Herrick congratulates its Restructuring & Finance Litigation Group on the success it has enjoyed over the last two years. The team, which now has 18 members and counting, has grown substantially while taking on a variety of complex litigation matters and Chapter 11 Restructurings. Below is a small sampling of our recent work.
Continue Reading Herrick’s Restructuring & Finance Litigation: 2019-2020 In Review
Fiduciary Duties
Hedge Fund Founder Faces Criminal and SEC Charges Based on Alleged Misconduct in Neiman Marcus Bankruptcy
By Stephen Selbst & Silvia Stockman on
Dan Kamensky, the founder and principal of the prominent hedge fund, Marble Ridge Capital LP and Marble Ridge Master Fund LP (“Marble Ridge”), was arrested on Thursday, September 3, 2020, by the FBI, the most recent development in a dramatic chain of events in the Chapter 11 proceedings of retailer Neiman Marcus. According to the U.S. Attorney’s Office for the Southern District of New York, Kamensky’s criminal charges stem from his attempt to pressure a rival bidder to abandon its higher bid for assets in the Neiman Marcus bankruptcy – which would have allowed Marble Ridge to purchase the assets at a lower price – and then pressuring the rival to cover up the scheme.[1] Mr. Kamensky faces one count each of securities fraud, wire fraud, extortion, and obstruction of justice.[2] If convicted, Mr. Kamensky faces up to 50 years in prison. Also on September 3, the Securities and Exchange Commission filed a civil complaint against Mr. Kamensky alleging violations of the federal securities laws and seeking permanent injunctive relief and civil money penalties.[3] Mr. Kamensky appeared in federal court yesterday afternoon, at which the terms of his pretrial release were set, including a $250,000 bond. At the time of this article, a spokesman for Mr. Kamensky has declined to comment.
Continue Reading Hedge Fund Founder Faces Criminal and SEC Charges Based on Alleged Misconduct in Neiman Marcus Bankruptcy
Delaware Bankruptcy Court Voids Preferred Stockholder’s Right to Block Bankruptcy Filing
By Stephen Selbst on
In In re Pace Industries, LLC, Judge Mary Walrath of the United States Bankruptcy Court for the District of Delaware denied a motion to dismiss a chapter 11 where the debtor circumvented a preferred stockholder’s blocking rights by filing bankruptcy petitions without the preferred stockholder’s consent.[1] Judge Walrath ruled, in a decision that has not yet been published, that she was “prepared to be the first court” to find a stockholder’s blocking rights were invalid. Judge Walrath held that use of a blocking right to preclude access to bankruptcy relief was against public policy, and that a stockholder in possession of such a right has a fiduciary duty to act in the best interests of the corporation, and not its own interests. This decision suggests that blocking rights, which are commonly used in structured finance and real estate transactions to prohibit voluntary bankruptcy filings, may not always be effective.
Continue Reading Delaware Bankruptcy Court Voids Preferred Stockholder’s Right to Block Bankruptcy Filing