leading bankruptcy and insolvency partners in New York, Los Angeles, London, and Sydney.
Bankruptcy and restructuring is the firm’s only practice not focused exclusively on litigation. In fact, the majority of our representations result in negotiated solutions. Like the rest of the firm we do try cases—a lot of them. However, we try to look for a business solution first. When we do negotiate, there is no doubt that our reputation for winning trials is a huge asset.
We regularly represent private equity firms and hedge funds seeking to maximize their recoveries in:
• Contentious workouts,
• Distressed asset sales, spin-offs or other transfers,
• Contested tender offers,
• Contested exchange offers, and
• Formal bankruptcy proceedings.
We often represent statutory committees of creditors in Chapter 11 cases where litigation and threats of litigation drive ultimate recoveries.
We advise debtors in possession and their boards of directors and/or special director sub-committees when the debtor’s corporate bankruptcy counsel is conflicted.
We represent administrators and liquidators in contentious insolvency proceedings. We frequently represent post-confirmation litigation trusts and similar entities established to bolster the estate’s recoveries through litigation or alternative dispute resolution.
When the situation calls for it, we will often turn to our deep bench of trial lawyers outside our group to partner with us in tough litigations.
We are skilled in unlocking maximum value through global compromises. However, we are also uniquely positioned to offer our clients a full range of recovery options through insolvency-related litigation. We have deep experience litigating:
• Avoidance actions,
• Cash collateral disputes,
• DIP financing disputes,
• Contested confirmations,
• Inter-company disputes,
• Fiduciary and lender liability claims,
• Auditor accountability actions;
• Fraud claims, and
• Aiding and abetting actions.
We are frequently retained to take on the big money center banks and global accounting firms. Eight years ago our firm made a decision to stop representing of the global financial institutions that are often agents in syndicated loans or major secured lenders in distressed situations. Hence, we are free to sue them and we do so often. Our firm has obtained settlements and judgments of over $20 billion against the big banks in the last 12 months alone.
Finally, we are relatively conflict free. We do not have a corporate or finance practice that create positional or “business” conflicts either. Our bankruptcy and restructuring practice was founded upon the belief that there is a need for financial restructuring counsel that has the intellectual prowess and experience to go toe to toe with the big corporate law firms but is not saddled with their conflicts.
In re Lehman Brothers Holdings Inc.
We represented Lehman Brothers Holdings Inc. and the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. in objections to claims by JPMorgan Chase Bank, N.A. and certain of its affiliates against LBHI, including an objection challenging the commercial reasonableness of the largest disposition of securities collateral we are aware of ever having taken place, resulting in a settlement through which JPMorgan agreed to pay LBHI $797.5 million.
In re G-I Holdings Inc., et al.
We secured complete summary judgment and disallowance of a $500+ million claim by the New York City Housing Authority (“NYCHA”) on behalf of G-I Holdings Inc. (“G-I”) in the U.S. Bankruptcy Court for the District of New Jersey. NYCHA asserted, under various tort and equitable theories, that G-I was responsible for the damage to NYCHA buildings caused by the presence of asbestos-containing materials sold by certain of G-I’s predecessors and installed in NYCHA buildings between approximately 1930 and 1981, and therefore also responsible for any removal costs. Initially, we persuaded the Court to dismiss all of NYCHA’s tort claims as time-barred, since NYCHA should have been aware of its asbestos-related claims in the mid-1980s. We then persuaded the Court, which issued a 106-page opinion, that not even NYCHA treats the presence of asbestos-containing materials as an immediate hazard to its tenants—which is consistent with EPA guidelines—and therefore NYCHA’s claims for equitable indemnity and restitution were not viable under New York State law.
New York Housing Authority v. In re G-I Holdings Inc.
On behalf of our client, G-I Holdings Inc. (“G-I”), we won affirmance in the U.S. Court of Appeals for the Third Circuit of the U.S. Bankruptcy Court for the District of New Jersey’s dismissal of an adversary proceeding filed by the New York City Housing Authority (“NYCHA”). The adversary complaint sought injunctive relief compelling G-I itself to remove from NYCHA’s buildings asbestos-containing materials (“ACM”) allegedly manufactured by G-I’s predecessors, and thus threatened to impose liability of at least $500-$600 million on G-I. NYCHA filed the adversary proceeding to circumvent G-I’s Plan of Reorganization, under which NYCHA’s claim would be paid, if at all, at 8.6 cents on the dollar. NYCHA argued that, because it was a regulator seeking equitable relief, its claim was not discharged under the Bankruptcy Code or the Plan. In obtaining dismissal, we persuaded the Bankruptcy Court, District Court, and finally the Third Circuit that NYCHA’s claim was ineligible for the narrow exception to discharge, since NYCHA is not an environmental regulator and does not otherwise possess police powers, was not seeking to remedy ongoing or imminent pollution, and could be adequately compensated by monetary relief.
Lehman Brothers Holdings Inc., et al. v. JPMorgan Chase Bank, N.A., et al.
We represented the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. in litigation against JPMorgan Chase Bank, N.A. concerning collateral JPMorgan obtained from Lehman pre-petition and the close out of derivatives transactions between the two institutions post-petition, resulting in a settlement that included a cash payment by JPMorgan to the Lehman estate of over $1.4 billion.
