Lehman 3/23

Client Attorney Privileged/Attorney Work Product/At Request of Counsel

Archstone Sale

1. NY Appeals Court Nixes Challenge To $6.5B Archstone Sale

   Mar 22, 2016 | Law360

   By Chelsea Naso
   
   
   A New York appeals court on Tuesday tossed a suit brought against Lehman Brothers Holdings Inc. by a minority investor objecting to the defunct company’s mammoth $6.5 billion sale of apartment owner Archstone Enterprise LP, ruling that the remaining claims were either time-barred or insufficient.
2. Appeals court tosses case against Lehman over real estate asset sale

   Mar 22, 2016 | Reuters

   A New York state appeals court on Tuesday dismissed a lawsuit against defunct investment bank Lehman Brothers Holdings over an alleged conflict in the sale of a multibillion-dollar real estate portfolio that was one of its remaining assets.

Client Attorney Privileged/Attorney Work Product/At Request of Counsel

Archstone Sale

1. NY Appeals Court Nixes Challenge To $6.5B Archstone Sale

   Mar 22, 2016 | Law360

   By Chelsea Naso

    A New York appeals court on Tuesday tossed a suit brought against Lehman Brothers Holdings Inc. by a minority investor objecting to the defunct company’s mammoth $6.5 billion sale of apartment owner Archstone Enterprise LP, ruling that the remaining claims were either time-barred or insufficient.
   
   A four-judge panel of the New York Supreme Court Appellate Division’s First Department granted Lehman’s motion to dismiss the remaining claims related to the November 2013 transaction, including breach of contract in relation to the deal, breach of fiduciary duty and aiding and abetting.
   
   “We now modify to dismiss the remaining causes of action,” the opinion said.
   
   The panel ruled the allegation that the fund’s general partner breached its fiduciary duty when it amended the LP agreement without consent is time-barred, and found that the claim of breach of fiduciary duty fell short of the heightened entire fairness standard.
   
   “Plaintiff identifies no alternative transactions, let alone one that would have achieved more value for the Fund. Fiduciaries are ‘not required to abandon [a] transaction simply because a better deal might have become available in the future,’” the opinion said, citing from the 2014 Delaware Chancery opinion in McGowan v. Ferro.
   
   Lehman in November 2013 announced the Archstone sale, a $6.5 billion cash and stock deal that saw the Archstone portfolio go to real estate investor Equity Residential and luxury apartment developer AvalonBay Communities Inc.
   
   The deal will bring Lehman and its affiliates nearly $2.7 billion in cash along with shares of Equity Residential and AvalonBay common stock that are worth roughly $3.8 billion combined, according to the defunct firm. Under the terms of the purchase, Equity Residential will obtain some 60 percent of Archstone’s assets and liabilities, while AvalonBay will get the rest, according to a statement by Hogan Lovells, which represented Equity Residential in the sale, along with Morrison & Foerster LLP.
   
   The deal averted a buzzed-about initial public offering by Archstone, which it had said in a regulatory filing could raise as much as $3.45 billion.
   
   Cambridge Capital filed suit less than a month later, saying that instead of engaging in a deal that was fair to all investors, Lehman aborted the IPO and set up a transaction to the detriment of Cambridge Capital and similar investors solely for the benefit of Lehman’s creditors.
   
   If Lehman hadn’t engaged in “self-dealing, wholesale breach of the limited partnership agreement,” and willful or grossly negligent breaches of fiduciary duty, the partnership could reasonably be expected to turn a profit in the future, if it relied on the long-term strategy that was the basis of the partnership’s offering memorandum, according to the complaint.
   
   Lehman shot back, contending in oral arguments in July 2013 that under the limited partnership agreement Lehman has with Cambridge Capital, a Lehman affiliate as the general partner had every right to unload the partnership’s assets.
   
   Lehman further argued that it had every reason to maximize the value of the Archstone assets when it made the November sale and portrayed Cambridge Capital as a disgruntled investor unhappy with the fact that it lost out after it got in on the partnership just before the financial crisis and at the height of the real estate bubble.
   
   New York Supreme Court Justice Marcy S. Friedman in October 2014 trimmed down Cambridge Capital’s claims, dismissing allegations surrounding breach of contract for failing to obtain authorization and breach of the implied covenant of good faith and fair dealing....

   For full story: http://www.law360.com/articles/774813/ny-appeals-court-nixes-challenge-to-6-5b-archstone-sale

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2. Appeals court tosses case against Lehman over real estate asset sale

   Mar 22, 2016 | Reuters

   A New York state appeals court on Tuesday dismissed a lawsuit against defunct investment bank Lehman Brothers Holdings over an alleged conflict in the sale of a multibillion-dollar real estate portfolio that was one of its remaining assets.

   The bankrupt estate of Lehman, whose 2008 collapse heralded the global financial crisis, continues to sell off assets once valued at more than $600 billion.

   To read the full story on WestlawNext Practitioner Insights, click here: bit.ly/1q11ueH 

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