On April 19, 2017, RCT filed a $1 billion lawsuit against the officers of GT Advanced Technologies Inc., a former publicly traded company, related to its failed contract with Apple, which resulted in the company’s bankruptcy and a series of criminal and regulatory investigations regarding the company’s sudden demise.
On April 27, 2017, the U.S. Bankruptcy Court for the District of Delaware approved a global settlement among Fresh & Easy, LLC, its former insiders, and the Official Committee of Unsecured Creditors. RCT represented the Committee in pursuing claims against the insiders—including billionaire supermarket magnate Ronald Burkle—for breach of fiduciary duty and fraudulent transfer of certain assets. After obtaining a temporary restraining order preventing the insiders from further disposing of the assets, RCT secured a settlement of those claims in exchange for a $21.5 million cash payment and the release of $104 million of insider claims against the estate, thereby doubling the projected distributions to unsecured creditors in the case.
Reid Collins Tsai has filed a class action lawsuit alleging an over $100 million fraud against Advocare International, LP and its high-level promotors. Advocare is a company that sells shakes, nutritional supplements, and powdered energy drinks. The lawsuit alleges that Advocare operates an illegal pyramid scheme by focusing not on selling products to retail customers, but on endlessly recruiting participants who purchase Advocare products at wholesale prices on an ongoing basis in exchange for the right to receive compensation for recruiting other participants to do the same. According to the lawsuit, Advocare entices people to participate in the scheme with the prospect of large financial rewards when, in fact, hardly any participants make money, the vast majority lose money, and the vast majority of money paid to participants comes from other participants, not retail customers. The claims made in the complaint, brought on behalf of individuals who lost money participating in the scheme, allege that Advocare’s operation as a pyramid scheme violates both state and federal law, including the Racketeer Influenced & Corrupt Organizations (RICO) Act.
The lawsuit (Case No. 3:17-cv-00691-B) was filed in the United States District Court for the Northern District of Texas by RCT partners Adam Swick and Ben King. If you have lost money selling Advocare products and would like more information, please fill out the information below and someone will contact you.
Reid Collins & Tsai, a small trial firm based in Austin, has paid merit bonuses to associates and junior partners ranging up to $229,000 in 2016, exceeding both the big-firm market rate for year-end bonuses set by Cravath, Swaine & Moore and the higher bonuses paid by another Texas litigation firm, Susman Godfrey.
The National Law Journal has selected RCT as 2016 Elite Trial Lawyers in the category of financial institutions litigation. Each year, the NLJ recognizes law firms that achieved high-dollar recoveries for their clients and performed the most creative and significant plaintiff’s work. RCT is proud to be honored among 35 law firms in the country across nine separate categories of plaintiff’s work. To qualify, each law firm was required to have at least one significant win in the prior year and possess an impressive track record of wins within the past three to five years. A “significant win” means prevailing in a bench or jury trial or in a major public settlement where the stakes were high.
The ABI Journal recently published the article, Circuit Split Deepens on Scope of § 546(e) by Recognizing Limits on the Application of the Safe Harbor, written by RCT partners Josh Bruckerhoff and Greg Schwegmann. The article describes RCT’s recent victory before the Seventh Circuit Court of Appeals in which the Seventh Circuit held that the § 546(e) safe harbor only applies where the debtor or the transferee-defendant is one of protected entities listed in the statute.
On August 29, 2016, RCT won a $212 million judgment on behalf of four offshore investment funds and a Massachusetts pension fund against Alphonse Fletcher Jr. and Fletcher Asset Management Co. in New York State Supreme Court. RCT’s clients asserted contract and various tort claims against Mr. Fletcher and his wholly owned management company for their mismanagement of the offshore funds.
The Seventh Circuit overturned the dismissal of a $16.5 million fraudulent-transfer action under section 546(e) of the Bankruptcy Code in FTI Consulting v. Merit Management. The Seventh Circuit rejected the opinions of five other Circuit Courts of Appeal to hold that the section 546(e) safe harbor only applies where the debtor or the transferee-defendant is one of protected entities listed in the statute. This opinion opens additional avenues in the Seventh Circuit for trustees to seek recoveries on behalf of creditors. RCT represents FTI, in its capacity as a litigation trustee, in the action.