LAX Retail Magic 2 Joint Venture and HG-Magic-Concourse TBIT JV (“Hudson”) v. A-List, Inc. d/b/a Kitson Stores (“Kitson”)
We achieved an important victory for our client Hudson Group, a retailer that operates hundreds of stores in airports throughout the United States. Hudson had an agreement with famed LA boutique retailer, Kitson, to operate two stores at LAX as Kitson stores. The relationship deteriorated and Kitson began to malign Hudson to the airport authority, city officials, and Hudson’s business partners—and Kitson was threatening to sue. Instead, we went on the offensive for Hudson. At an early preliminary junction hearing, we achieved a victory over Kitson so decisive that it gutted Kitson’s case and set up Hudson for a near certain victory at trial. Kitson had no choice but to settle, agreeing to pay an amount close to what Hudson was seeking in the case.
Insolvency Services Group et al. v. Meritage Homes Corp. et al
On behalf of our client, Insolvency Services Group (ISG), we obtained summary judgment and an award of $15.7 million against Meritage Homes Corp. related to a real estate development near Las Vegas. The trial court found that ISG could enforce the repayment guaranty that Meritage signed in connection with the venture. The Ninth Circuit affirmed in full.
In re Peabody Energy Corp.
Quinn Emanuel has been engaged to act as special counsel to Peabody Energy Corporation and certain of its direct and indirect subsidiaries that are debtors and debtors in possession (collectively the “Peabody Debtors”) in their chapter 11 cases filed in the United States Bankruptcy Court for the Eastern District of Missouri (Case No. 16-42429 (BSS)) (the “Main Case”). Generally, Quinn Emanuel is advising the Peabody Debtors with respect to matters where their primary counsel (Jones Day/Armstrong Teasdale) has a conflict or other matters directed by the company. Those matters include advising the Peabody Debtors in connection with potential disputes between the Peabody Debtors’ pre-petition secured and unsecured lenders. Specifically, Quinn Emanuel has filed a complaint on behalf of the Peabody Debtors (as Plaintiffs) against Citibank, N.A. (administrative agent to certain first-lien lenders) and Wilmington Savings Fund Society FSB (trustee with respect to certain second-lien notes) as defendants. That adversary proceeding is captioned Peabody Energy Corp., et al. v. Citibank, N.A., et al. (In re Peabody Energy Corp., et al.), Adv. Proc. No. 16-04068-399 (Bankr. E.D. Mo.) (the “CNTA Adversary Proceeding,” and, with the Main Case and any other adversary proceedings that have or may be commenced, the “Peabody Bankruptcy Cases”). Generally, the CNTA Adversary Proceeding involves the Peabody Debtors’ challenges to the scope of the pre-petition secured lenders’ collateral packages (e.g., “Principal Properties” disputes). The CNTA Adversary Proceeding is one of the largest bankruptcy litigations in the United States. The lenders argue that $1.457 billion of their claims are collateralized by Principal Properties, and Peabody argues that only $455 million of those claims are collateralized by Principal Properties. The case is being litigated on an expedited track. The complaint was filed on May 20, 2016; fact discovery closed in early August; summary judgment papers were filed on August 24; oral argument on he summary judgment motions is September 12; and trial begins on September 19.
We have been retained by a group of investors that hold more than $1.3 billion of Puerto Rico sales-tax bonds, known as "COFINA" bonds. COFINA bonds make up more than $16 billion of the more than $70 billion of public Puerto Rican debt, and are the Commonwealth’s single largest credit.
As economic conditions in the Commonwealth of Puerto Rico continued to deteriorate over the last several months, the Commonwealth government has indicated to the market that it believes its debts are unpayable, and that it will seek concessions from creditors. Because Chapter 9 of the Bankruptcy Code is unavailable to Puerto Rico and its municipalities, the form of this restructuring is uncertain and without clear precedent. Nonconsensual concessions would raise constitutional issues as well as inter-creditor disputes. Moreover because, the Commonwealth debt structure is complicated, with dozens of individual issuers and credits, each of which have unique legal positions and claims on collateral, an inability of the parties to reach a consensual resolution could result in complex and prolonged litigation in multiple courts and jurisdictions.
Finally, the political sensitivities of the potential default of a U.S. commonwealth may lead to the involvement of the U.S. government, including Congress as well as the U.S. Treasury Department and other Federal executive agencies and officers.
In re LINN Energy
We represent an ad hoc group of bondholders issued by Berry Petroleum holding approximately 80% of the unsecured debt issued by Berry, the wholly-owned subsidiary of LINN Energy. In the fourth quarter of 2015, Berry issued a Form 8-K disclosing an intent to effectuate a so-called “Berry Consolidation” by year-end. We immediately asserted the position of the Berry bondholders and the company was not able to go forward with its plans.
LINN and Berry have since filed for chapter 11 relief in the S.D. Texas. We continue to represent the ad hoc committee in connection with those contentious cases, including contesting cash collateral and exclusivity motions.
In re Essar Steel Minnesota
Quinn Emanuel represents US Bank as administrative agent for first-lien, term loan lenders in connection with this troubled iron-ore project and ESML’s inevitable restructuring. We also represent US Bank in connection with the lenders’ guaranty claim against ESML’s parent—Essar Global Fund Limited.
Quinn Emanuel also represents an ad hoc group of first lien lender in connection with ESML’s affiliate’s, Essar Algoma’s CCAA proceeding and related chapter 15 case.
Sabine Oil and Gas Corp.
