We have broad experience in an array of complex legal challenges that confront troubled companies, giving us the ability to develop innovative and effective solutions for our clients.
Corporate Governance and Fiduciary Duty
Representing officers and directors of financially distressed companies takes a particular skill set and experience that our group developed over the course of many years. The decisions that officers and directors must make when confronting insolvency require the advice of experienced insolvency practitioners and are often different from decisions made outside of the zone of insolvency. We have developed an appreciation and understanding of these issues confronting officers and directors in chapter 11 cases, out-of-court workouts and all stages of the restructuring process. In collaboration with our corporate and litigation colleagues, we have the resources to represent the interests of officers and directors in the wide variety of issues they face.
Our Restructuring Group provides experienced guidance to boards and management so that they may navigate the often difficult decisions when facing financial distress. Typical advice we are called upon for includes:
- Corporate Governance and Minimizing Liability – Advising officers and directors in the decision-making process, helping them avoid and minimize potential risk or liability for the decisions they make within or nearing the zone of insolvency.
- Public Disclosure and Filings – Closely working with our corporate and securities practice groups, we regularly advise boards and management on the proper disclosures to be made when contemplating a restructuring or bankruptcy or when confronted with financial distress.
- Investigations – It is essential that boards and special committees are represented when an investigation by the government in a criminal, civil or regulatory capacity is suspected or underway. Our group works closely with our White Collar Practice Group, comprised of former assistant U.S. attorneys, as well as the Litigation practice group to ensure the broadest possible protections for the board.
Insolvency Related Litigation
Creditors’ rights and insolvency related litigation require a particular skill set. Our restructuring lawyers regularly litigate complex commercial disputes including fraudulent conveyance actions, preference litigation, contested matters, state court creditors’ rights remedies, foreclosures, UCC remedies, secured party rights, and virtually every other aspect of insolvency related litigation.
Our success is attributed to a firm understanding of the practical realities and benefits of settlement, where appropriate, while delivering a deliberate message to our adversaries that we are prepared to go to trial for our clients if necessary. In collaboration with our seasoned litigators, our group has had and continues to have great success in litigating and resolving some of the largest bankruptcy-related cases across the country.
Notable representations include:
- Interstate Bakeries Corp. (“Interstate IV”) – Represented prepetition purchaser and licensee before the Eight Circuit Court of Appeals, En Banc, and obtained reversal of all lower court decisions in determination that our client’s license agreement and asset purchase agreement were not executory contracts.
- Flintkote Co. – Represented bankrupt construction products manufacturing company and its committees in a multi-year complex fraudulent conveyance and alter ego litigation against its former parent corporation obtaining settlement of approximately $575 million.
- City of Detroit – Represented holders of over $175 million of certificates of deposit in litigation with the City of Detroit over the validity of the City’s pension obligation certifications of participation issued via service corporations created by the City.
- Liberty State Benefits of Delaware, Inc., et al. - Represented the chapter 11 Trustee and subsequently appointed Liquidating Trustee in numerous fraudulent conveyance and avoidance actions leading to multimillion dollar recovery for an otherwise insolvent estate.
- Wellesley Services, LLC, et al. (Harvey v. Wellesley, et al.) - At the request of the State of New Jersey Bureau of Securities, served as court appointed receiver in one of the largest securities fraud cases brought by the New Jersey Bureau of Securities to recover more than $90 million of investor funds.
- DSI Holdings LLC – Represented a major insurance firm in the defense of fraudulent transfer, veil piercing, and aiding and abetting fiduciary duty claims in the chapter 7 bankruptcy of a national chain of dialysis clinics.
- Honeywood Development – Represented consumer finance company in obtaining arbitration and civil RICO judgments against developer who used fraudulent appraisals and “straw purchasers” to obtain millions of dollars of financing for derelict Chicago houses.
- Represented a credit union in the successful referral for criminal prosecution by the United States of a recreation-vehicle dealer who used fraudulently obtained titles and “straw purchasers” to obtain millions of dollars of financing for nonexistent luxury RVs.
- Representation of junior mortgage lender in the foreclosure on over 10 downtown Chicago office and commercial residential high-rises.
- LFG LLC – Represented a bank in the successful defense and jury trial of lender liability issues in connection with a senior subordinated financing of a bankrupt major forwards commission merchant in Chicago., in which the jury not only gave the bank a defense verdict, it awarded $1.2 million in damages under a counterclaim for breach of a subordination agreement.
- Represented a bank, its subsidiaries and their officers and directors, in the successful defense of a $300 million lender liability counterclaim to a foreclosure action in which we obtained pre-trial dismissals, with prejudice, of all claims against the officers, directors and subsidiaries and of the claims in breach of fiduciary duty, breach of good faith, and one breach of contract claim and, after trial obtained judgment for the bank for all amounts sought, including all of the bank’s legal fees, and dismissal of all remaining lender liability claims.
- Kaiser Steel – Represented a securities firm in the successful defense of fraudulent transfer claims against them as sellers of stock in the debtor’s LBOs by utilized provisions of the Bankruptcy Code that, years before, we helped draft to protect such payments as “settlement payments”.
- Lee Way Holding Company – Represented a national consumer products company in a bankruptcy in Columbus, Ohio, and related litigation in federal courts in Ohio, New York, and Oklahoma, to defeat securities fraud, fraudulent transfer, alter ego, and RICO claims and a wide variety of bankruptcy litigation.
- Represented an LBO buyer in the successful defense against fraudulent conveyance, alter ego, RICO, and “unlawful dividend” and related litigation brought by the trustee in the Select Brand Industries bankruptcy in Kansas City, MO.
- Spinnaker Reach – Represented the LBO lender in proceedings to recover on its claim by the sale of several operating plants and the settlement of all fraudulent transfer and lender liability claims in the bankruptcy proceedings in Chicago.
- Represented a bank in the successful defense of a claim for several million dollars arising from the bank’s termination of a line of credit, foreclosure on $3 million in GNMA securities without notice, and the consequent liquidation of borrower by the Illinois insurance commissioner. In doing so, we made new law favorable to lenders, that the over-the-counter market for GNMA securities is a recognized market for which no prior notice is required and that the implied duty of good faith does not create an independent right of action under the Illinois UCC.