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At Cadwalader, we believe that the truest measure of our success is the success of our clients. Our case studies provide insight into how we help our clients deal with challenges and seize opportunities in the area of bankruptcy litigation: Bear Stearns
Cadwalader represents The Bear Stearns Companies Inc. and certain individual defendants in several actions pending in New York State Supreme Court. The complaints in these actions allege that the defendants breached their fiduciary duties by approving the proposed merger between Bear Stearns and JPMorgan Chase & Co. After extensive expedited discovery, plaintiffs filed a motion seeking to preliminarily enjoin the merger of Bear Stearns and JPMorgan. The defendants aggressively opposed the preliminary injunction motion, resulting in plaintiffs voluntarily withdrawing their motion, enabling the merger to go forward. With respect to the plaintiffs’ breach of fiduciary duty claims, Cadwalader has filed a motion for summary judgment seeking to dismiss the claims. Daewoo
Cadwalader represented the Official Committee of Unsecured Creditors of Daewoo International Inc., which was the U.S. trading arm of the conglomerate, Daewoo Corporation. Based on the debtor’s available assets, unsecured creditors stood to recover only a fraction of their claims from the estate. Cadwalader conducted an exhaustive investigation of the debtor’s pre-petition activities in both Asia and Europe. Based on its investigation, Cadwalader threatened to bring a complex fraud action, including claims based on civil RICO, alleging that the debtor and its corporate parent unlawfully transferred billions of dollars of borrowed money to untraceable locations. The claims were settled without having to commence an adversary proceeding, and based on a cash contribution made by the parent corporation, the unsecured creditors recovered 100% of their claims from the Daewoo estate. Enron
Cadwalader acted as special counsel to Enron Corp. and certain of its subsidiaries in their chapter 11 cases filed in the United States Bankruptcy Court for the Southern District of New York. Cadwalader represented the debtors in more than 40 separate adversary proceedings, seeking to recover monies owed to the estates under swaps, forwards and other derivative contracts. Through negotiations, mediations, and litigation, Cadwalader was successful in recovering more than $2 billion for the benefit of creditors of the Enron estates and in eliminating several billion dollars of claims against the estates. In connection with its representation of Enron, Cadwalader litigated issues involving common law fraud, market manipulation, setoff, breach of contract, the Federal Power Act and the filed rate doctrine. In this regard, Cadwalader was successful in obtaining a ruling by the Bankruptcy Court that state law market manipulation claims were preempted by the Federal Power Act and that the Bankruptcy Court was further precluded from considering the same claims based on the filed rate doctrine. In re Enron Corp, 327 B.R. 526 (Bankr. S.D.N.Y. 2005). Cadwalader also litigated issues involving the police power exception to the automatic stay. In this regard, Cadwalader secured rulings by the Bankruptcy Court that certain counterparties that filed actions before the Federal Energy Regulatory Commission (“FERC”) involving purely state-law contract issues violated the automatic stay as the police power exception to the automatic stay did not apply to an action filed by a private party for the purpose of obtaining an adjudication of purely state-law contract issues. See Enron Power Mktg., Inc. v. Public Util. Dist. No. 1 of Snohomish County (In re Enron Corp.), 2006 WL 3140640 (October 26, 2006 Bankr. S.D.N.Y.). Cadwalader was also responsible for a landmark decision involving the application and scope of Section 1290 of the Energy Policy Act of 2005 (i.e., the Cantwell Amendment), where the United District Court for the Southern District of New York ruled that the Cantwell Amendment was merely clarifying legislation and did not wrest from the Bankruptcy Court its traditional jurisdiction over state law issues related to enforcement of the MPPSA. Enron Power Mktg. Inc. v. Luzenac Am. Inc. (In re Enron Corp.) 2006 WL 2548453 (Aug. 31, 2006 S.D.N.Y.). This ruling enabled Enron to continue to litigate its state law claims against counterparties in the Bankruptcy Court. Lehman
Cadwalader represents Citigroup, Morgan Stanley and other major Lehman lenders and trading counterparties in the Lehman Brothers bankruptcy and is providing advice in regards to the liquidation of contracts and trades involving commodities, foreign exchange, interest rate, credit default swaps, and other derivative products under Master ISDA and Master Repurchase Agreements. Cadwalader also represents three separate groups of hedge funds in claims against the estates of Lehman Brothers International Europe and Lehman Brothers Inc. to recover customer property under prime brokerage and margin lending agreement Mirant