We obtained a complete defense victory for our client First Reserve in the chapter 11 case of Sabine Oil and Gas in bankruptcy court in the SDNY. First Reserve – the largest global private firm exclusively focused on energy - was the private equity sponsor of Sabine Oil & Gas. After a 14-day trial, on March 24, Judge Chapman issued a lengthy opinion denying STN standing to the Official Creditors Committee and two indenture trustees, finding that their proposed claims including claims for fiduciary breach and aiding and abetting fiduciary breach against First Reserve and several of its employees were not colorable. The Committee appealed to the District Court for the Southern District of New York, where Quinn Emanuel successfully defended First Reserve.
The Debtors' plan of reorganization—which contains estate releases of First Reserve—was confirmed over the Committee's objection on July 27, 2016, and despite the Committee's motion to stay the effective date, went effective on August 11, 2016.
We represent OAS – a Brazilian company involved in engineering, construction, and infrastructure – in connection with its pending Brazilian restructuring and against the hedge funds Aurelius and Alden, along with their affiliates, in three parallel cases in the Southern District of New York and the SDNY Bankruptcy Court.
In Huxley Capital Corporation v. OAS S.A. et al., case no. 1:15-cv-01637-GHW (S.D.N.Y), Huxley, an affiliate of Aurelius, seeks to recover hundreds of millions of dollars based on three allegedly fraudulent transfers that took place between OAS entities. We successfully opposed Aurelius’s request for expedited discovery and then obtained a stay of all discovery in the case. OAS’s motion to dismiss is currently pending.
In In re: OAS S.A. et al., case no. 15-10937-smb (Bankr. S.D.N.Y), OAS filed petitions under chapter 15 of the U.S. bankruptcy code for recognition of the Brazilian restructuring proceedings of OAS S.A., Construtora OAS S.A., OAS Finance Limited, and OAS Investments GmbH. Aurelius objected to the petitions. On July 13, 2015, Judge Bernstein decided to grant recognition for OAS S.A., Construtora OAS S.A., and OAS Investments GmbH. In re OAS S.A., 533 B.R. 83 (Bankr. S.D.N.Y. 2015). This important decision has received significant press coverage and clarified the standards for a “foreign representative” and for a company’s “center of main interests” in chapter 15 cases.
We are the Unsecured Creditors’ Committee’s counsel on issues involving RadioShack’s secured lenders, including matters relating to DIP financing, cash collateral, and liens and claims asserted by secured lenders, as well as the investigation and litigation of estate causes of action.
Shortly after being retained, we filed a motion pursuant to Federal Rule of Bankruptcy Procedure 2004 seeking discovery from various parties in an effort to investigate the events surrounding RadioShack’s slide into bankruptcy, including the alleged manipulation of the CDS markets by numerous hedge funds. In particular, we sought, and received, discovery from nearly 20 parties.
On behalf of the Committee, we subsequently negotiated and reached a settlement with a large group of secured creditors, paving the way for a confirmable plan of reorganization and increasing the likelihood of recoveries for unsecured creditors.
Based on the findings from discovery, we have commenced litigation against Standard General, and RadioShack’s directors and officers in Texas which causes of action will be the largest—if not only—source of recovery for unsecured creditors in these cases.
Solus et. al. v. Delphi et. al.
In 2009, Delphi and its affiliates emerged from chapter 11. Under the terms of their Modified Plan, once distributions to the members of Delphi Automotive LLP exceed $7.2 billion, the company must start making the “General Unsecured MDA Distribution”—which consists of a portion of future distributions up to $300 million—to General Unsecured Creditors. In November 2014, we were engaged to compel defendants Delphi Automotive PLC and Delphi Automotive LLP to comply with their obligations under the Modified Plan and distribute the $300 million to General Unsecured Creditors. Plaintiffs argue the $7.2 billion threshold was exceeded as of February 27, 2015, following a series of share repurchases, redemptions and dividends. The lawsuit has been hard fought from the outset. Defendants first challenged Plaintiffs’ standing to prosecute the claim and insisted that all standing issues had to be resolved before Plaintiffs could submit the merits issues to the Court for decision. We, however, obtained approval to seek summary judgment on the merits at the same time – so that consideration of the merits issues would not be deferred. Oral argument on the motions was held on June 19, 2015, and the Court Ordered supplemental briefing. We won an early victory with respect to Defendants’ dismissal motion, when the parties agreed after the hearing to stipulate to Plaintiffs’ standing and allow the Court to deny the dismissal motion. Post-hearing briefing closed on August 17, and the parties are awaiting the Court’s decision competing summary judgment motions.
In re Physiotherapy Associates
We have recently been retained to represent the litigation trust established pursuant to Physiotherapy’s prepackaged and confirmed chapter 11 bankruptcy plan, to pursue claims in the shoes of Physiotherapy, its creditors, and its owner. Physiotherapy was the subject of a $535 million leveraged acquisition in April 2012 in which it incurred more than $300 million of new debt and pushed out a similar amount of money to its old owners. Less than one year later, it was the subject of a significant and shocking accounting restatement which reduced EBITDA to less than half of what the transaction was premised on. We have commenced litigation against the prior owners on behalf of the litigation trust.
In re Nortel Networks Inc.
