Creditors' Rights and Bankruptcy
Kasowitz’s creditors’ rights and bankruptcy practice has been highly rated by Chambers USA and other national organizations and publications, and is one of the leading creditors’ rights groups in the country. The firm is recognized for its creative and aggressive representation of investors in securities of distressed companies, including hedge funds that see opportunity in troubled companies poised for a turnaround, and represents those funds which typically acquire significant positions in an enterprise’s capital structure, in order to influence the direction of its reorganization. The firm has extensive experience in the most sophisticated litigations arising out of bankruptcy cases, including valuation trials. The firm also represents companies of all types and sizes when they are in financial distress, working closely with the clients and their financial advisors to develop and implement creative legal strategies for their financial rehabilitation.
Some of the firm’s high-profile bankruptcy representations include:
- Residential Capital LLC: Kasowitz currently represents Federal Housing Finance Agency (“FHFA”) as Conservator for the Federal Home Loan Mortgage Corporation in the bankruptcy cases of Residential Capital, LLC and its debtor affiliates (the “ResCap Cases”), pending in the United States Bankruptcy Court for the Southern District of New York. Prior to the commencement of the ResCap Cases, FHFA commenced an action styled Federal Housing Finance Agency, as Conservator for the Federal Home Loan Mortgage Corporation v. Ally Financial Inc. f/k/a GMAC, LLC et al. (referred to herein as the “FHFA Case”), which is currently pending in the District Court for the Southern District of New York before District Judge Cote. Shortly after the commencement of the ResCap Cases, the debtors commenced an adversary proceeding against numerous parties, including FHFA, seeking to enjoin the prosecution of certain pending litigation, including the FHFA case, against certain affiliated non-debtor entities (the “Injunction Motion”). After FHFA succeeded in withdrawing the reference of the adversary proceeding, on July 9, 2012, Judge Cote denied the Injunction Motion, finding that the anti-injunction provision of the Housing and Economic Recovery Act deprived the District Court jurisdiction to enjoin FHFA from prosecuting the FHFA case against ResCap’s non-debtor affiliates.
- Dewey & LeBoeuf LLP: Official Committee of Former Partners: Kasowitz represents the Official Committee of Former Partners of Dewey & Leboeuf LLP (the “FPC”). The FPC represents former partners who hold claims against the Debtor relating to unpaid pension benefits, severance agreements, employment contracts or other similar arrangements. Kasowitz has been involved with all issues in the case including cash collateral, the partner contribution plan, retention issues, and the debtor’s disclosure statement and chapter 11 plan.
- MSR Resort Golf Course LLC: Kasowitz represents Five Mile Capital Partners LLC and certain of its affiliates in the chapter 11 bankruptcy cases of MSR Resort Golf Course LLC and its affiliates pending in the United States Bankruptcy Court for the Southern District of New York. As of the bankruptcy filing, the debtors owned and operated five iconic luxury resort hotels and amenities, specifically, (1) the Grand Wailea Resort Hotel & Spa (Wailea, HI), (2) La Quinta Resort & Club PGA West (La Quinta, CA), (3) the Arizona Biltmore Resort & Spa (Phoenix, AR), (4) the Doral (Miami, FL), and (5) the Claremont Resort & Spa (Berkeley, CA). Five Mile holds $50 million of the junior-most mezzanine debt in the debtors’ complex capital structure that includes $1.525 billion of mortgage and mezzanine debt, and is a post-petition DIP lender. The Court recently approved bid and auction procedures connected with the sale of substantially all of their assets pursuant to a stalking horse agreement in the amount of approximately $1.54 billion, with affiliates of Government of Singapore Investment Corporation, which holds approximately $360 million in second- and third-level mezzanine loans.
