Is Milken Ready To Settle?Michele Galen
Judge Milton Pollack is at it again. Last May, the U.S. judge in Manhattan pushed through a smooth settlement in the Drexel Burnham Lambert bankruptcy. Now, he's aiming for another quickie, involving billions in claims by the Federal Deposit Insurance Corp. and scores of investors against Michael R. Milken, Drexel's jailed junk-bond king. It looks as if a full settlement is near. Says Pollack: "I am not taking resistance or defeat lightly."
While the terms are still being hammered out, the pact could total $1.3 billion. At least $300 million, say those close to the talks, would be kicked in by some 40 former Drexel employees and about 200 Drexel-related investment partnerships. Milken would add about $500 million, plus the $400 million he has already paid to a restitution fund, along with the $200 million fine he agreed to in his 1990 criminal plea bargain. Insurers would pay $100 million more. The cash would settle suits charging that defendants rigged the junk market, along with a Drexel suit that claims Milken caused the firm's collapse.
Getting all to agree is one task. Then, the partnerships must dig up the dough to settle. Also, Milken and others want to bar all future Drexel-related securities suits against them--which may not be entirely enforceable. "I'm frankly skeptical," says one lawyer.
The heat is on to reach a deal before the Drexel bankruptcy wraps up this spring. That, says David Boies, a lawyer for the FDIC and a Cravath, Swaine & Moore partner, would affect "how much everybody gets in the Drexel bankruptcy." Meanwhile, Milken sits in a Pleasanton (Calif.) federal prison, where he has spent the past 11 months. A hearing on reducing his 10-year term could be held within weeks. However that goes, by settling the civil suits, Pollack says Milken would at least "get to buy his peace."
Michele Galen in New York