Cadwalader acted as the lead counsel for an ad hoc committee of bond holders of Mirant Americas Generation, LLC or “MAGI”, the wholly-owned subsidiary of Mirant Corporation, a major North American merchant power generator. In 2003, Mirant attempted an out of court restructuring and proposed an exchange offer using unencumbered assets belonging to MAGI to collateralize debt at the parent level. On behalf of a group of MAGI bondholders, Cadwalader commenced litigation in the Delaware Chancery Court alleging that Mirant’s exchange offer was the product of a breach of duty on the part of MAGI’s fiduciaries. Ultimately, Cadwalader’s litigation on behalf of the MAGI bondholders created sufficient pressure on both Mirant and the secured lenders supporting Mirant’s restructuring to lead to the collapse of the exchange offer, thereby forcing Mirant, MAGI and various affiliates to commence chapter 11 proceedings. The Mirant chapter 11 cases were the largest bankruptcy cases filed in the United States in 2003. After commencement of the chapter 11 cases, Cadwalader was retained by the Official Committee of Unsecured Creditors of MAGI in the Mirant chapter 11 cases. The Mirant cases started as a contentious bankruptcy pitting parent company creditors against creditors of subsidiaries. In order to ensure that MAGI creditors were not prejudiced in the proceedings, Cadwalader took actions such as litigating for the right to pursue MAGI estate claims on behalf of creditors, and demanding creditor protections against possible harm from the debtors’ proprietary trading operations. Cadwalader’s efforts on behalf of the MAGI Committee protected the distinct rights of MAGI creditors to the assets of MAGI, and ensured that such assets were not used to support a Mirant restructuring without appropriate protections for MAGI creditors. This strategy helped achieve a “par plus accrued” recovery, and ultimately contributed to the development of a consensual plan of reorganization. On the effective date of the Mirant chapter 11 plan, MAGI bond claims were trading well above par, almost triple their pre-petition trading levels. New Century
Cadwalader represents Morgan Stanley as a major repurchase agreement counterparty and creditor in the New Century Chapter 11 bankruptcy cases, the nation's largest subprime bankruptcy. Prior to the Chapter 11 filing in early April 2007, we counseled Morgan Stanley on the safe-harbored closeout of the repo facility and the structure of a public auction of over $3 billion in mortgage loans and residual securities. This safe harbored foreclosure sale continued, exempt from the automatic stay, and ultimately was conducted in May 2007 under a court-approved procedure negotiated with the debtors and the creditors committee. Thereafter we played a leading role on an informal committee of repurchase agreement counterparties in negotiating an agreed upon distribution of hundreds of millions in assets to the counterparties resulting from loan payments and proceeds obtained by the debtors post petition. RSL Communications
Cadwalader represents the Joint Administrators of RSL Communications Plc (“RSL Plc”), an international telecommunications company that is subject to an insolvency proceeding in the United Kingdom. Cadwalader was retained to investigate claims the estate of RSL Plc may hold against third parties who were responsible for operating the company. As part of Cadwalader’s investigation, it commenced a proceeding under section 304 of the Bankruptcy Code to obtain discovery against these parties. At the conclusion of the investigation, Cadwalader commenced an action on behalf of the Joint Administrators of RSL Plc against the company’s former directors in the United States District Court for the Southern District of New York, seeking damages in excess of $1 billion. In September 2004, the District Court denied the defendants' motion to dismiss the complaint. See RSL Communications Plc v. Bildirici, No. 04-CV-5217 (KMK), 2006 U.S. Dist. LEXIS 67548 (S.D.N.Y. 2006). The Joint Administrators and the defendants filed motions for summary judgment. In the event the court denies the motions, the matter will proceed to a jury trial. Solutia Inc.
Cadwalader acted as the lead counsel for Pharmacia Corporation in the chapter 11 case of chemical manufacturer, Solutia Inc., which was filed in the United States Bankruptcy Court for the Southern District of New York. Solutia previously was a chemicals manufacturing division of Pharmacia, which Pharmacia spun off as an independent, publicly traded corporation. After Solutia sought relief under chapter 11 of the Bankruptcy Code, it and the Official Committee of Equity Security Holders commenced an adversary proceeding against Pharmacia, seeking to transfer several billions of dollars of liabilities to Pharmacia. Solutia and the Equity Committee asserted that Pharmacia wrongfully spun off Solutia for the sole purpose of transferring its legacy liabilities arising from environmental contamination, toxic tort personal injury litigation and obligations owing to retirees. Pharmacia successfully defended the litigation and the matter was ultimately settled as part of Solutia’s plan of reorganization. Pharmacia did not make any contribution to the estate, or pay any consideration as part of the settlement.
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