Bill Reid and Lisa Tsai were selected to the 2016 list of LawDragon 500 Leading Lawyers in America. Each year, the LawDragon 500 recognizes the most elite lawyers in the profession who represent “the year’s biggest dealmakers, trial lawyers, and public interest lawyers.”
William T. Reid IV is a founding member of Reid Collins & Tsai LLP, which is a 28-lawyer contingency fee commercial plaintiff’s trial firm. Reid has tried a wide range of cases to verdict before judges and juries over the course of his 24-year legal career. From 1997-2000, Bill served an assistant U.S. attorney general, where he focused on complex drug and corruption prosecutions, trying 25 cases to verdict (and getting 24 convictions). Since returning to private practice, Reid has made the NLJ top-100 jury verdicts for his plaintiff clients on several occasions…Read PDF Article
Eric Madden recently spoke at the Annual Spring Meeting of the American Bankruptcy Institute in Washington, DC. He spoke as part of a panel presentation, along with a senior bankruptcy judge and a long-time bankruptcy mediator, entitled “War and Peace: Recent Trends in Bankruptcy Litigation and Mediation.” The conference was attended by over 1,000 attorneys, financial advisors, and other professionals from around the country.
On February 8, 2016, the National Law Journal named RCT to the 2016 Litigation Boutiques Hot List. Each year, the NLJ recognizes the 10 best litigation boutiques in the country with up to 50 lawyers who made standout accomplishments in the prior year, either by securing a key monetary victory or establishing important precedent at the trial or appellate level.
On January 28, 2016, the Appellate Division, First Department, ruled in favor of RCT’s clients, the Joint Official Liquidators of the AJW Offshore Funds. The JOLs sued Marcum for $25 million in connection with Marcum’s role as the funds’ auditor. The First Department held that Marcum could not rule out the application of the “adverse interest” exception to the defense of in pari delicto, and that the AJW Offshore Funds had successfully pleaded that their claims were timely.
On January 20, 2016, Lisa Tsai was honored as a 2016 Pathfinder by the Travis County Women Lawyers’ Association. Each year, the TCWLA selects and honors women lawyers who are “role models and trailblazers” in the legal profession. At the awards luncheon, Lisa encouraged young women lawyers to “stay in the game.”
On December 22, 2015, the New York Appellate Division, First Department, revived $350 million in fraud claims brought by RCT’s clients, a group of funds that invested in five Credit Suisse-arranged real estate loans to the developers of Ginn Clubs & Resorts, Park Highlands, Rhodes Homes, Turtle Bay Resort, and Yellowstone Mountain Club. In overturning the lower court’s dismissal, the First Department held that the funds had adequately pleaded that Credit Suisse committed fraud by causing appraisers to issue inflated appraisals of the collateral supporting the loan transactions.
In December 2015, the Grand Court of the Cayman Islands approved a confidential settlement between ICP Strategic Credit Income Master Fund, Ltd. and Barclays Bank PLC in connection with a $36 million fraudulent transfer action filed by RCT on behalf of the ICP Funds against Barclays in New York bankruptcy court.
Eric Madden recently spoke at the Winter Leadership Conference hosted by the American Bankruptcy Institute. He spoke as part of a panel presentation entitled “A Road to Recovery: How to Navigate the Twists and Turns of Insider Litigation,” which focused on D&O litigation in the context of a bankruptcy case.
On September 30, 2015, the U.S. District Court for the Eastern District of New York ruled in favor of RCT’s client, Neogenix Oncology Inc., by denying six motions to dismiss Neogenix’s $50 million lawsuit against its former officers, directors, and outside counsel for breaches of fiduciary duty, malpractice, and fraud. Once a promising biotechnology company developing genetically engineered cancer treatments, Neogenix is now in bankruptcy and pursuing claims against those who caused its downfall through the sale of securities by unregistered brokers. In prevailing over the motions to dismiss, Neogenix defeated arguments that its claims were barred by the Wagoner Rule, in pari delicto, and the business judgment rule. See Neogenix Oncology, Inc. v. Peter Gordon, et al.,— F. Supp. 2d —, 2015 WL 5725182 (E.D.N.Y. Sept. 30, 2015).