We represent Solus Alternative Asset Management LP, on behalf of certain funds and managed accounts (“Solus”), and Macquarie Capital (USA) Inc. (“Macquarie), in their capacities as holders of certain fixed rate senior notes due June 15, 2026 (the “7.875% Notes”) issued by Nortel Networks Limited f/k/a Northern Telecom Limited (“NNL”) and Nortel Networks Capital Corporation f/k/a Northern Telecom Capital Corporation (“NNCC”), and guaranteed by NNL in the chapter 11 cases of Nortel Networks Inc. and its affiliated debtors and debtors in possession pending in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Cases”). Solus and Macquarie hold nearly 90% of the 7.875% Notes issued by NNCC, and we are prosecuting on the clients’ behalf claims for post-petition interest owing with respect to the 7.875% Notes. The case involves emerging law in the Delaware Bankruptcy Court concerning the propriety of paying post-petition interest to unsecured creditors in solvent bankruptcy cases. Moreover, we are pursuing bespoke treatment for the 7.875% Notes given their unique contractual entitlements, including their rights with respect to a Support Agreement entered into among Nortel Networks Inc. and NNCC in favor of NNCC.
Gradient Resources, Inc. (Patua Project)
We represent the debtor companies in an out of court restructuring of approximately $150 million in debt. Gradient Resources and Patua Project’s core business is the development, design, construction, and operation of clean, renewable electric power generation projects and the sale of baseload renewable geothermal power to utilities located in the western United States.
In re Residential Capital, LLC
ResCap creditors, represented by our firm, played a critical role in the court-ordered global mediation with the Debtors, Ally Financial, and most of the other major creditor constituencies. On behalf of our clients and similarly situated claimants, we negotiated a settlement of $235 million to be allocated among twenty-one parties holding securities claims against Ally and ResCap. This settlement was embodied in a plan support agreement that was approved by the Bankruptcy Court by order dated June 26, 2013, and was implemented through the Debtors’ chapter 11 plan following a hotly contested confirmation.
Twin River Worldwide Holdings, Inc. v. Sola Ltd, et al.
We represent Sola Ltd, Ultra Master Ltd, and Wingspan Master Fund, LP (collectively, the “Shareholders”) in a declaratory judgment action brought by Twin River Worldwide Holdings, Inc. (“Twin River”). The parties are seeking a determination as to whether a post-confirmation agreement (the “CVR Agreement”) represents an impermissible modification of the plan of reorganization (the “Plan”). At the heart of the dispute is whether the CVR Agreement fundamentally altered the economic terms pursuant to which Twin River restructured its pre-petition first-lien and second-lien debt pursuant to the solicited, approved, and confirmed Plan. This case implicates the interpretation of the Plan’s allocation/classification of $350 million and, more generally, important bankruptcy principles concerning plans of reorganization (transparency, adequate disclosure, finality, and priority). Oral argument recently concluded on competing motions for summary judgment and the parties are awaiting a decision from the Court.
In re PCI, Inc. (Tom Petters)
We represent one of the largest creditors in the third largest Ponzi scheme case in US history (Madoff, Stanford). We have proposed our own chapter 11 plan, which the chapter 11 trustee, Doug Kelly, has largely endorsed, and have been a leading participant in current plan negotiations which are the subject of pending mediation.
MSR Hotels & Resorts, Inc.
We obtained for our clients—senior executives of Paulson & Co. Inc.—a complete and decisive dismissal of a civil complaint brought derivatively by Five Mile Capital, which sought more than $158 million in damages. The executives were directors of a portfolio entity, MSR Hotels & Resorts, Inc. This total victory made clear that our clients properly satisfied all duties and also cleared the way for MSR to successfully emerge from bankruptcy in 2014.
In re Lehman Brothers Holdings Inc.
We represent the Official Committee of Unsecured Creditors of Lehman Brothers Holdings, Inc. (“LBHI”) and its affiliated debtors (collectively, “Lehman”) as lead trial counsel in matters against significant financial institutions. Lehman’s cases are the largest ever filed in the United States (and arguably the most challenging), and stand as the symbol of the impact of the 2008 financial crisis.
In addition to sheer size (more than $600 billion in assets and liabilities), Lehman’s businesses involved complex financial instruments, including over 260,000 derivative trades and myriad securities lending arrangements, e.g., repo financings and securities clearing arrangements. Unraveling and understanding these extremely complex financial transactions entails considerations of highly technical and cutting edge areas of law, including bankruptcy, securities, derivatives, and finance.
Our attorneys tackle novel and unprecedented issues of law and are called upon to dissect and comprehend complex, multi-billion dollar transactions. As special counsel to the Creditors’ Committee, we have been responsible for investigating and prosecuting claims and causes of action against major financial institutions that were parties to myriad complex transactions with Lehman. To that end, it joined the Lehman estates in asserting affirmative claims and objections against financial institutions such as Barclays Capital, Inc. (challenging Barclay’s acquisition of the North American broker dealer business), JPMorgan Chase Bank, N.A. (asserting over $8 billion in actual-intent and common law claims relating to pre-petition transfers as well as objections to JPMorgan’s various claims under derivative, clearing, and investment management agreements); Citibank, N.A. (challenging Citibank’s entitlement to $2 billion in cash which was transferred to it from Lehman Brothers Holdings Inc. in the weeks before the bankruptcy cases commenced as well as Citibank’s more than $2 billion in claims filed against the Lehman estates); and Bank of America, N.A. (challenging certain transfers in excess of $500 million that violated the automatic stay).
