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LEhman Jan 15
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Lehman 401(k) Plan Held 'Disastrous' Stock, 2nd Circ. Told
Jan 14, 2016 | Law360
By Max Stendahl
A class of former Lehman Brothers employees who lost some of their retirement savings when the bank collapsed in 2008 pressed the Second Circuit on Thursday to revive a suit alleging their benefits plan should have dumped its "disastrous" Lehman stock as the financial crisis unfolded. -
Restructuring & Insolvency 2016: Analysis
Jan 14, 2016 | Who's Who Legal
...Alfredo Pérez is managing partner of the firm’s Houston office and played a lead role in the bankruptcies of American Airlines, City of Detroit, WorldCom and Lehman among others, while Martin Sosland in Dallas won commendation for his work as one of the principal partners involved in the firm’s representation of Enron Corp...
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Employee Retirement Income Security Act
Comment - Global Restructuring
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Lehman 401(k) Plan Held 'Disastrous' Stock, 2nd Circ. Told
Jan 14, 2016 | Law360
By Max Stendahl
A class of former Lehman Brothers employees who lost some of their retirement savings when the bank collapsed in 2008 pressed the Second Circuit on Thursday to revive a suit alleging their benefits plan should have dumped its "disastrous" Lehman stock as the financial crisis unfolded.
A three-judge panel heard oral arguments on an appeal of a July 2015 district court ruling tossing claims against former Lehman CEO Richard Fuld and seven former members of a benefits committee that oversaw the 401(k) plan. According to the suit, the defendants breached their duties under the Employee Retirement Income Security Act by allowing plan participants to purchase and hold Lehman stock as the company spiraled toward bankruptcy.
Two previous iterations of the case were dismissed, but the allegations were revived in July 2014 by the U.S. Supreme Court in the wake of its ruling in Fifth Third Bancorp v. Dudenhoeffer. That decision eliminated the so-called “presumption of prudence” for plan fiduciaries that invest in company stock, but it also placed limits on suits that allege fiduciaries should have sold stock on the basis of public information.
Daniel Krasner, an attorney for the former Lehman employees, urged the Second Circuit on Thursday to overturn the district court’s July 2015 finding that the plaintiffs had still failed to show that the committee members breached their duties under ERISA.
Krasner said the committee should have foreseen that Lehman was in serious jeopardy based on public information, including the volatility of the company’s stock and the increased costs of its credit default swaps. Instead, the defendants “did nothing,” Krasner said.
“Like an ostrich, they put their heads in the sand and said, ‘This is not our responsibility,’” Krasner told the panel.
In Dudenhoeffer, the U.S. Supreme Court held that plaintiffs in such cases must point to “special circumstances” that would make clear to fiduciaries, based on public information, that a stock was overvalued. However, the court did not define that term.
The plaintiffs in the Lehman case have argued that a special circumstance occurred in July 2008, when the SEC issued emergency orders barring the naked short-selling of Lehman shares. According to the suit, the committee failed to properly investigate whether it remained sensible for the benefits plan to hold the stock. Lehman filed for bankruptcy in September 2008, at the height of the U.S. financial crisis.
Jonathan Youngwood, an attorney for the committee members, said Thursday that the SEC was concerned at the time that the stock price of Lehman and other major banks was too low — not that it was artificially high. The SEC never stated that the market was no longer efficient or had in fact been disrupted, such that it would no longer be prudent for the benefits plan to hold Lehman stock, he said.
“You couldn’t have known how the story was going to end for Lehman,” Youngwood said.
Todd Fishman, an attorney for Fuld, also asked the panel not to reinstate a claim accusing the former CEO of breaching a supposed duty to monitor members of the committee. Fishman said Fuld had no legal obligation under ERISA to keep the members continuously informed of nonpublic information regarding Lehman’s financial condition...
For full story: http://www.law360.com/articles/744509/lehman-401-k-plan-held-disastrous-stock-2nd-circ-told
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Restructuring & Insolvency 2016: Analysis
Jan 14, 2016 | Who's Who Legal
Weil Gotshal & Manges has 10 lawyers selected for inclusion this year, including one of the most highly nominated individuals in the world in Marcia Goldstein. Co-chair of the firm’s business finance and restructuring department, she is “the best in the business” in the eyes of her peers. Her track record is “second to none”, and she led the restructurings of WorldCom and Parmalat. Stephen Karotkin was one of the lead attorneys representing General Motors in its chapter 11 case and is “universally well respected”, while Matthew Barr joined the firm from Milbank in late 2015 and is a “real asset”. The “eminent” Richard Krasnow is regarded as a “dean of the NY bankruptcy bar”.
