The plan to save part of Dewey & LeBoeuf LLP’s business through a merger was dealt “a body blow” when the Manhattan District Attorney said he was probing possible wrongdoing at the firm, lawyer Al Togut told U.S. Bankruptcy Judge Martin Glenn at a court hearing.
Togut, a partner at Togut, Segal & Segal LLP, also said at yesterday’s hearing in Manhattan that the firm is cooperating with the district attorney’s investigation into its former chairman, Steven Davis.
The firm filed for bankruptcy May 28 listing debt of $245 million and assets of $193 million.
It is closing offices in Hong Kong, Beijing, Sao Paulo, London, Paris, Madrid, Frankfurt and Johannesburg. All U.S. offices have been closed or are closing. The firm is recovering equipment and artwork and securing client records, according to the filing.
Dewey, which has been collecting bills to pay lenders, had about $13.4 million of cash in its bank accounts on May 25, according to a U.S. budget published in a court filing. Cash may rise by June 25 to $30.3 million as more clients pay their bills, according to the filing.
The case is In re Dewey & LeBoeuf, 12-12321, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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Skadden and Jones Day Work on Marubeni’s Purchase of Gavilon
Skadden Arps Slate Meagher & Flom LLP is representing Tokyo-based Marubeni Corp. (8002) in its agreement to buy Gavilon Group LLC for $3.6 billion. Jones Day is representing Gavilon, the third-largest U.S. grain merchandiser.
Skadden partners involved in the deal are Patricia Moran and Sally Thurston in New York and Nobuhisa Ishizuka in Tokyo. The Jones Day partners representing Gavilon are Robert Kennedy and Nicholas Rodriguez, both in New York.
Marubeni is Japan’s biggest agricultural trader and the purchase will double its grain-trading capacity, the company said yesterday in a statement. The company will use cash and loans to fund the deal and take on Gavilon’s $2 billion of debt, Chief Financial Officer Yukihiko Matsumura told reporters in Tokyo.
Buying Omaha, Nebraska-based Gavilon will allow Marubeni to compete with Cargill Inc. and other top global grain traders. The acquisition also strengthens Marubeni’s position in supplying food to Asia, said Daisuke Okada, the company’s managing executive officer.
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Paul Weiss, Fried Frank and Debevoise on Interline Deal
GS Capital Partners, the private-equity unit of Goldman Sachs Group Inc. (GS), and P2 Capital Partners LLC agreed to buy Interline Brands Inc. (IBI), a distributor of janitorial, plumbing and lighting products that went public in 2004, in a deal valued at $1.1 billion including debt.
Partners Robert Schumer, Paul Ginsberg, Eric Goodison, John Kennedy, David Sicular and Lawrence Witdorchic from Paul, Weiss, Rifkind, Wharton & Garrison LLP represented Interline.
Fried, Frank, Harris, Shriver & Jacobson LLP advised GS Capital. The firm’s partners on the deal are Robert C. Schwenkel, David L. Shaw, Christopher Ewan, F. William Reindel and David C. Golay.
Debevoise & Plimpton LLP represented P2. On the Debevoise team are partners Andrew L. Bab, Gary M. Friedman, Gregory V. Gooding, Jonathan F. Lewis and Pierre Maugue.
Funds managed by GS Capital and P2 Capital will pay Interline shareholders $25.50 a share, 42 percent higher than the closing price on May 25, according to a statement from the Jacksonville, Florida-based company yesterday. Interline closed at $25.08 in New York trading. The company may solicit alternative proposals through June 28 under what’s known as a “go-shop” provision.
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MBIA Lawyer Finishes Opening Statement in New York Trial
A lawyer for MBIA Inc. (MBI) finished his opening statement in a trial over the bond insurer’s 2009 restructuring after two days, saying the transaction was properly approved by New York state regulators.