In re NewPage Corporation
We were retained to pursue litigation arising out of NewPage’s failed leveraged acquisition of Stora’s North American division in 2007. At the time of the SENA Acquisition, the Debtors incurred more than approximately $2 billion of additional debt, amounting to a total funded debt of approximately $3.2 billion, and entered into a new revolving facility of $500 million. The vast majority of the debt proceeds were immediately paid to Stora, the former owner of the target subsidiaries. After two rounds of Court-ordered mediation, we obtained a settlement under which the First Lien Noteholders agreed to waive their $50 million deficiency claim, $30 million cash would be distributed to the Second Lien Noteholders and the unsecured creditors, and a litigation trust would be established.
We also opposed the Debtors’ motion to settle their claims against their equity owner, Cerberus, for inadequate consideration. We identified a viable estate cause of action premised on Cerberus’s trading activity in NewPage debt. On the eve of trial, we reached a favorable settled pursuant to which Cerberus contributed a substantial sum to the litigation trust.
In re Jefferson County, Alabama
We represented bond insurer Syncora Guarantee Inc. in connection with one of the largest municipal bankruptcy filings in U.S. history. We actively represented our clients’ interests for several years before the filing of the county’s chapter 9 petition on November 2011 and obtained a successful conclusion through the confirmed chapter 9 plan.
Getty Petroleum Marketing Inc. v. Lukoil Americas Corp.
This hard-fought litigation was commenced by the Liquidating Trustee of the Getty Petroleum Marketing Inc. (GPMI) estates challenging a complex transaction involving the infusion of more than $585 million by a parent company into its subsidiary (GPMI) as part of a corporate restructuring that also involved the transfer by GPMI to an affiliate (Lukoil North Americas) of more than 300 gas stations. We represented the individual directors and officers at trial and resolved the matter consensually at no cost to our clients on the 17th day of trial.
The Colonial BancGroup, Inc.
We represent The Colonial BancGroup, Inc. (CBG) , the second largest savings and thrift failure ever. We represent CBG in litigation against the FDIC as receiver for Colonial Bank, CBG’s former banking subsidiary, and BB&T Corp. concerning ownership disputes over more than $650 million in assets.
In re Town of Mammoth Lakes, California
We represented the largest creditor of a California municipality and obtained a dismissal of its chapter 9 case and a issuance of writ of mandate following mediation.
We represented Derek Quinlan in the very substantial and high profile Re Coroin litigation concerning the ownership of Claridge’s, the Connaught, and the Berkeley Hotels. Mr Quinlan is a shareholder in the company that owns the hotels and was accused by another shareholder of engaging in a dishonest conspiracy with the Barclay brothers in connection with his shares, and of causing unfair prejudice to that shareholder. After a 30 day trial, we achieved a complete dismissal of the allegations against Mr. Quinlan.
In early 2012, Susheel Kirpalani, the Chairperson of our Group, served as Examiner in the chapter 11 cases of Dynegy Holdings LLC and its affiliated debtors and debtors in possession. The Court also appointed Mr. Kirpalani to serve as a Chapter 11 Plan Mediator. As Examiner, Susheel led a team of over 30 professionals and issued a comprehensive report ahead of schedule regarding potential claims and causes of action arising out of various pre-petition transactions. As Mediator, he successfully negotiated a settlement among the numerous parties-in-interest which facilitated emergence from chapter 11 pursuant to a plan filed with the court in July 2012.
Zais Investment Grade Limited VII
We represented a group of contractually subordinated creditors challenging confirmation of the senior secured creditors; plan in this involuntary chapter 11 case. The senior secured creditors’ plan would have wiped out all junior creditors, including our clients. To that end, we achieved a significant victory when the court found that the senior secured creditors’ valuation expert was not qualified to testify, resulting in adjournment of the senior secured creditors’ plan.
In re New Stream Secured Capital
On behalf of the Official Committee of Unsecured Creditors, we renegotiated the terms of a pre-negotiated sale of the Debtors’ crown jewel asset – a life settlement investment portfolio. Our efforts resulted in (i) a Committee-run auction process, (ii) significant, favorable revisions to post-closing sale adjustments agreed to by the debtors which threatened to materially and negatively impact the estate, and (iii) concessions from the buyer (which was also a creditor) which transferred distributions under a plan from the purchaser to other unsecured creditors. Thereafter, the Committee prosecuted a joint-plan with the Debtors which improved distributions to unsecured creditors exponentially relative to the Debtors’ pre-negotiated plan.
In re Trident Microsystems, Inc.
We represented the Equity Committee in the Trident Microsystems, Inc. (“TMI”) chapter 11 cases. We investigated controlling shareholder NXP BV’s role in Trident’s demise. In addition to owning 60 percent of TMI, Netherlands-based NXP was the debtors’ largest supplier and creditor. We investigated whether NXP exerted undue influence over TMI as it descended into bankruptcy, using four hand-picked directors to further its cause. Our investigation resulted in millions of dollars of incremental value being afforded TMI’s minority shareholders, transferred from NXP.
In re Velo Holdings Inc.
