Quinn Emanuel’s bankruptcy and restructuring group is widely recognized as a leader in the United States, Europe, and Australia. We represent parties at all levels of the capital structure of financially distressed companies and municipalities in insolvency proceedings, related litigation, and out-of-court workouts. Our clients include private equity sponsors, bondholders, hedge funds, mezzanine and second lien lenders, unsecured creditor and equity committees, litigation trusts, contract counterparties, and claim and asset acquirers. We have an outstanding record of success in pursuing or defending against litigation in virtually every aspect of distressed investing, including breach of fiduciary claims, preference and fraudulent transfer litigation, subordination disputes, intercreditor fights, and litigation over substantive consolidation and enterprise or asset valuation.
Our restructuring lawyers are able to utilize the firm’s other litigation groups to advance our clients’ interests as the industry and company profile dictates, whether it be litigating competition issues, intellectual property disputes, fraud, securities, structured financial products, or corporate governance. The degree to which our complex financial fluency can be combined with our courtroom skill is unrivaled by our peers. We aim to dominate our opponents in the courtroom. At the same time, we are very successful at delivering outcomes that maximize value through negotiated resolutions. We are known as being aggressive, creative, strategic, and practical--attributes that serve our clients well, whether they be hedge funds, private equity sponsors, statutory committees, or ad hoc creditor or equity groups.
Representative Private Equity Sponsor/Director and Officer Matters
- The “Zohar Funds” The firm won a major victory for two investment funds, Zohar II 2005-1, Ltd. and Zohar III, Ltd. (the “Zohar Funds”), in a dispute with their former collateral manager, Lynn Tilton. The immediate dispute concerned ownership and control over three Delaware corporations—FSAR Holdings, Inc., UI Acquisition Holding Co., and Glenoit Universal Ltd.—but has ramifications for dozens of other portfolio companies that are subject to the same dispute. The Zohar Funds claimed legal and beneficial ownership of the three subject companies, and elected new directors to their boards by written consent. Tilton refused to recognize the election, claiming that the Zohar Funds were merely record holders of equity in the companies, while she was the true beneficial owner entitled to all rights and privileges of ownership, including the right to elect their directors. Following a six day trial before the Delaware Court of Chancery, the Court issued a 95-page Memorandum Opinion finding for the Zohar Funds on all counts. The Court confirmed the Zohar Funds’ appointees as the rightful directors of the subject companies and rejected Tilton’s claim of beneficial ownership of the Defendant Companies as “not credible” and based upon “hindsight observations” the Court characterized as “revisionist.”
- MSR Hotel and Resorts 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.
- Montreal, Maine and Atlantic Railway We represent the Caisse de Depot et Placement du Quebec defending against avoidance action litigation seeking to recover distributions made to the failed railroad company’s lead investors. We have successfully obtained dismissal of all but one of the trustee’s accounts.
- G-I Holdings We were special counsel to G-I Holdings (f/k/a GAF) in estimation litigation to value hundreds of thousands of asbestos lawsuits. We tried and won the contested confirmation hearing, defeating the objection of the United States Government, and allowing the nation’s largest roofing manufacturer to emerge from chapter 11 free of asbestos liability. (Bankr. D.N.J.)
- Sabine Oil & Gas/First Reserve We obtained a complete victory for First Reserve in a case in which unsecured creditors were seeking standing to bring claims against First Reserve totaling $1 billion. First Reserve is the private equity sponsor of Sabine Oil & Gas, which filed for bankruptcy in July 2015 following its merger with Forest Oil. Sabine’s unsecured creditors sought leave of the bankruptcy court to bring claims for fiduciary breach and aiding and abetting fiduciary breach against First Reserve and its employees who served as directors on Sabine’s board. Typically, such motions for standing by unsecured creditors are routinely granted and rarely denied.
- Gradient Resources We represented Gradient Resources and Patua Project in an out of court restructuring of approximately $150 million in debt. The debtors develop, design, construct, and operate clean, renewable electric power generation projects and sell baseload renewable geothermal power to utilities located in the western United States.
