Bank of America Corp.’s effort with Societe Generale SA (GLE) to reverse New York’s approval of MBIA Inc. (MBI)’s 2009 restructuring is being considered by a judge after the conclusion of a four-week trial over the transaction.
Lawyers with Sullivan & Cromwell LLP and Kasowitz Benson Torres & Friedman LLP gave final arguments before New York State Supreme Court Justice Barbara Kapnick in Manhattan, capping a hearing that began last month over the decision by former New York Insurance Department Superintendent Eric Dinallo to approve the bond insurer’s restructuring.
Kapnick said it’s going to “take a while” to review the evidence and make a ruling.
“There’s a lot of stuff to go through,” Kapnick said.
Kapnick is considering claims by the banks that the state’s approval was based on inaccurate and incomplete information and should be annulled under state insurance laws. Lawyers for banks argued during the trial that the approval was done in secret and based on a rushed, flawed analysis.
The banks claim the restructuring exposed them to losses as policyholders by transferring $5 billion in assets out of an MBIA unit that issued financial guaranty insurance policies into a new division that guaranteed municipal bonds.
Kapnick heard arguments over a four-week period from the banks, MBIA and New York Attorney General Eric Schneiderman’s office, which represents the state. There was no jury, and witnesses weren’t called.
Marc Kasowitz, a lawyer with Kasowitz Benson who represents MBIA, said the approval was based on a yearlong state investigation that included weeks of on-site review at the company’s headquarters.
The banks rely on “distortions and misrepresentations” about the process and haven’t met their burden of showing that Dinallo’s approval was arbitrary and capricious, Kasowitz said. The decision was rational and within the scope of the department’s authority, he argued.
David Holgado, a lawyer with the attorney general’s office, argued during the trial that the review was based on a thorough investigation by the insurance department, which analyzed investments insured by MBIA and conducted interviews with company employees.
Robert Giuffra, a lawyer with Sullivan & Cromwell who represents the banks, told the judge during his closing argument yesterday that the case is important to all current and future holders of insurance policies in the state of New York, whether they are banks, homeowners or owners of student loans that have been securitized into bonds.
“This time it’s the banks,” Giuffra said. “Next time it will be hurricane victims or victims of a toxic drug.”
The case is ABN Amro Bank v. Dinallo, 601846-2009, New York State Supreme Court, New York County (Manhattan).
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Lloyds Sells Australian Loans to Morgan Stanley, Blackstone
Lloyds Banking Group Plc (LLOY) agreed to sell 809 million pounds ($1.25 billion) of Australian corporate real estate loans to a Morgan Stanley (MS) and Blackstone Group LP (BX) joint venture for about 388 million pounds in cash.
Minter Ellison advised Lloyds International while Freehills advised the buyer, Minter Ellison said in a statement.
The Minter Ellison team included partners Victoria Mathewson, corporate; John Elias, finance; Daniel Scotti, corporate; Lindsay Powers, dispute resolution; and David McElhone, real estate. John Nestel was the lead lawyer for Freehills, Minter Ellison said.
Lloyds will use the proceeds from the deal to repay debt, the London-based company said in a statement yesterday. The loans generated losses of 183 million pounds last year, said Lloyds, the U.K.’s second-biggest government-aided bank.
“This transaction further de-risks the Australian business,” removing 92 percent of the non-performing real estate loans, Dave Smith, chief executive officer of Lloyds International Pty Ltd., said in the statement. Smith’s company is a Sydney-based unit operating in Australia and New Zealand.
The transaction is expected to be completed in the third quarter, Lloyds said.
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Chicago Law Firm Opens With Majority Female Ownership
The firm, with 10 attorneys, represents companies in complex litigation, compliance and corporate governance, employment, life sciences and antitrust, according to a statement.
“We have the same focus on getting the right results for our clients as when we were practicing in large firms,” Scharf said in a statement. “Happily, we can provide a high quality of service at sharply lower costs.”
The principals most recently practiced at the Chicago office of New York firm Schoeman Updike & Kaufman LLP, according to the statement. Scharf and Marmor are former partners with Jenner & Block LLP and Kirkland & Ellis LLP, while Banks was associate general counsel and chief counsel-global compliance at Kraft Foods Global Inc.
Jackson Lewis Adds Dallas Partner Michael Mirarchi
Jackson Lewis LLP hired Michael J. Mirarchi in the firm’s Dallas office as partner. He joins from Mirarchi Management Group, a consulting firm he founded in 1992.
“Michael’s passion for helping employers minimize and prevent lawsuit filings lines up perfectly with Jackson Lewis’s long-standing history of ‘preventive strategy’ counsel to clients,” said Christopher Antone, managing partner of the firm’s Dallas office.
Mirarchi developed his interest in litigation prevention while in charge of employment litigation at Frito-Lay Inc., where he defended the company from claims of discrimination, sexual harassment and wrongful termination, the firm said.
Jackson Lewis has been expanding its presence in Texas. The firm opened an Austin office in October. Jackson Lewis has more than 700 attorneys in 49 locations nationwide.
Employment Litigation Partner Joins Venable in Los Angeles
Venable LLP said that Daniel P. Hoffer, formerly with Kellman Hoffer LLP in Manhattan Beach, California, joined the law firm’s Los Angeles office as a partner in the labor and employment practice group.
“Our clients will have a great opportunity to work with counsel who has substantial experience with the most pressing issues facing California employers today, including privacy and data security, trade secret protection and class action defense,” Douglas Emhoff, partner-in-charge of the Los Angeles office, said in a statement.
Hoffer has litigated hundreds of lawsuits in state and federal courts and before such administrative agencies as the Division of Labor Standards Enforcement, the Department of Fair Employment and Housing, and the Equal Employment Opportunity Commission.
Venable has more than 500 lawyers in seven offices in Washington, California, Maryland, New York and Virginia.
Verdicts & Settlement
Bear Stearns Investors Settle Lawsuit for $275 Million
JPMorgan Chase & Co. (JPM)’s Bear Stearns unit agreed to a proposed $275 million cash settlement of a consolidated federal lawsuit filed by investors who lost money from 2006 to 2008.
Bear Stearns lawyer Brad Karp, of Paul, Weiss, Rifkind, Wharton & Garrison LLP, declined to comment on the settlement. Thomas Dubbs, of Labaton Sucharow LLP, a lawyer for the investors, didn’t return a message seeking comment.
Under the agreement, which requires approval by a judge, the money, minus legal fees, will go to shareholders who claimed the company issued “materially false and misleading statements” about financial results, according to papers filed yesterday in Manhattan federal court. The legal fees requested haven’t yet been specified.
Company officials “continue to deny any wrongdoing” in the case, according to a stipulation filed with the court. Among the defendants are former Bear Stearns executives and directors including James Cayne, Alan Schwartz, Warren Spector, Samuel Molinaro and Alan Greenberg.
The case is In re The Bear Stearns Cos. Securities, Derivative and ERISA Litigation, 08-mdl-1963 and 08-cv-2793, U.S. District Court, Southern District of New York (Manhattan).
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