On September 4, 2015, following a jury trial and a bench trial, a Texas state court entered a judgment for $287.5 million in favor of RCT’s client, an affiliate of Highland Capital Management, LP, against Credit Suisse AG, Cayman Islands Branch, and Credit Suisse Securities (USA), LLC. More than two years ago, RCT, on behalf of a group of Highland-managed funds, brought claims against Credit Suisse for fraud and breach of contract in connection with a grossly inflated appraisal of the collateral supporting a $540 million loan to the developers of Lake Las Vegas. In December 2014, a Texas jury found that Credit Suisse had fraudulently induced the Highland-managed funds to invest in the loan by making affirmative misrepresentations, and following a bench trial in May and June 2015, a Texas court ruled against Credit Suisse on breach of contract, breach of duty of good faith and fair dealing, aiding and abetting fraud, and unjust enrichment.
Bill Reid and Eric Madden were recently selected for inclusion in The Best Lawyers in America® for 2016. Selection to this group is based on an exhaustive peer-review evaluation. The methodology is designed to capture, as accurately as possible, the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area.
This recognition follows other professional accolades that RCT has received this year, including being named as a “Litigation Department of the Year Finalist” by Texas Lawyer.
Texas Lawyer just announced that RCT has been selected as a Finalist in the 2015 Small Firm Litigation Department of the Year.
On July 17, 2015, in one of the largest Chapter 15 cases, the United States Bankruptcy Court for the Southern District of New York recognized Saad Investments Co. Ltd.’s insolvency proceeding in the Cayman Islands as a foreign main proceeding. SICL is the main holding company of a group of Saad entities controlled by Maan Al-Sanea, a Saudi Arabian billionaire once ranked by Forbes magazine as the world’s 62nd richest person.
On behalf of the Joint Official Liquidators of the AJW Funds, New York’s Appellate Division, Second Department, ruled that the Liquidators can collect more than $110 million owed under promissory notes and personal guaranties. Former management of the AJW Funds sold convertible debentures to Bronson’s companies in return for the notes, which were never repaid. The appellate court reversed the trial court’s finding that there were factual issues concerning the amount of damages owed.
The Delaware Chancery Court awarded RCT’s client, ChinaCast Education Corporation, $366 million on its claims for breaches of fiduciary duty and other wrongdoing.
On April 2, 2015, the United States Bankruptcy Court for the Southern District of New York granted foreign main recognition under Chapter 15 of the Bankruptcy Code of the Tibanne Co., Ltd bankruptcy proceeding pending in Tokyo, Japan. RCT represented Taro Awataguchi, the Trustee of Tibanne in his effort to obtain recognition. Tibanne is the parent company of MtGox, a company that reportedly lost over 750,000 customer bitcoins worth in excess of $400 million.
On February 6, 2015, the State of Tennessee’s Consolidated Retirement System formally intervened in a $140 million suit filed by RCT on behalf of relator, Integra REC LLC, against numerous investment banks, including Merrill Lynch, Citigroup, Royal Bank of Scotland, and Credit Suisse, for financial fraud in connection with knowingly misrepresented residential mortgage-backed securities purchased by the state’s retirement system. In connection with its intervention, the state has retained RCT to prosecute the case.
MXI is a company that sells supposed “healthy” chocolate products, including chocolate skin care products, through the brand Xocai (pronounced “sho-sigh”). RCT has filed a class action alleging that MXI is a scam that operates as an illegal pyramid scheme by focusing not on selling chocolate products to retail customers, but on endlessly recruiting participants to commit to purchasing MXI chocolate at wholesale prices on an ongoing basis in exchange for the right to receive compensation for recruiting other participants to do the same. The lawsuit alleges that MXI entices people to participate in the scheme with the prospect of large financial rewards when, in fact, hardly any participants make money and the vast majority lose their investments. MXI, of course, fails to inform its participants that they are almost certain to lose money.
On December 17, 2014, a Texas jury awarded a Highland Capital Management LP-managed entity $40 million, finding the Dallas-based hedge fund was defrauded by Credit Suisse AG units about the value of Las Vegas real estate underlying a $540 million refinancing loan.