We successfully represented the Debtors, a direct marketing and services company and currently a chapter 11 debtor, in obtaining a permanent injunction against one of the world’s largest credit-card processors -- JPMorgan Chase Bank’s credit-card processing subsidiary, Chase Paymentech. Chase Paymentech argued it had terminated Vertrue’s “life-line” processing agreements before Vertrue’s bankruptcy cases commenced and that Vertrue otherwise had breached those agreements. The United States Bankruptcy Court for the Southern District of New York declared Chase Paymentech’s pre-bankruptcy attempts to terminate the agreements null and void, permanently enjoined Chase Paymentech from terminating those agreements on the basis of Vertrue’s financial condition, and determined that Vertrue had not otherwise breached the agreements. As a result, Chase Paymentech remained the Debtor’s credit-card processor in its bankruptcy cases, thereby permitting an orderly wind down, instead of a meltdown that would have resulted in massive value destruction.
In re Washington Mutual, Inc.
We represented Washington Mutual, Inc. in litigation in its chapter 11 cases, asserting more than $10 billion in avoidance actions against JPMorgan Chase Bank (“JPMC”) and seeking turnover of more than $4 billion in funds on deposit with JPMC. Our efforts in defeating the assertions of JPMC and the Federal Deposit Insurance Corp. (“FDIC”) that the Bankruptcy Court was precluded from exercising jurisdiction over such actions under FIRREA’s jurisdictional bar contributed materially to a very favorable settlement among and between JPMC, FDIC, the Creditors’ Committee. and other creditor constituents valued by the debtors at $6.1 billion to $6.8 billion (including the receipt of approximately $4 billion in cash deposits free and clear). We continue to represent the Liquidation Trust established pursuant to WMI’s confirmed chapter 11 plan.
We represented FTI as the liquidating trustee for Advanta Corp., objecting to more than $60 million in claims asserted by Advanta’s former CEO and CFO, which threatened to dilute significantly the returns to Advanta’s general unsecured creditors. By asserting affirmative claims on behalf of the estate, and participating in a mediation conducted by the Honorable Robert D. Drain, the liquidating trust caused the former officers to walk away with no estate recoveries. This was an amazing result for Advanta’s creditors, who have recovered as much as 86 cents on the dollar.
In re Idearc Inc.
We represented the Official Committee of Unsecured Creditors in the chapter 11 cases of Idearc, Inc. which involved difficult issues of first impression concerning the valuation of certain assets owned by the “Yellow Pages” publisher. We represented the Creditors’ Committee in litigation with the estates’ pre-petition lenders concerning the extent and validity of their alleged security interests in certain intellectual property. That litigation ultimately settled and increased recoveries for unsecured creditors from $5 million to over $160 million.
In re Spansion, Inc.
Acting for an ad hoc group of equity holders, we blocked confirmation of Spansion’s chapter 11 plan. The bankruptcy court embraced our argument that the chapter 11 plan, which offered no distribution to shareholders but provided an overly generous employee equity incentive plan, had not been proposed in good faith.
In re FairPoint Communications, Inc.
We successfully obtained an order from the District Court for the Southern District of New York affirming FairPoint Communications’ chapter 11 plan. Verizon had appealed the confirmation order, challenging a third-party injunction which barred Verizon from pursuing claims against third-parties that arise out of the assertion of claims pursued against Verizon by FairPoint’s litigation trust, and which could negatively impact reorganized FairPoint. Verizon’s appeal threatened to undo FairPoint’s plan of reorganization, which had allowed FairPoint to emerge from bankruptcy significantly de-levered having shed $1.8 billion in debt. At the trial level, we successfully defended against Verizon’s charges that the third-party injunction was impermissible. On appeal, Verizon challenged the bankruptcy court’s subject matter jurisdiction to authorize such an injunction. We argued successfully to the district court that, although there was no Second Circuit authority on the relevant jurisdictional issue, and although there was recent and directly contrary Third Circuit authority, the Second Circuit would not follow the Third Circuit, and would agree with FairPoint that the bankruptcy court’s jurisdiction was appropriate.
We represented one of the defrauded investors in Marc S. Dreier’s Ponzi scheme who had been named as a defendant in avoidance actions commenced by the trustees for both Marc S. Dreier and Dreier LLP seeking to avoid a lien that the investor received in connection with its investment. On the eve of arguments on motions to dismiss the complaints, we negotiated a favorable settlement for its client with the trustees that will result in the claims being dismissed.
Millennium Global Emerging Credit Master Fund Limited
We act as counsel for the joint liquidators of two Bermuda investment funds. In October 2008, the Millennium funds suffered liquidity problems and thereafter commenced winding up proceedings in Bermuda. The joint liquidators commenced an investigation of the funds’ financial affairs. When certain third-party service providers refused to cooperate with this investigation, the liquidators engaged us to obtain the assistance of U.S. courts utilizing chapter 15 of the Bankruptcy Code. Following a contested evidentiary hearing, we scored a complete victory by obtaining foreign main recognition of the Bermuda proceedings. We are in the process of obtaining discovery from the third party service provides, utilizing discovery mechanism available under the Bankruptcy Code and the Bankruptcy Rules.
In re G-I Holdings, Inc.
We acted as special litigation counsel for the debtor, G-I Holdings, Inc. and won a contested confirmation hearing in November 2009, which paved the way for a successful reorganization. G-I (formerly GAF Corporation), parent of the largest residential roofing company in the country, filed chapter 11 in 2001 when it was flooded with hundreds of thousands of asbestos personal injury lawsuits. G-I reached a settlement with the asbestos creditors under a plan of reorganization, which established a $775 million trust and a Section 524(g) injunction. The IRS, which asserted over $300 million in priority tax claims, objected to the plan on numerous grounds, including that the plan protected nondebtor affiliates from tax liability and that it violated the absolute priority rule by allowing old equity holder Samuel J. Heyman to emerge with ownership of the reorganized debtor. We successfully tried the two-week confirmation hearing, after which Chief District Judge Brown and Bankruptcy Judge Gambardella jointly issued a 102-page opinion overruling all of the IRS objections.