- Borders Group, Inc.: In 2011, Kasowitz was counsel to the debtors and debtors in possession in the bankruptcy cases of Borders Group, Inc. and its subsidiaries. Borders was a leading operator of book, music and movie superstores and mall-based bookstores. As of January 29, 2011, Borders operated 642 stores, under the Borders, Waldenbooks, Borders Express and Borders Outlet names, as well as Borders-branded airport stores in the United States. Kasowitz filed Borders’ chapter 11 cases on February 16, 2011 in the United States Bankruptcy Court for the Southern District of New York. During the chapter 11 cases, Kasowitz, among other things, obtained court approval of $505 million in post-petition financing and approval of two agency agreements with third-party liquidators to conduct going out of business sales at all of the debtors’ store locations. Further, on September 14, 2011, Kasowitz held a successful auction and sold many of Borders’ most valuable intellectual property assets, primarily to Barnes & Noble, Inc. The Bankruptcy Court approved the sale of these assets on September 27, 2011. On December 20, 2011, the Bankruptcy Court confirmed Borders’ chapter 11 plan of liquidation, which went effective on January 12, 2012.
- Adelphia Communications Corporation: Kasowitz was counsel to the Official Committee of Unsecured Creditors of Adelphia Communications Corporation and its affiliated debtors and is now counsel to the Adelphia Recovery Trust. In its capacity as counsel to the Creditors’ Committee, Kasowitz was the architect of Adelphia’s chapter 11 plan and prosecuted confirmation thereof and also advised the Creditors’ Committee and participated extensively in the sale of Adelphia’s assets to Time Warner NY Cable LLC and Comcast for in excess of $17 billion, among the largest M&A transactions ever completed in bankruptcy. On behalf of the Adelphia Recovery Trust, a publicly traded liquidating trust, Kasowitz has prosecuted actions against numerous commercial banks and their investment bank affiliates, alleging, among other things, that such institutions assisted Adelphia’s management, led by the Rigas family, in looting funds from the company. The action was recently settled for $175 million. Kasowitz has continued to represent the Trust in pursuing several remaining claims for intentional and constructive fraudulent conveyances, and aiding and abetting fraud and breach of fiduciary duty, in the litigation, appeal, and mediation contexts.
- Tribune Company: Kasowitz currently represents Law Debenture Trust Company of New York, indenture trustee for 18% of the total outstanding senior notes issued by Tribune, in the chapter 11 cases of Tribune Company currently pending in the United States Bankruptcy Court for the District of Delaware. The representation focuses on potential claims related to the approximately $11 billion leveraged buy-out transaction that Tribune entered into less than two years prior to the commencement of the cases. Kasowitz has worked throughout the pendency of the almost four-year case to ensure a complete, thorough, investigation of all aspects of the leveraged buyout transaction and ascertain whether claims should be brought on behalf of the debtors’ estates to enhance the recovery to unsecured creditors, including Tribune’s bondholders. This effort led to the Official Committee of Unsecured Creditors’ commencement of two separate complaints. Kasowitz sought to resolve these potential claims and enable the debtors to propose a confirmable plan of reorganization favorable to the bondholders. Kasowitz’s representation resulted in the proposal of a competing plan of reorganization along with other indenture trustees in opposition to a plan proposed by the Debtors, the Official Committee of Unsecured Creditors and certain other creditors. This culminated in a three-week contested confirmation hearing from March-April 2011. While Kasowitz successfully defeated the Debtors’ initial plan, the Court recently confirmed an amended plan proposed by the Debtors. Kasowitz is currently appealing certain aspects of the confirmed plan.
- The Liquidation Trustee of the Le-Nature’s Liquidation Trust, which was formed under the plan of reorganization in the chapter 11 case of Le-Nature’s, Inc. In the multi-district litigation, Kasowitz brought claims against, among others, Wachovia, CIT, and Krones AG, a major German manufacturer, for their participation and substantial assistance in Le-Nature's massive Ponzi scheme fraud. Kasowitz also separately brought claims against BDO Seidman LLP in a related arbitration. Together with the Liquidation Trustee, Kasowitz has achieved multiple settlements with defendant parties.
- Trump Entertainment Resorts, Inc.: Kasowitz was counsel to Donald J. Trump and Ivanka Trump in the chapter 11 bankruptcy cases of Trump Entertainment Resorts, Inc. (“TER”) and its affiliates. TER owns and operates the Taj Mahal, Trump Plaza, and Trump Marina casinos in Atlantic City, New Jersey. Kasowitz was actively involved, on behalf of the Trumps, in all aspects of the cases, including an extensive confirmation fight with competing chapter 11 plans that resulted in a victory for the Trumps on April 12, 2010, when the bankruptcy court confirmed the plan backed by Mr. Trump.