In accordance with a Memorandum Opinion issued in November 2014, the Bankruptcy Court for the Southern District of New York ruled in favor of RCT’s client on claw-back actions commenced against former partners of Thelen LLP. The ruling found that former partners are liable for excess draw payments. Yann Geron, the chapter 7 trustee of Thelen LLP tapped RCT to handle 76 of the former partner actions, representing those partners who were hold outs and refused to participate in an earlier settlement. RCT settled most of the actions and proceeded to litigate to judgment against the remaining group.
RCT obtained approval of a settlement on behalf of Deborah Piazza, the chapter 7 trustee of Empire Financial Group, Inc. resolving actions against former directors and officers. Empire was a broker dealer and a former subsidiary of Jesup & LaMont Inc. Both Empire and Jesup had cases pending in the Bankruptcy Court for the Southern District of New York where the settlement was approved.
On November 13, 2014, RCT prevailed against an international insurance company in an appeal to the U.S. Court of Appeals for the Tenth Circuit concerning a $112 million abusive tax shelter. RCT convinced the court that the insurance company’s attempt to use federal interpleader was—as the court concluded—a “thinly veiled attempt to cap its potential liability” to RCT’s clients. In obtaining this favorable ruling, RCT successfully distinguished two prior Tenth Circuit cases involving similar facts that have been binding precedent for almost 60 years. See Aviva Life and Annuity Company v. White (In re Millennium Multiple Employer Welfare Benefit Plan), — F.3d —, 2014 WL 6056941 (10th Cir. 2014).
On October 15, 2014, RCT client Sheila M. Gowan, Post-confirmation Plan Administrator for Dreier LLP, settled her clawback action against the Westford family of hedge funds for $32.2 million. The settlement, which is still subject to Bankruptcy Court approval, ends the last in a series of litigations Ms. Gowan brought against hedge funds that had invested in a massive Ponzi scheme operated by disgraced former attorney, Marc S. Dreier.
On September 16, 2014, the Commonwealth of Virginia formally intervened in a $1.15 billion suit filed by RCT on behalf of the relator, Integra REC LLC, against numerous investment banks, including J.P. Morgan Securities, Merrill Lynch, and Morgan Stanley, which knowingly misrepresented residential mortgage-backed securities purchased by the Virginia Retirement System.
On August 25, 2014, RCT filed claims seeking over $200 million in the Court of Chancery of the State of Delaware against five of ChinaCast’s former officers and directors on behalf of the Company for breaches of their fiduciary duties. As alleged in the lawsuit, ChinaCast’s former officers and directors breached their fiduciary duties by, among other things, looting millions in cash and assets from the Company and its subsidiaries over the course of several years.
On July 22, 2014, RCT filed a lawsuit in New York federal court against Mintz Levin, Nixon Peabody, and former insiders of Neogenix Oncology, a publicly reporting biotechnology company. As alleged in the complaint, the company’s former CFO, with the knowledge and consent of the company’s outside counsel, paid finder fees for sales of Neogenix stock, regardless of whether the “finders” were licensed to sell securities. This practice violated securities laws, triggered an SEC inquiry, and caused the company’s bankruptcy.
On July 22, 2014, RCT filed a $25 million claim in New York Supreme Court against Marcum LLP on behalf of the Joint Official Liquidators of the AJW Offshore Funds. As alleged in the lawsuit, Marcum provided negligent audit reports that allowed the manager of the funds, The N.I.R. Group, LLC and its principal, Corey Ribotsky, to receive improper management and performance fees.
In April 2014, following a two-week jury trial in Texas state court, RCT obtained a judgment in favor of its client, Petroleum Wholesale, LP, a full-service gasoline distributor with operations in nine western states. RCT prevailed on its client’s breach-of-contract claims and successfully defended against counterclaims that its client breached a fuel supply agreement. The court awarded $740,000 to RCT’s client and nothing to the defendants on their $10 million counterclaim. RCT tried the case against Chris Bell, a former U.S. Congressman and Texas gubernatorial candidate.