We were retained by Solutia virtually on the eve of its exit from its four-year chapter 11 proceeding when the banks that had agreed to provide the necessary $2 billion of exit financing (Citibank, Goldman Sachs and Deutsche Bank) refused to fund the loans claiming that the credit market downturn constituted a “materially adverse condition” (MAC) that enabled them to terminate the agreement. The issue we were brought in to litigate was whether Solutia or the banks bore the risk of the credit market downturn. The trial commenced after a month of expedited discovery in which we produced millions of documents, took and defended almost 30 depositions and prepared for trial. After three days of trial, and on the eve of closing arguments, the banks, which had previously refused to entertain settlement negotiations, indicated that they were eager to settle. Under the terms of the settlement, the banks were required to provide the $2 billion in exit financing needed to fund the plan. The case is believed to be the first of its kind and is of great significance to the bankruptcy bar, financial institutions, and companies in chapter 11.
We act as counsel to Bettina Whyte as Trustee of the SemGroup Litigation Trust. SemGroup and its affiliated debtors filed for bankruptcy precipitously in July 2008, amid revelations of billions of dollars in commodities trading losses and allegations that one or more insiders had improperly utilized corporate resources and failed to adequately disclose unauthorized speculative trading practices. As counsel to the prior Creditors’ Committee, we worked to protect and preserve the assets of the debtors’ chapter 11 estates, to explore all potential stand-alone restructuring options and asset disposition strategies, and to identify value available for distribution to unsecured creditors. Working collaboratively with a bankruptcy examiner, we prepared to pursue litigation against various parties arising from and related to the allegations of corporate wrongdoing, which, as counsel for the Litigation Trust, we have since pursued against former insiders and limited partners, reaching several confidential settlements on behalf of the former creditors of SemGroup. We continue to litigate professional malpractice and breach of fiduciary duty claims against SemGroup’s former auditor PricewaterhouseCoopers, LLP, in Oklahoma state court, asserting more than $1 billion in damages.
We represent a consortium of hedge funds and others investors who were initial and secondary market lenders to bankrupt beverage manufacturer Le Nature’s Inc., in litigation against Wachovia Capital Markets, BDO Seidman, and certain Le Nature’s executives. The action alleges fraud in connection with losses incurred by the lenders, stemming from conduct in the syndication of the loans and thereafter. In addition to asserting claims against the defendants in New York, we represent the secondary lenders in a North Carolina action commenced by Wachovia, in which Wachovia asserts that the acquisition of bank debt in the secondary markets was champertous. Separately, we represent a group of approximately 75 pension funds, investment funds, and other investors that purchased bonds issues by Le Nature’s at par value. The defendants in that case include Wachovia, Ernst & Young, and BDO Seidman.
Sentinel Group Management, Inc.
We were retained as counsel to the Official Committee of Unsecured Creditors appointed in the chapter 11 case of Sentinel Group Management, Inc. pending in Chicago, Illinois. Sentinel managed over a billion dollars in investments of short-term cash for various clients, including futures commission merchants, hedge funds, financial institutions, pension funds, and individuals. The chapter 11 cases were commenced among allegations that certain members of Sentinel’s management engaged in fraudulent and undisclosed co-mingling and leveraging of client funds and misrepresented the nature of risky and illiquid securities purchased on their clients’ behalf. As Committee counsel, we have been working with the chapter 11 trustee to negotiate a consensual chapter 11 plan and have been tasked with evaluating and possibly pursuing complex litigation against various parties relating to the allegations of misconduct.
American Home Mortgage Corp., et al.
We were retained as special litigation and conflicts counsel to American Home Mortgage Corp. and its affiliated debtors and debtors in possession in one of the largest chapter 11 cases filed in 2007. American Home Mortgage previously was the 10th largest residential mortgage lender in the United States, at one point holding a leveraged portfolio of mortgage loans and mortgage-backed securities totaling approximately $15.6 billion, originating approximately $58.9 billion in the aggregate principal amount of loans, and operating more than 550 loan origination offices in 47 states and the District of Columbia. We were principally responsible for evaluating and litigating the bankruptcy estates’ claims and causes of action against American Home Mortgage’s various warehouse lenders and repurchase agreement counterparties.
We were retained by the Refco Litigation Trust and the Refco Private Actions Trust, litigation vehicles established pursuant to Refco’s chapter 11 plan to pursue claims belonging to the estates of Refco Inc. and its subsidiaries and private causes of action held by customers of the defunct broker-dealer. We were lead litigation counsel in actions seeking damages in excess of $2 billion for fraud, breach of fiduciary duty, aiding and abetting, and professional malpractice brought by these Trusts against Refco’s officers and professional advisors including, among others, Refco’s accountant’s Grant Thornton LLP, and it’s outside counsel Mayer Brown LLP. The case against Grant Thornton was settled on the opening day of a three week jury trial. The case against Mayer Brown was settled on the eve of a critical appellate argument. Both cases were pending in the Southern District of New York.