Alfredo Pérez is managing partner of the firm’s Houston office and played a lead role in the bankruptcies of American Airlines, City of Detroit, WorldCom and Lehman among others, while Martin Sosland in Dallas won commendation for his work as one of the principal partners involved in the firm’s representation of Enron Corp. The firm is also very strong in London, where Andrew Wilkinson is a former European head and co-head of restructuring at Goldman Sachs and a “major player in this market” and is known for his work on behalf of creditors, debtors, financial institutions and government bodies. Alongside him, the “very fine” Adam Plainer is leading the team advising KPMG as joint administrators in MF Global UK’s special administration. Jean-Dominique Daudier de Cassini co-heads the highly rated Paris business finance and restructuring department and he is listed alongside his fellow co-head Philippe Druon, “a first-class adviser to both domestic and international funds and companies”.
...The nine lawyers from Clifford Chance are selected from six countries, demonstrating the firm’s global profile in this area. Three are from England, where Philip Hertz is “incisive and impressive” and known for his insurance related expertise in particular. David Steinberg is joint leader of the firm’s practice in London and praised for both debtor and creditor work that includes advising creditors and customers of the Lehmans and MF Global estates on a range of issues. Adrian Cohen is advising Co-operative Bank on its current capital and financial restructuring and is “first rate” in the eyes of his clients and peers. Reinhard Dammann is one of the most highly respected experts in France and is particularly praised for his cross-border experience.
...His client list is “second to none” having represented Enron, Global Crossing, WorldCom, Parmalat and Eurotunnel among others, and interviewees commented on his ability to “translate complicated situations into comprehensible and above all commercially aware language”. Alongside him, Dominic McCahill is recognised for his representation of clients including the winding-up committees of Kaupthing Bank, the Lehman Brothers estate and the Enron estate in their respective Chapter 11 bankruptcies.
...Larry Nyhan is co-leader of Sidley Austin’s corporate reorganisation and bankruptcy group and a “first-rate lawyer”. One of seven nominees from the firm, he is highly regarded for his Chapter 11 work. Alongside him in Chicago, Bryan Krakauer is known for his creditor work in relation to the Lehman, Sentinel and Petters bankruptcy proceedings. Jennifer Hagle in California is “fantastic” for work relating to banks, hedge funds and other financial institutions. Patrick Corr is head of the corporate reorganisation and bankruptcy group in London and a “very skilled operator”, and he is praised for his work in both contentious and non-contentious settings.
...Linklaters maintains a strong practice in this area, particularly in Europe. Tony Bugg in London is global head of the restructuring and insolvency practice and “one of the big names in the market”. He is very well known for his “very high profile and tremendously impressive” work co-leading the team advising PwC as administrators of Lehman Brothers International (Europe). Rebecca Jarvis recently advised the senior lenders in the €2.2 billion restructuring of the European Directories Group. Kolja von Bismarck is “one of the premier experts in Germany” for both creditor and debtor work, and he is recognised for his cross-border expertise in particular, while Aymar de Mauléon is similarly well regarded in France. David Kidd in the Hong Kong office is said to be “one of the finest restructuring lawyers in Asia” by his peers.
...The UK Bar is home to many market-leading experts, with 11 based at South Square alone. Gabriel Moss QC has acted as leading counsel in 11 major Supreme Court, Privy Council, CJEU and EFTA Court cases in recent years, and is “second to none in his understanding of all facets of insolvency law”. William Trower QC is “incredibly experienced” and is acting for the administrators of Lehman Brothers and Nortel, having previously acted in relation to the insolvencies of Kaupthing and Landsbanki. Robin Dicker QC is “simply outstanding”, and has appeared before the UK Supreme Court in relation to Nortel/Lehman Brothers and the Court of Appeal in relation to Lehman Brothers International (Europe), among many others. Antony Zacaroli QC recently advised the administrators of the Phones 4U Group and was commended to researchers as “quite brilliant”, while Felicity Toube QC was highlighted by private practitioners as “great to work with” and “the first name on my list when I need a barrister”.
...Donald Bernstein heads the insolvency and restructuring practice at Davis Polk & Wardwell and “one of the foremost figures in this field”. He has represented companies such as Ford Motor Company in restructurings, as well as a range of creditors and liquidators. He is also much sought after by financial institutions – including JPMorgan Chase, Citibank, Goldman Sachs and Morgan Stanley – for his “insightful and incisive” advice on global credit risk management. Marshall Huebner is co-head of the group and another “big name in the market” having acted as lead counsel to the Federal Reserve Bank of New York and to the US Department of the Treasury in relation to their multiple financings and equity stake in the American International Group. He also acted as lead US counsel to the joint administrators and liquidators of Lehman Brothers International (Europe) and its UK Lehman affiliates, and as lead bankruptcy and restructuring counsel to Delta Air Lines. “They have acted on some of the biggest cases in history” said one interviewee, “and you can see why – their skills are second to none”...
For full story: http://whoswholegal.com/news/analysis/article/32861/banking/
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Employee Retirement Income Security Act
Comment - Global Restructuring
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