- Smurfit-Stone Container Corporation: Kasowitz acted as counsel to certain common stockholders of Smurfit-Stone Container Corporation, the second-largest containerboard producer in North America. Kasowitz’s representation focuses primarily on opposing confirmation of the Debtors’ proposed chapter 11 plan of reorganization that seeks to wipe out common stock. As one of two leading opponents to confirmation, Kasowitz, on behalf of its clients, participated in extensive discovery and a multi-week valuation trial involving eight testifying experts and several fact witnesses.
- Lyondell Chemical Company: Kasowitz acted as counsel to Wilmington Trust Company in its capacity as indenture trustee for holders of $1.3 billion in subordinated notes issued by the predecessor of Lyondell Basell Industries, in connection with Lyondell’s chapter 11 cases pending in the United States Bankruptcy Court for the Southern District of New York. Kasowitz successfully brought litigation against Lyondell and the leveraged buyout lenders that resulted in a negotiated settlement. Pursuant to the settlement, Lyondell and the banks agreed to waive enforcement of the subordination provisions resulting in the holders of the subordinated notes sharing equally in all recoveries received by general unsecured creditors, including a $450 million settlement of fraudulent transfer claims against Lyondell’s banks. Stemming from the Lyondell leveraged buyout, Kasowitz commenced suit on behalf of several Lyondell subordinated noteholders against their former Indenture Trustee, The Bank of New York Mellon, asserting approximately $1 billion in damages from BNY Mellon’s alleged gross negligence, breach of fiduciary duty and other claims. On February 28, 2012 the Court denied BNY Mellon’s motion to dismiss the complaint, allowing the noteholders’ claims to proceed.
- Lehman Brothers Holdings Inc.: Kasowitz has been retained as special counsel to Lehman Brothers Holdings Inc. and its affiliated debtors to represent such debtors in connection with an investigation and possible prosecution of certain litigation against parties that may have interfered with or damaged the debtors’ business.
- Hawkeye Renewables, LLC: Kasowitz acted as counsel for the agent for Hawkeye’s second lien lenders. Hawkeye is a leading ethanol producer that filed for chapter 11 relief in December 2009. The Hawkeye debtors and the first lien lender group agreed to a pre-packaged chapter 11 plan that initially valued the company at approximately $210 million. Based on such valuation, junior claims would be rendered worthless, as such claims would not be eligible to receive any recoveries unless the company’s value was at least $580 million. Kasowitz objected to the plan and contested the valuation. After a valuation hearing, the parties negotiated a settlement providing a recovery to the second lien lenders.
- Merisant Worldwide Inc.: Kasowitz acted as counsel to Nomura Corporate Research & Asset Management, Inc., on behalf of its investment funds and certain managed accounts, holder of in excess of 11% of the 9½% Senior Subordinated Notes issued by Merisant Company, in connection with the chapter 11 cases of Merisant Worldwide and its debtor affiliates. Pursuant to Merisant’s proposed plan of reorganization, the subordinated noteholders were to receive a grossly unfair distribution. Kasowitz successfully negotiated a settlement whereby the holders of the subordinated notes received a significantly improved distribution under the plan of reorganization.
- Linens ‘n Things, Inc.: Kasowitz was counsel to an ad hoc group of holders of Linens ‘n Things’ $650 million Senior Secured Floating Rate Notes due 2014, that holds substantially all of such notes. Prior to winding-down operations, Linens ‘n Things operated in excess of 500 stores located throughout the United States and Canada. Kasowitz represented the noteholders in the chapter 11 case and is currently representing the noteholders in the chapter 7 case liquidation, including with respect to cash collateral usage and monetizing remaining assets.
- Anderson News LLC: Kasowitz is counsel to the company in its chapter 11 case in the United States Bankruptcy Court for the District of Delaware. Anderson News, LLC was part of a family of companies that comprised the second largest wholesaler of books and magazines in the United States. On March 2, 2009, certain petitioning creditors filed an involuntary petition under chapter 7 of the United States Bankruptcy Code against the company. After a two-day hearing, the Bankruptcy Court converted the case into a voluntary case under chapter 11 of the Bankruptcy Code. In the bankruptcy case, Kasowitz has secured debtor-in-possession financing on favorable terms and has filed and defended various other administrative and substantive motions on behalf of the estate.