Griffin Energy Group Pty Limited (Subject to Deed of Company Arrangement) & Anor v. ICICI Bank Limited & Ors
We represented ICICI Bank Limited in proceedings concerning the construction of three letters of credit together worth $150 million. ICICI Bank Limited was the issuing bank under the credits and by our construction of them the letters of credit expired before the liability against which they were being drawn became due and payable. Both at trial and on appeal the court agreed with our construction and our client avoided this $150 million liability – this was critical given the low practical likelihood of recouping funds from the borrower.
Enrico Bondi v. Grant Thornton International, et al.
We represent Dr. Enrico Bondi (Extraordinary Administrator for the former Parmalat companies) in a case involving accounting malpractice and related misconduct by former auditor Grant Thornton S.p.A., the Italian affiliate of Grant Thornton LLP and Grant Thornton International. Dr. Bondi’s case against Grant Thornton was originally filed in Illinois state court but then was removed to federal court and proceeded there for years, resulting initially in a summary judgment in favor of Grant Thornton. We successfully obtained reversal by the U.S. Court of Appeals for the Second Circuit ordering remand to state court on abstention grounds, and then, when the federal district court in Illinois declined to follow that instruction, we obtained reversal by the U.S. Court of Appeals for the Seventh Circuit definitively ordering remand to state court so that proceedings may restart on a clean slate. Earlier in the same case we obtained a $150 million settlement against various Deloitte entities, and in a separate proceeding obtained a $100 million settlement against Bank of America.
Performance Transportation Systems, Inc., et al.
We have been retained by the Ad Hoc Committee of Second Lien Lenders in the chapter 11 cases of Performance Transportation Systems, Inc. and its affiliated debtors and debtors in possession pending in the United States Bankruptcy Court for the Western District of New York. The representation involves both inter-creditor litigation and contested matters concerning various issues in the cases, including objections to the Debtors’ proposed sale process for substantially all their assets.
Calpine Corp., et al.
We were retained by the Ad Hoc Committee of Calgen Third Lien Noteholders in the Chapter 11 cases of Calpine Corporation pending in the United States Bankruptcy Court for the Southern District of New York to review, evaluate, and, if necessary, litigate various inter-creditor and plan confirmation issues.
The Official Committee of Unsecured Creditors of TW, Inc. f/k/a Cablevision Electronics Investments v. Cablevision Systems Corporation
We represent Cablevision in an action filed by the Committee for Unsecured Creditors of CEI (aka, “The Wiz”, the former regional electronics chain). In 1998, Cablevision formed CEI as a wholly-owned subsidiary to purchase the assets of the Wiz out of bankruptcy. Despite obtaining funding to the tune of over $500 million from 1998 to 2003, CEI struggled, generated operating losses, and eventually filed for bankruptcy in March 2003. We went before Judge Walrath for a scheduled 2-day trial on insolvency. The Committee claimed, and their expert opined, that since CEI had no guarantee that Cablevision would continue to fund it, CEI should be valued as a failing concern from 1998 onward. The Committee took this position -- ignoring the actual parental support from Cablevision -- so that they could value CEI at essentially liquidation values, and thereby show the company to be insolvent throughout its existence.
After the Committee rested, we moved for a directed verdict, arguing that applicable law required the committee and its expert to consider the actual funding by Cablevision, and that CEI should be valued as a going concern since its collapse was never imminent from 1998-2002. The Court granted the motion, finding the committee had failed to prove CEI was insolvent from 1998-2002. The decision requires dismissal of most of their claims (which are premised on insolvency) and their hopes of any substantial recovery (they had sought to recover hundreds of millions of dollars).
National Century Financial Enterprises
We represent ING Bank in a $500 million fraud action against JPMorgan Chase, Bank One, Deloitte, PriceWaterhouseCoopers, and others arising out of a massive fraud at NCFE and NCFE’s subsequent bankruptcy. We also represent ING Bank as a member of the steering committee of the Litigation Trust. We have assisted ING Bank in recovering in excess of $100 million to date.
We represent about two dozen hedge funds, including international funds, grouped under four management entities — Elliott, Davidson-Kempner, Appaloosa, and Angelo Gordon — as plaintiff-holders of Yosemite and Enron Credit-Linked Notes (ECLN) in the Yosemite v. Citibank action in the Enron multi-district litigation. The noteholders asserted fraudulent transfer claims against Citibank and collectively sought in excess of $1.4 billion on those claims. With Citibank’s motion for summary judgment pending, Citibank and Enron agreed to a joint settlement and our clients will receive in excess of $2.1 billion in payments from the Enron bankruptcy estate.
In re Buffets, Inc. et al.
We represented the chapter 11 debtor in possession as special counsel in connection with litigation that resulted in the successful restructuring of master lease obligations involving more than 120 restaurant locations for one of the country’s largest steak restaurant chains.
Crown Vantage Liquidating Trust
We represented three outside directors of an insolvent subsidiary spun off from a leading international paper company in an action brought by the liquidating Trustee against the directors, officers, and company advisors. The Trustee alleged fraudulent transfer and deepening insolvency theories, and claimed close to $1 billion in damages. The matter was dismissed, and the dismissal was affirmed by the U.S. Court of Appeals for the Ninth Circuit.
Owner of Seventh Continent
One of our partners represented the owner of Russian supermarket Seventh Continent in his defence of a US150 million English High Court fraud and conspiracy claim and related German proceedings arising out of the disputed US500 million restructuring of defaulted loan notes.