The restructuring protected all policyholders, including the banks opposed to it, and they can’t prove that the approval was “arbitrary and capricious” and based on a flawed analysis by a single department employee, Marc Kasowitz, the MBIA attorney, said in New York Supreme Court in Manhattan.
“The department vigorously and throughly analyzed the proposal,” Kasowitz, a partner at Kasowitz Benson Torres & Friedman LLP, said yesterday. “This was not a situation of the department blindly accepting the work that MBIA had done.”
Justice Barbara Kapnick of state Supreme Court is hearing a nonjury trial on claims by Bank of America Corp. and Societe Generale SA (GLE) that the February 2009 approval of MBIA’s proposal by then-Superintendent Eric Dinallo was based on inaccurate and incomplete information and should be annulled.
More than a dozen financial institutions sued Armonk, New York-based MBIA and the state insurance department in 2009 over the restructuring. Bank of America, based in Charlotte, North Carolina, and Paris-based Societe Generale are the only banks left in the litigation after JPMorgan Chase & Co. (JPM), Morgan Stanley, UBS AG and other banks dropped out.
The banks claim the restructuring exposed them to losses as policyholders by transferring $5 billion in assets out of an MBIA unit that insured risky mortgage debt into a new division that guaranteed municipal bonds.
David Holgado, a lawyer in state Attorney General Eric Schneiderman’s office, last week asked Kapnick to dismiss the banks’ challenge, saying the approval was rational and based on an “extraordinary” analysis by the former Insurance Department official, Jack Buchmiller.
Proceedings in the case are scheduled to resume on tomorrow, when Robert Giuffra, a lawyer with Sullivan & Cromwell LLP who is representing the banks, is set to respond to the presentations given by attorneys for the state and MBIA. The trial is scheduled to last two to four weeks.
The case is ABN Amro Bank v. Dinallo, 601846-2009, New York State Supreme Court (Manhattan).
Accounting Class Actions Increase in 2011
The number of securities class actions filed in 2011 involving accounting allegations climbed, fueled in part by lawsuits against China-based issuers that entered the U.S. through reverse mergers, Cornerstone Research said in a study.
Of the 188 securities class actions filed in 2011, 70 included accounting allegations, according to the study released May 22. The previous year, 46 of the 176 class actions filed had accounting claims.
Securities class actions involving accounting allegations increased as a proportion of total securities-case filings in 2011, to 37 percent from 26 percent in 2010, the study found.
The number of accounting cases filed in 2011 involving restatements of financial statements also rose, ending four years of declines.
While fewer than half of the cases settled in 2011 included accounting claims, those cases represented a disproportionately higher share of total settlement values, the study found.
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Hong Kong Proposes Class Actions After IPO Disputes Increase
Hong Kong, where the securities regulator this month proposed introducing civil liability for banks working on initial share sale prospectuses, may also allow class-action lawsuits to help investors seek damages.
The city’s Law Reform Commission on May 28 recommended legislation to allow a group with a common complaint to sue through a representative. The new regime initially will apply to product liability and consumer fraud cases and not to purchasers of securities, the commission said.
Hong Kong currently allows multiparty proceedings under rules the city’s then-chief justice Andrew Li criticized as restrictive and inadequate in 2004. Losing parties must pay all or part of their opponent’s legal fees under Hong Kong law, a deterrent for individual investors seeking damages.
As a result, litigation risk for bankers and companies selling shares in Hong Kong has been relatively low to date, according to Jeff Maddox, a lawyer who had advised on capital raising in Hong Kong, New York and Singapore stock exchanges.
“There’s less than a 3 percent chance of getting sued after a listing here compared to a 20 to 25 percent chance in the U.S.,” said Maddox, a Hong Kong-based partner at Cadwalader, Wickersham & Taft LLP, citing industry statistics.
Allowing class actions was recommended by a sub-committee of the law commission in 2009 following losses by thousands of investors on notes guaranteed by failed Lehman Brothers Holdings Inc.