- Cabi Downtown, LLC: Kasowitz was counsel to the company in its chapter 11 case. Cabi Downtown, LLC was the developer and owner of Everglades on the Bay, an 800-unit residential condominium development. This case represented the first significant condominium chapter 11 case in Miami as a result of the recent economic downturn. Kasowitz successfully fended off various attempts by the bank lender to frustrate the proceedings, including an attempt to dismiss the case and an attempt to halt the company’s residential leasing program. Ultimately, Kasowitz negotiated a successful consensual plan with Cabi’s lenders that resolved the bankruptcy for all constituencies.
- Refco, Inc.: Kasowitz was counsel to the Official Creditors’ Committee and general counsel to the Additional Creditors’ Committee, and is currently counsel to the RCM Plan Administrator, the Refco Plan Administrator and the Refco Liquidating Trust in connection with the wind-down of the Refco chapter 11 estates. During the chapter 11 cases, Kasowitz was charged with the prosecution and settlement of claims relating to a $1.4 billion leveraged recapitalization and the investigation and prosecution of claims against all underwriters and major financial institutions involved with Refco. Kasowitz was also involved with prosecution of the confirmed joint chapter 11 plan.
- Mirant Corporation: Mirant is an energy company that filed for chapter 11 relief in 2003. In connection with a proposed plan of reorganization, each of the Mirant debtors and two official committees of creditors submitted valuations of the company of approximately $8.5 billion that would render interests in certain subordinated securities worthless. Kasowitz was retained in early 2005 by substantial holders of the subordinated securities to object to the plan and contest the valuation. After a 27-day hearing, the bankruptcy court overseeing the case directed that the debtors manage a new process to determine the value of Mirant, including utilizing major adjustments to the valuation methodology asserted by Kasowitz. Thereafter, Kasowitz played a substantial role in negotiating a global settlement, which included that the holders of the subordinated securities be paid in full, and implied a valuation of the company in excess of $12 billion.
- Tronox Inc.: Kasowitz represented the Official Creditors’ Committee in litigation arising out of the spin-off of Tronox by Kerr-McGee. This included litigation against Anadarko, which acquired Kerr-McGee soon after the spin-off, as well as a separate action against the lenders that financed the spin-off.
- Broadstripe Inc.: Kasowitz represented the Official Creditors’ Committee in litigation against a large hedge fund that both owned a majority of Broadstripe’s pre-petition debt and controlled a majority of its equity. The suit sought to equitably subordinate the claims of the pre-petition lenders based on their participation in mismanagement of the company. After Kasowitz, on behalf of the Creditors’ Committee, successfully defended against the lenders’ motion seeking summary judgment, the parties agreed to participate in a mediation. The mediation resulted in a very favorable settlement that funded distributions to general unsecured creditors, who likely would have received no value otherwise.
Kasowitz is ranked both in New York and nationally as a leading firm in the area of Bankruptcy/ Restructuring. Chambers notes, “Kasowitz's practice is one of the best in the country when it comes to bankruptcy disputes, particularly on behalf of creditors. It is renowned for its aggressive and creative pursuit and defense of its clients' interests.” Kasowitz partner David M. Friedman is recognized both in New York and nationally as a leader in the field and David S. Rosner is profiled as a leader in the field in New York.
The Legal 500 2012 - Bankrutpcy
Kasowitz has been recognized by The Legal 500 as a leading firm in the area of Finance: Corporate Restructuring. The group is described as a “committed and hungry team that you want in your corner.”
Kasowitz’s Creditors Rights & Bankruptcy Group Ranked in IFLR 1000 2013
Kasowitz’s Creditors’ Rights & Bankruptcy group has been ranked in the 2013 edition of IFLR 1000 in the area of restructuring and insolvency. The publication notes that “the practice continues to blaze a trail,” and highlights the group’s representation of Adelphia Communications Corporation. Additionally, IFLR 1000 lists David M. Friedman, Michael C. Harwood and Adam L. Shiff as “Leading Lawyers.”
IFLR 1000, the guide to the world’s leading financial law firms, publishes rankings based on the recommendations of in-house counsel at the world’s most prominent financial institutions and companies. Please click here to view the full rankings.