RECOVERY STRATEGIES

Our representations often involve aggressive and creative litigation strategies to maximize our clients' recoveries.  Below are several case histories illustrating Moses Singer’s successful recovery litigation efforts.

Whitehall Jewelers

The firm represented the Official Creditors' Committee. After blocking a quick sale, we were instrumental in negotiating a settlement between the debtors and consignors and a global settlement with secured creditors, consignors and unsecured creditors, which benefited the unsecured creditors.

Friedman's Inc. and Crescent Jewelers

The firm represented the Official Creditors' Committee. In Friedman's, Debtors held an auction that produced a high bid that would have resulted in no recovery for unsecured creditors. After M&S threatened equitable subordination litigation against the equity holder/junior lienholder, the Committee negotiated a settlement that resulted in, among other things, the junior lender's assigning to the estate its $10 million pre-petition secured claim and its pre-petition unsecured claims totaling $20 million, which allowed a more favorable “going out of business” sale structure.

M. Fabrikant & Sons

The firm represented the Official Creditors' Committee. After the firm developed potential fraudulent transfer and equitable subordination claims against the hedge funds that acquired the secured debt of the original bank lenders, the Committee settled with those hedge funds on a plan that provides for a base recovery plus funding to pursue director and officer litigation with substantial upside. The Committee preserved fraudulent transfer and related claims against the original bank lenders which were superior to what had been previously proposed.

Thaxton Group

On behalf of the Official Committee representing subordinated noteholders, M&S pursued an adversary proceeding seeking to equitably subordinate and avoid the asserted senior secured claims of Thaxton's principal lender. The firm obtained summary judgment, subordinating its $100 million secured claim at the operating company level to the $125 million of subordinated debt at the holding company level. The firm's efforts resulted in a settlement that lead to a cash recovery of more than 90% for subordinated creditors.

RFS Ecusta Inc. and RFS US Inc.

The firm represented the Official Creditors' Committee. We identified claims against management/equity and others and negotiated a funding and sharing agreement with the principal secured creditor to fund the pursuit of such claims. The Committee forced a sale of the company, and, following the conversion of the cases to proceedings under Chapter 7, the firm was retained by the Chapter 7 trustee to pursue the claims we previously identified in the Chapter 11 proceedings. M&S recovered in excess of $15 million on those claims.

Waste Systems International, Inc.

The firm achieved a 67% cash recovery for general unsecured creditors in its representation of the Official Creditors' Committee, rejecting the Debtors' proposal for an all equity plan.

Homegold

In this Chapter 11 case, the firm negotiated an enhanced claim of 250% of the face amount of notes for the unsecured debenture holders represented by the firm as part of an agreement on a consolidated reorganization plan for three affiliated debtors. This resulted in a recovery of over 40% for noteholders in a case that paid other creditors 15% or less.

Leasing Solutions

The firm represented the Official Creditors' Committee in a case where all assets were the subject of multiple security interests. We negotiated a plan that preserved certain litigation claims for unsecured creditors. We pursued claims against secured creditor GECC seeking actual and punitive damages and settled the case for the amount of actual damages claimed, with the firm's legal fees being paid by the estate rather than the unsecured creditors.

O'Brien Environmental Energy, Inc.

For this developer and operator of co-generation facilities, the firm successfully represented the Official Creditors' Committee. At the time of the firm's retention, O'Brien's public debt was trading in the 30's. As a result of the firm efforts, a plan was confirmed, providing for creditors to be paid 100% of claims plus post-petition interest. The O'Brien case won the Turnaround Management Association's 1996 Award for best large company turnaround.

Telemundo Group

The firm represented a committee of the holders of two issues of subordinated debentures involving one of the two Spanish language television networks in the United States. As a result of the firm's efforts, a favorable agreement was negotiated resolving intercreditor disputes. The debentures represented by the firm were trading at 16 when the firm was retained, reaching near or at par by the plan confirmation date.  The Company was sold 3 years later resulting in a price for the stock the subordinate creditors had received that was about 3 times its value at the time of confirmation.

Emerald Acquisition

The firm represented the sole creditor of Emerald Acquisition, the holding company for Envirodyne, in the Envirodyne bankruptcy case. The firm obtained an $11 million settlement from the principal shareholder of Emerald on its client's $30 million claim against Emerald. M&S developed and prosecuted numerous claims.  Creditors of Envirodyne, who were structurally senior to our client, received no recovery.

Lomas Financial

In the first Lomas Financial case, the firm represented the interests of holders of subordinated debentures on the Official Creditors’ Committee. The firm's efforts resulted in a highly favorable settlement for debenture holders generally. The firm then commenced litigation to establish the seniority of the debenture issues we represented over other subordinated debentures, which had been considered to be pari passu. We obtained an enhanced recovery of 52% for the firm's clients. In the second Lomas Financial case, the firm represented the indenture trustee for noteholders which served as a member of the Official Creditors’ Committee. The firm represented the indenture trustee in asserting various claims relating to intercompany transfers between Lomas entities.

Forum Group

The firm represented the Official Creditors’ Committee in the Chapter 11 case. We blocked a management-proposed disposition of the Company, ousted senior management, and negotiated a plan with the secured bank lenders, which the Company, agreed to sponsor. Members of the Creditors’ Committee took control of the Company upon confirmation of the plan. The firm subsequently represented the directors of Forum in a takeover battle between the Pritzker family and an investor group including Apollo Advisors, resulting in a $137 million recapitalization of Forum.

Jamesway

In the first Jamesway Chapter 11 case, the firm successfully represented the interests of subordinated debentureholders obtaining a substantial recovery for holders that would not have been available had the absolute priority rule been applied.

Belle Casinos

The firm also represented the original holders, and the indenture trustee for holders, of $75 million of secured notes in the Belle Casinos case in Biloxi, Mississippi which has broken new ground on several issues of finance in the gaming industry. The Fifth Circuit Court of Appeals ultimately upheld the validity of ship mortgages on stationary, landlocked "floating" casinos, a position the firm had advocated in the Belle Casinos case.

Lone Star Industries

The firm represented a bank holding $40 million of claims against Lone Star and one of its subsidiaries. As a member of the Official Creditors Committee the firm persuaded the Debtor to abandon its original plans for substantive consolidation and negotiated an enhanced recovery for creditors holding claims against subsidiaries. The firm was awarded legal fees by the Court by reason of its substantial contribution to the case.

REAL ESTATE WORKOUTS

Commercial Real Estate

• The firm regularly advises major banks and other financial institutions in loan workouts and restructurings of commercial properties in New York and throughout the United States.  This has included matters such as:
• Restructuring a $120,000,000 loan secured by older office buildings in lower Manhattan
• Workouts of commercial real estate loans in the New York area
• Workouts and restructurings of secured office building and condominium loans in New York and New Jersey
• Representation of an international bank in the restructuring of its portfolio of New York City IDA-funded projects throughout the New York region.

Construction Loans

Moses Singer has represented banks in workouts and restructurings of construction loans.  Examples of restructuring include:

• $20,000,000 acquisition and construction loan for a Nassau County, New York office building
• $46,000,000 acquisition and construction loan for a townhouse development in Nassau County, New York
• $60,000,000 financing in connection with cost overruns in a mixed use office and hotel project in New York City
• $25,000,000 construction loan for condominium units in New York City
• $11,500,000 shopping center construction loan

^{Prior results do not guarantee a similar outcome.}