Stevens & Lee Closes Unique Transaction to Monetize Bankruptcy Trustee’s $213 Million Judgment On Appeal
NEW YORK, NY, September 13, 2016 – In what appears to be a first of its kind transaction, lawyers in Stevens & Lee’s Litigation Finance and Alternative Funding Group recently closed a $26.2 million sale of net recoveries from certain litigation claims to Gerchen Keller Capital, LLC. The firm’s client thus monetized a portion of his $213 million judgment against The Renco Group, Inc., and Ira L. Rennert, which is currently on appeal to the Court of Appeals for the Second Circuit.
Gerchen Keller, the largest capital provider in the litigation finance industry, and the firm’s bankruptcy trustee client believe that no bankruptcy trustee or debtor in possession has ever sold an interest in the right to receive litigation recoveries, although litigation funders sometimes provide post-confirmation financing to plan trustees on terms that are not publicly disclosed.
Stevens & Lee structured the transaction as a section 363 bankruptcy sale, rather than a section 364 financing, allowing for the bankruptcy trustee to run an auction process to maximize value for creditors.
Stevens & Lee overcame objections filed by the judgment debtors and certain of the Debtors’ noteholders to both the bidding procedures and the sale itself. Thereafter, the firm was successful in opposing the noteholders’ motion for a stay pending their appeal of the sale order in the District Court for the Southern District of New York. This transaction was covered by The American Lawyer, Crain’s, Bankruptcy Law360 and other media.
Stevens & Lee’s Litigation Finance and Alternative Funding Group achieves end-to-end solutions in this emerging marketplace, and helps our clients advance and protect their rights as plaintiffs and defendants in judicial and arbitral disputes pending across the U.S. As with many law firms, our firm has agreed to engagements involving the alternative fee agreements that have become relatively common over the past decade.
The Group is Co-Chaired by Nick Kajon and Eric Robinson, both of whom worked on this transaction along with Dean Pourakis and Jason Angelo. The Group consists of attorneys from the Firm’s Bankruptcy and Financial Restructuring and Litigation Departments and involves others across the Stevens & Lee/Griffin platform, as appropriate. In insolvency situations, we represent creditors, bankruptcy trustees, debtors in possession and creditors’ committees. We currently represents several hedge funds in business litigation.
This News Alert has been prepared for informational purposes only and should not be construed as, and does not constitute, legal advice on any specific matter. For more information, please see the disclaimer.