Representative Bondholder and Hedge Fund Matters
- Solus Alternative Asset Management We represented Solus Alternative Asset Management LP against GSO Capital Partners (“GSO”) and Hovnanian Enterprises Inc. (“Hovnanian), in a suit arising from GSO’s agreement to lend money to Hovnanian in exchange for Hovnanian agreeing to default on a portion of its debt. The default would trigger a credit event on credit default swaps, which would require Solus to pay millions of dollars in payments and would yield GSO millions of dollars in CDS payments. In addition, certain aspects of the transaction between GSO and Hovnanian were explicitly designed to set the price of the payout required from Solus in the case of a credit event. Solus alleged that this agreement violated Sections 10(b) and 14(e) of the Securities Exchange Act and that GSO had tortiously interfered with Solus’s prospective economic advantage. The case settled at the end of May; as part of the settlement, Hovnanian cured the agreed-upon default, thereby avoiding the threatened credit event.
- Caesars Entertainment We represented UMB Bank, as indenture trustee for Caesars’ first lien bondholders, in a Delaware Chancery Court action against Caesars and its senior officers and directors. We successfully obtained an expedited schedule for the appointment of a receiver for the company, which led to a settlement that is being implemented in Caesars’ chapter 11 bankruptcy.
- Commonwealth of Puerto Rico/COFINA We represent the largest organized group of holders of the approximately $7.6 billion in senior bonds issued by COFINA. We have been actively involved in negotiations concerning a potential restructuring of COFINA’s obligations with the Commonwealth, other creditors of both COFINA and the Commonwealth, and monoline insurers. In connection with our representation, we took a leading role in the formulation of PROMESA (Puerto Rico Oversight, Management, and Economic Stability Act), which provides for the establishment of a Financial Oversight and Management Board for the Commonwealth and a framework for restructuring COFINA’s and the Commonwealth’s debt. The lead partner on this engagement testified before Congress about PROMESA’s debt restructuring provisions.
- LINN Energy/Berry Petroleum We represent an ad hoc group of bondholders that hold approximately 80% of the unsecured debt issued by Berry. Through our efforts, the bondholders negotiated a restructuring support agreement with Berry, its parent (LINN Energy), and its secured lenders that maximizes value for Berry through a stand-alone reorganization.
- Airplanes Group We represent Brigade, Candlewood, and Guggenheim as noteholders asserting claims against an international airplanes securitization vehicle with companies in Delaware, Jersey, and Ireland. We have asserted claims seeking payment of all of the company’s cash in the Southern District of New York.
- BioMed Realty We represented some of the largest insurance companies in the United States in connection with their bond investments in BioMed Realty, specifically in connection with Blackstone’s acquisition of the company.
- Delphi Auto We represent holders of unsecured claims Solus Alternative Asset Management LP, Angelo Gordon & Co, and certain funds affiliated with Highland Capital in litigation against Delphi Automotive LLP and Delphi Automotive PLC seeking to compel more than $300 million in distributions under their chapter 11 plan.
- Nortel Networks We represent Solus Alternative Asset Management and PointState Capital LP in connection with their investment in Nortel Networks Capital Corporation, a chapter 11 debtor in Delaware.
- Twin River We represented Solus Alternative Asset Management LP and Wingspan Capital in connection with their equity investment in Twin River Worldwide casinos, formerly a chapter 11 debtor in Rhode Island.
- Peabody Energy Corp We act as counsel to chapter 11 debtor Peabody Energy Corp. in its chapter 11 cases pending in Missouri in connection with litigation involving its secured first-lien credit facility ($3 billion) and challenges to the lenders’ collateral package.
- Samson Resources We act as counsel to chapter 11 debtor Samson Resources Corp. in its chapter 11 cases pending in Delaware in connection with litigation involving certain of its swap counterparties and their attempts to terminate those contracts after the commencement of the bankruptcy cases.
- Alpha Natural Resources We represent reorganized debtor ANR, Inc. in disputes with its pre-petition lenders concerning their respective rights and obligations under their chapter 11 plan.
- Albina Community Bancorp We represent Hildene Capital, a beneficial holder of trust preferred securities issued by chapter 7 debtor Albina Community Bancorp in pursuing security holder and estate claims against former directors and officers and Beneficial State Bancorp as acquirer of the majority of common stock of Albina Community Bank.