On April 2, 2014, RCT filed a $64 million petition in Travis County District Court on behalf of The Texas County and District Retirement System against numerous investment banks, including J.P. Morgan Securities, Merrill Lynch, and Morgan Stanley, which knowingly misrepresented residential mortgage-backed securities. The Texas County and District Retirement System is a multibillion-dollar governmental entity created by the Texas Legislature that serves more than 655 Texas county and district employers, ranging from sheriff’s offices to water and hospital districts.
On March 24, 2014, the Second Circuit reversed the trial court’s summary judgment ruling in an interpleader action, United States v. Barry Fischer Law Firm, LLC, et al., holding that the long-standing penal law rule barred Federative Republic of Brazil from asserting rights arising from a Brazilian criminal judgment. RCT represents the Joint Official Liquidators of Trade and Commerce Bank, a claimant in the interpleader action seeking the approximately $7 million in interpleaded funds.
On March 31, 2014, RCT filed a lawsuit in New York State Supreme Court against Alphonse “Buddy” Fletcher, Fletcher Asset Management, and others related to their alleged mismanagement of various offshore funds whose claims were pooled pursuant to a confirmed plan of reorganization that was approved by the bankruptcy court on March 27, 2014.
In December 2013, RCT filed a lawsuit in New York state court against DLA Piper alleging that the law firm assisted an investment manager in defrauding two Cayman hedge funds. As alleged in the lawsuit, DLA Piper helped the investment manager misappropriate tens of millions of dollars from the Cayman hedge funds to make margin payments on behalf of a CDO that the investment manager also managed.
RCT, special counsel to Yann Geron as Chapter 7 Trustee of Pali Holdings and Pali Capital, a defunct securities firm, obtained court permission to settle a suit commenced against 13 former officers and directors of Pali as well as one company. The settlement provides for an overall recovery in excess of $5.7 million. The settlement also provides other benefits to the Pali estates, including the disallowance of various related claims filed against the Pali companies.
RCT, as special counsel to the Trustee of Thelen LLP, settled overcompensation, fraudulent transfer, and other claims against 44 Thelen partners and former partners. RCT commenced 11 new actions against partners and former partners based on similar claims. Pending actions are subject to a motion to consolidate that will be heard next month.
On August 26, 2013, Reid Collins & Tsai LLP announced that Dallas trial lawyers Eric D. Madden and J. Benjamin King have joined the firm as partners. Mr. Madden and Mr. King will launch the firm’s new Dallas office, located in Thanksgiving Tower.
Previously partners at Diamond McCarthy LLP, Mr. Madden and Mr. King focus their practices on high-stakes bankruptcy-related litigation, including director-and-officer liability, auditor malpractice, other professional liability, and fraudulent transfers. Both also handle other general commercial litigation matters. They join Reid Collins & Tsai’s experienced team of trial attorneys handling national and international litigation matters.
“Ben and Eric have handled some of the most prominent litigations arising out of major bankruptcies in the country. They are go-to, zealous litigators, and we are extremely happy that they have decided to join our firm and open our new office,” said Bill Reid, a founding partner of Reid Collins & Tsai.
Mr. Madden has recently represented the post-confirmation trustee of Seahawk Drilling, Inc., a former publicly traded company that had a market capitalization of $220 million, but was destroyed as a result of the worst environmental disaster in U.S. history-namely the Deepwater Horizon explosion and oil spill in the Gulf of Mexico in April 2010. He is pursuing Seahawk’s claims, seeking $175 million in damages from BP, in the multi-district litigation pending in New Orleans. Mr. Madden also represented the post-confirmation trustee of LJM2 Co-Investment LP, the Enron-affiliated partnership that Andy Fastow used to conceal hundreds of millions of dollars in losses from Enron’s investors. He successfully resolved claims against LJM2’s former counsel, accountants, and investment bankers.
Mr. Madden graduated from the University of Kansas, after serving as the Editor-in-Chief of the law review and earning membership in the Order of the Coif. He then practiced in the Dallas offices of Carrington Coleman Sloman & Blumenthal LLP and Diamond McCarthy LLP.
