Moses Singer's attorneys represent directors, shareholders and creditors, in the defense of bankruptcy litigation, including claw-back, fraudulent transfer, preference and "lender liability" claims. Below are several case histories illustrating Moses Singer’s successful insolvency litigation efforts.
Thaxton Group
On behalf of the Official Committee of Unsecured Creditors, representing $125 million of subordinated noteholders, we prosecuted an adversary proceeding to equitably subordinate and avoid the $100 million senior secured claim of Thaxton's principal lender. We obtained summary judgment subordinating that secured claim at the operating company level to the unsecured subordinated debt issued at the holding company level. The case was settled while on appeal to the Fourth Circuit. The settlement with the senior secured lender ultimately resulted in a cash recovery to the subordinated noteholders of more than 100%.
Leasing Solutions
The firm represented the Official Creditors' Committee in a case where all assets were subject to multiple security interests. We negotiated a plan that preserved claims against a secured creditor for the unsecured creditors. Post-confirmation of the liquidating plan, we represented the estate administrator and sued for actual and punitive damages. The case settled for 100% of the actual damages claimed (plus interest), with our legal fees being paid by the estate rather than by the unsecured creditors.
Telemundo Group
We represented an ad hoc committee of the holders of two issues of subordinated debentures. The firm brought an action against the senior lender for a declaration that the junior debt was not subordinated as a result of the manner in which the financings had been structured. The case was settled during Telemundo’s insolvency proceedings, with the subordinated creditors receiving equity that traded at 100% of the face amount of the subordinated debt upon plan confirmation.
Emerald Acquisition
We represented Artra Group, the sole creditor of Emerald Acquisition, the holding company for Envirodyne, in Envirodyne’s bankruptcy proceedings. Artra held $34 million of Emerald PIK notes issued in connection with the LBO of Envirodyne by Salomon Brothers. We persuaded the Illinois state court to grant judgment on the $34 million note by reason of Emerald’s failure to pay $300 of interest in cash required by the PIK notes, which only permitted PIK interest to be paid with notes of $1,000 denomination. Emerald then filed its own bankruptcy proceeding, in which it made no attempt to obtain a recovery from its Envirodyne subsidiary. We sued Salomon Brothers, which controlled Emerald, for breach of fiduciary duty on the ground that they sought no recovery for Emerald because they held senior notes issued by Envirodyne, which they sought to favor. That case was dismissed, and we appealed on behalf of Artra. After argument in the Seventh Circuit, and the issuance of a supplemental briefing order by the court that clearly signaled that Artra would win the appeal, Salomon Brothers settled the case for $11 million.
Enron
We represented three west coast municipalities in the defense of actions by Enron seeking to recover hundreds of millions of dollars with respect to long-term power supply agreements. We also represented a client in actions to recover hundreds of millions of dollars wrongfully drawn by letter of credit beneficiaries when Enron's NEPCO subsidiary failed.
ATC Group
We successfully represented the principal selling shareholders in settling threatened fraudulent transfer claims of $30 million arising from the previous insolvency of ATC Group Inc. shortly after its leveraged buyout by Weiss Peck & Greer. As a result of our challenges to the confirmation of ATC Group's proposed reorganization plan, our clients were able to settle for the projected costs of defense.
Phoenix Information Systems
The firm, as special counsel to the Board of Directors of Phoenix Information Systems Inc., obtained releases of the directors from all potential claims by the Debtor, its creditors and its shareholders for alleged breaches of the federal securities laws and fiduciary duties of directors.
Healthco International, Inc.
The firm obtained a jury verdict dismissing $240 million of claims asserted by the bankruptcy trustee against the directors for breach of fiduciary duty and unjust enrichment in connection with the leveraged buy-out of Healthco. The jury verdict prevented the expansion of directors’ duties toward creditors in connection with LBOs.
American Banknote
We represented the National Bank of Lithuania in litigation concerning the effect of the automatic stay on a pending international arbitration.
Financial Institution/Lender Liability Litigation
The firm has successfully represented financial institutions in complex lender liability litigation, such as in Crothers McCall, Hunt Brothers and Brasswell Shipyards in New York, Texas, and South Carolina, respectively.
Prior results do not guarantee a similar outcome.