Its final recommendation comes two weeks after the Securities and Futures Commission, Hong Kong’s market regulator, proposed extending criminal and civil liability laws to initial share sale arrangers who sign off on misleading or inaccurate prospectuses.
The SFC said tighter laws are needed to protect investors after finding substandard work by investment banks arranging IPOs. In one case, it alleges that Chinese fabric-maker Hontex International Holdings Co. misled investors in its listings prospectus in 2009.
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Law Firm Moves
International Trade Commission Lawyer Joins McKool Smith
Stevens has more than 20 years of experience in intellectual property litigation and specializes in handling Section 337 investigations before the ITC, the firm said in a statement. He also focuses on proceedings relating to ITC probes before the U.S. Customs and Border Protection and the U.S. Court of Appeals for the Federal Circuit.
Stevens served as both an investigative attorney and senior investigative attorney for the ITC’s Office of Unfair Import Investigations. In 10 years there, he handled cases involving petitions for temporary relief, gray market cases, and patent cases involving pharmaceutical, electronic and other technologies.
Energy Lawyer Golden Joins Orrick Herrington
Cornelius J. “Neil” Golden Jr. joined Orrick, Herrington & Sutcliffe LLP as a partner in its Global Energy & Infrastructure practice. He was previously a partner at Chadbourne & Parke LLP.
Golden has more than 25 years of experience representing energy clients in complex equity and debt financings, project acquisitions and divestitures, and other transactions, the firm said in a statement.
In recent years, he has worked extensively on the development and financing of renewable energy projects and conventional power plants
Orrick has 1,200 lawyers in nine countries.
Buchanan Ingersoll Adds Energy Lawyer in New York Office
Matthew Cohen joined Buchanan Ingersoll & Rooney PC as a shareholder in its energy practice, the firm said in a statement. Cohen was a partner in the corporate practice group of Thompson & Knight LLP.
In the past two years, Buchanan has added more than 20 attorneys to its roster of more than 80 energy-focused professionals. Cohen has handled domestic and cross-border deals for businesses in the oil and gas and metals and mining industries.
Buchanan Ingersoll has more than 450 attorneys and government-relations professionals practicing throughout the U.S., with offices in California, Florida, New Jersey, New York, Pennsylvania, Delaware, Virginia and Washington, D.C.
King & Spalding Adds Two Litigators in Austin Office
Litigators Paul R. Bessette and Michael J. Biles joined King & Spalding LLP as partners in the Austin, Texas, office.
Both specialize in securities litigation and related government investigations, and come to the firm from Greenberg Traurig LLP, King & Spalding said in a statement.
Bessette will serve as co-chairman of King & Spalding’s national securities litigation practice, a role he played at his previous firm, according to the statement.
New Silicon Valley Lawyer Joins DLA Piper
Michael Torosian joined DLA Piper LLP as a partner in the corporate and finance practice in the firm’s Silicon Valley office.
Previously a senior counsel in the corporate department at Latham & Watkins LLP, Torosian advises public and private companies, investment banks and venture capital and private equity firms in the emerging growth, mergers and acquisitions, and capital markets areas, according to a statement.
DLA Piper has 4,200 lawyers in 31 countries and 77 offices throughout the Americas, U.K., Continental Europe, Middle East, Asia and Australia.
Greenberg Traurig Adds Employment lawyer in New Jersey Office
Robert H. Bernstein is joining Greenberg Traurig LLP as a shareholder in the labor & employment practice in the firm’s Florham Park, New Jersey, office.
Bernstein is the sixth labor and employment attorney to join Greenberg Traurig’s New Jersey office in recent months, the firm said in a statement. Bernstein focuses on labor and employment issues for management, with an emphasis in litigation and counseling.
Before joining Greenberg Traurig, Bernstein was head of Constangy, Brooks & Smith LLP’s Princeton office, where he was a partner.
Greenberg Traurig has about 1,800 attorneys in 34 offices in the U.S., Latin America, Europe, the Middle East and Asia.
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