Mr. King recently has represented the bankruptcy trustee of Dreier LLP in bringing hundreds of millions of dollars in fraudulent transfer claims against Ponzi scheme participants, and he has represented the trustee of defunct law firm Howrey LLP in bringing unfinished business and overpayment claims against the firm’s former partners. He also represented the Caymanian liquidators of three entities destroyed by the collapse of Italian dairy giant, Parmalat S.p.A., in bringing claims against the former companies’ bankers and auditors.
Mr. King graduated first in his class from Cornell Law School and then clerked for the Honorable Allan E. Norris of the United States Court of Appeals for the Sixth Circuit. After his clerkship, he worked for Arnold & Porter LLP in Washington, DC.
“Reid Collins & Tsai is packed with aggressive, tough litigators. It is incredible what the firm has been able to accomplish in the bankruptcy litigation space, and I am thrilled to be joining,” said Mr. Madden.
“I’ve worked extensively with several Reid Collins & Tsai attorneys on prior cases, and I’m excited to be joining forces with them again,” added Mr. King.
Reid Collins & Tsai is a boutique trial firm that practices complex litigation nationally and internationally. Its trial attorneys include a team of former federal prosecutors, judicial law clerks, and forensic accountants who aggressively and efficiently maximize recoveries and resolve complicated disputes for clients both in and out of the courtroom. The firm’s practice spans a wide range of complex commercial litigation, including financial fraud matters, Ponzi scheme-related cases, international money laundering matters, cross-border disputes, and professional liability matters. The firm represents trustees, liquidators, foreign governments, international banks, hedge funds, and companies from the U.S. and abroad in federal and state courts across the country.
On July 16, 2013, RCT filed two lawsuits against Credit Suisse seeking damages in excess of $600 million related to failed “dividend recapitalization loans” syndicated by Credit Suisse from 2005 to 2007. As alleged in the lawsuits, Credit Suisse marketed and sold the loans based on false appraisals, which grossly overvalued the real estate that collateralized the loans. Eventually, every deal soured, and the borrowers ended up in bankruptcy.
An Ohio arbitrator has ruled in favor of RCT’s client, a former KeyCorp employee, in an arbitration against KeyCorp. The arbitrator held that the employee’s separation agreement, in which he purported to waive all claims against KeyCorp, was void for lack of consideration. As a result of the arbitration victory, RCT is now proceeding with a multimillion-dollar breach-of-contract claim against KeyCorp in Texas federal court.
The Hong Kong High Court appointed RCT to assist JLA Asia, the Hong Kong liquidators of Smart Union Mining, in pursuing claims arising from the judgment against a NY resident who was party to a mining contract. The claims arise from the default on an obligation to acquire a mining company incorporated in the BVI. RCT has commenced a lawsuit in New York Supreme Court to enforce the multi-million Hong Kong judgment.
Judge Robert E. Gerber of the Bankruptcy Court for the S.D.N.Y. granted foreign main recognition to the Joint Official Liquidators of two ICP Strategic Credit Income Funds. The ICP Funds are Cayman Islands exempted limited liability entities that invested in the RMBS market. In addition to recognition, the Court granted several forms of additional relief to assist the Liquidators in commencing potential actions in the U.S.
On July 22, 2013, the Grand Court of the Cayman Islands authorized the JOLs of two offshore ICP Funds to hire RCT to pursue third-party litigation claims against a U.S. law firm and a European Bank, as well as to investigate claims against insiders and other third-party service providers.
RCT has settled on confidential terms a lawsuit in Dallas state court against CBRE, Inc. The lawsuit alleged that CBRE issued a fraudulent or negligent appraisal that caused a group of funds to invest and lose more than $250 million in a $540 million refinancing loan made to the developers of the Lake Las Vegas master-planned residential and resort community in Nevada.
RCT filed suit against Corey Ribotsky and The NIR Group, LLC in New York Supreme Court on behalf of the Joint Official Liquidators of the AJW family of funds alleging fraud and breaches of fiduciary duty against the former managers of the AJW funds. The lawsuit alleges defendants artificially inflated the value of the AJW funds, which once reported assets under management of $800 million, for the purpose of collecting tens of millions of dollars in unjustified management and performance fees.