- Essar Algoma We represent an ad hoc group of first lien bond holders in connection with Algoma’s Canadian CCAA and United States chapter 15 proceedings. We successfully defeated the monitor’s plan to zero out our clients and negotiated for a meaningful ownership interest in reorganized Algoma.
- Essar Steel Minnesota We represent US Bank as administrative agent for first-lien, term loan lenders in connection with this troubled ironore 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—and related international collection efforts in more than six venues.
- OCZ Technology We represented an ad hoc group of second lien bondholders in connection with OCZ’s chapter 11 case. We successfully steered the administration of the bondholders’ collateral, resulting in a near par recovery after the debtor forecast recoveries of approximately 25%.
Representative Creditors’ Committee/Litigation Trust Matters
- Lehman Brothers We represent the Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. (“LBHI”) as lead counsel litigating LBHI’s objections to claims by Citibank, N.A. and affiliates (“Citibank”) related to the close-out and valuation of tens of thousands of derivatives following Lehman’s bankruptcy in September 2008. Under governing ISDA Master Agreements, Lehman’s trading counterparties were directed to determine the value of their derivatives trades following Lehman’s bankruptcy. LBHI’s objections sought a significant reduction to the amounts claimed by Citibank, which totaled more than $2 billion, relating to approximately thirty thousand derivatives trades on a variety of grounds including that Citibank failed to act in a commercially reasonable manner when valuing the derivatives in question. Quinn Emanuel engaged in almost five years of fact and expert discovery involving more than 1.4 million documents, thirty expert witnesses, and approximately 170 fact and expert depositions in addition to briefing summary judgment and pre-trial motions. After 42 days of trial over the course of four months, at around the expected halfway point in trial, LBHI announced that it had reached a settlement with Citibank that will return $1.74 billion to Lehman’s creditors. On October 13, 2017, the Bankruptcy Court approved the settlement.
- Residential Capital We represent the ResCap Liquidating Trust in its efforts to recover from dozens of correspondent lenders who originated and sold defective residential mortgages to the company. We have obtained hundreds of millions of dollars in settlements against several lenders.
- Core Media Litigation Trust After representing the largest holder of first lien and second lien loans, we were retained to represent the Litigation Trust formed pursuant to the Chapter 11 Plan for Core Media (American Idol and So You Think You Can Dance) to investigate and pursue claims against former directors and officers and affiliates of Apollo Global Management.
- Petro Hunter Energy Company We have been appointed by Jeffrey Hill, the Chapter 7 bankruptcy trustee of Petro Hunter Energy Company, to represent the group’s non-insolvent subsidiaries in Australia. The US bankruptcy trustee estimates Petro Hunter Energy Company’s assets (primarily comprising a number of fracking interests in Australia), are valued at approximately $300 million.
- Physiotherapy We represent the PAH Litigation Trust, formed pursuant to the bankruptcy of Physiotherapy Associates, Inc. We represent the Trust in a variety of in- court and out-of-court investigation and recovery efforts against the company's former advisors, underwriters, auditors, and private equity owners that sponsored the LBO that preceded the company's collapse.
- SemGroup We represent the SemGroup Litigation Trust in various actions against the company's former directors and officers, auditors, private equity owners, and trading counterparties and have obtained record setting recoveries in the hundreds of millions of dollars for the Trust.
- Advanta 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 significantly dilute 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.
- Petters Co., Inc. We represented one of the largest creditors in the third largest Ponzi scheme case in US history (after Madoff and Stanford). We proposed a chapter 11 plan, which we prosecuted and confirmed in connection with the chapter 11 trustee, Doug Kelly. We now represent the liquidating trust in connection with the estate’s big ticket avoidance actions.
- The Colonial BancGroup We represented the post-bankruptcy plan trustee for Colonial BancGroup, the second largest savings and thrift failure ever. We represented 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.
Representative Contract Counterparty/Asset Acquisition Matters
- Midway Gold We represented Barrick Gold in the sale of its joint venture in a mining project with Midway Gold, a chapter 11 debtor. Our efforts were instrumental in ensuring that Barrick received maximum value for its interest and that the transaction was consistent with the company’s efforts to sell other mining assets in the United States.
- SandRidge Energy We were retained to represent Occidental Petroleum in connection with a prepetition settlement and acquisition of oil and gas leases and subsequent participation in the SandRidge chapter 11 case in the Southern District of Texas.