On behalf of the Joint Official Liquidators of the AJW Funds, RCT has sued Edward Bronson and several of his companies to collect more than $85 million owed under promissory notes and personal guaranties. Former management of the AJW Funds sold convertible debentures to Bronson’s companies in return for the notes, which were never repaid. RCT moved for immediate summary judgment on the notes and guaranties in New York Supreme Court.
RCT has filed suit against T. Boone Pickens III, CEO of Austin-based Astrotech Corporation, and the company’s board of directors. The derivative lawsuit alleges that Astrotech’s staggering 89 percent decline in share value is attributable to Pickens’s mismanagement and self-dealing, and seeks to hold Pickens and his hand-picked board personally responsible.
RCT and its co-counsel, Fox Rothschild have filed a lawsuit in the S.D.N.Y. on behalf of Yann Geron, as chapter 7 trustee of Pali Capital and Pali Holdings. Prior to its liquidation, Pali Capital was known as a highly profitable securities firm. The suit seeks damages from Pali’s former directors and officers for breaches of fiduciary duty leading to the ultimate demise of the company as well as recovery of fraudulent conveyances and on a note.
Judge Alan Trust of the E.D.N.Y. granted foreign main recognition to the Joint Official Liquidators of the AJW family of funds. The AJW funds were Cayman Islands exempted limited liability funds that invested in PIPES. The Court found that the center of main interest of the funds was in the Cayman Islands and that the Official Liquidators should be recognized so that they could commence actions in the U.S.
RCT sued MF Global, Inc. for fraudulent transfers of $27 million in the Agape bankruptcy. After MF Global, Inc. sought bankruptcy protection, Agape’s lawsuit was eventually transformed into a $15 million proof of claim, which the Agape Trustee auctioned for $13.5M. EDNY District Judge Eisenberg granted RCT’s subsequent fee application, saying that RCT had “done an excellent job” and could “be proud of the work you’ve done.”
On December 24th, the Grand Court of the Cayman Islands authorized the JOLs of four offshore AJW Funds to hire RCT to pursue third-party litigation claims. Separately, the JOLs also act as liquidators for 6 onshore funds. The AJW funds were a failed PIPE investment fund that once had a NAV in excess of $800 million that has turned out to be almost entirely worthless. RCT is investigating claims against insiders and third-party service providers.
RCT has settled on confidential terms a legal malpractice lawsuit brought by a group of funds against Orrick Herrington & Sutcliffe LLP. The lawsuit sought damages of $95 million for Orrick’s failure to advise the funds that their extension agreements with Royal Bank of Scotland, PLC allowed the bank to unilaterally terminate a proposed $400 million CLO transaction.
RCT obtained a ruling in the U.S. Court of Appeals for the Fifth Circuit that reversed a federal district court’s dismissal of a breach of contract claim brought by Highland Capital Management, LP against Bank of America, NA. The central issue is whether the parties’ oral agreement to trade bank debtwas binding under the Loan Syndications and Trading Association Standard Terms and Conditions.
Read the full text of the opinion
RCT has filed a lawsuit in federal court in Texas against KeyCorp on behalf of a former employee for breach of contract and fraudulent inducement. The lawsuit alleges KeyCorp failed to pay the employee a multi-million dollar bonus contractually owed in connection with the sale of the former asset manager, Austin Capital Management.
The U.S. District Court for the Northern District of California denied a motion by former directors and officers of Asyst Technologies to dismiss breach of fiduciary duty claims asserted by RCT’s client, the trustee of the Asyst Technologies Liquidation Trust. In a matter of first impression under California law, the court ruled that directors and officers can be held liable for a breach of fiduciary duty for authorizing a payment by an insolvent company on an existing contract. Preferential payments can give rise to D&O liability in California.
RCT has settled several fraudulent transfer claims it is pursuing on behalf of FTI Consulting, Inc., trustee to the Centaur LLC Litigation Trust. Centaur LLC and its subsidiaries, some of the country’s leading horse racing, off-track betting, and casino operators, filed for bankruptcy in 2009 and 2010. The lawsuits seek to recover fraudulent transfers totaling over $40 million that were made in connection with the development of a race track and casino in Pennsylvania. RCT recently resolved one such claim, brought in the Delaware bankruptcy court, for $3.7 million.
Prior results do not guarantee a similar outcome