Managing Claims inBankruptcyPresented by Thomas J ShroyerMoss & Barnettto Fireman’s FundOctober 25, 2012
Presented byThomas J ShroyerMoss & Barnett
Gateway to Claims Bankruptcy law gives tremendous powerto Trustees Pre-suit discovery under Rule 2004 Liquidating asset...
Types of Claims CPAs: failed audits, tax advice andpreparation Lawyers: PPMs, leveraged buyouts,securities or other clie...
Types of Proceedings Receivership compared to Bankruptcy• Article III v. US Bankruptcy Court• Receiver usually files bank...
Typical Pathway to Claim Company files bankruptcy petition increditor friendly/predictable venue (DE orSDNY) Trustee app...
Procedural Issues Venue transfer motion Motion to “withdraw the reference” (i.e.,move case out of US Bankruptcy Court)?•...
Legal Defenses Trustee “stands in the shoes”• In pari delicto/ Waggoner Doctrine Mixture of federal and state law Compl...
Clawback Claims Fraudulent conveyances Ponzi profits
Loss Causation/Damages Issues “Deepening Insolvency” Damages models• Out of pocket• Benefit of the bargain Creditor pre...
Third Party Practice Can Trustee preempt suit v. D & Os? Injunction to bar creditors from directlysuing• Trustee power t...
Private Action Trusts The “new kid” in town Ultra vires? Huge impact on case dynamics• Too big to defend (or too small ...
Settlement Timing issues ADR• Mediation• Arbitration Estate liquidation/recovery Bar of third party and creditor claim...
Q&AThanks for listening!
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Managing Claims in Bankruptcy

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Thomas J. Shroyer presentation to Fireman's Fund Claims Professionals, Oct. 25, 2012

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Managing Claims in Bankruptcy

  1. 1. Managing Claims inBankruptcyPresented by Thomas J ShroyerMoss & Barnettto Fireman’s FundOctober 25, 2012
  2. 2. Presented byThomas J ShroyerMoss & Barnett
  3. 3. Gateway to Claims Bankruptcy law gives tremendous powerto Trustees Pre-suit discovery under Rule 2004 Liquidating assets provide unlimitedbudget to trustees, legal counsel andexperts National service of process/venue Private Action Trusts maximize threat topolicy limits
  4. 4. Types of Claims CPAs: failed audits, tax advice andpreparation Lawyers: PPMs, leveraged buyouts,securities or other client fraud Directors: fiduciary duties, securitiesfraud, embezzlement No limit on any state or federal claim
  5. 5. Types of Proceedings Receivership compared to Bankruptcy• Article III v. US Bankruptcy Court• Receiver usually files bankruptcy petition• Tied to criminal forfeiture proceedings Chapter 7 versus Chapter 11• Total liquidation versus “work out” orsale Adversary Complaint• Option for Article III or Bankruptcy Court
  6. 6. Typical Pathway to Claim Company files bankruptcy petition increditor friendly/predictable venue (DE orSDNY) Trustee appointed Creditors file claims (including insured?) Rule 2004 discovery (no real limit; A/Cprivilege) Substantive Consolidation of all relatedparties Liquidation Plan (not C. 11 reorganization) Adversary Complaints
  7. 7. Procedural Issues Venue transfer motion Motion to “withdraw the reference” (i.e.,move case out of US Bankruptcy Court)?• Return to Article III judge• Pros/cons• Jury v. bench trial Consolidation of multiple cases? Jurisdiction Choice of law
  8. 8. Legal Defenses Trustee “stands in the shoes”• In pari delicto/ Waggoner Doctrine Mixture of federal and state law Complex and fact intensive Inconsistent application• Comparative fault Contrast to in pari delicto PSLRA pleading standards Iqbal-Twombley pleading standards Aiding and abetting• Stoneridge (SCOTUS 2008) RICO
  9. 9. Clawback Claims Fraudulent conveyances Ponzi profits
  10. 10. Loss Causation/Damages Issues “Deepening Insolvency” Damages models• Out of pocket• Benefit of the bargain Creditor preferences (secured v.unsecured)
  11. 11. Third Party Practice Can Trustee preempt suit v. D & Os? Injunction to bar creditors from directlysuing• Trustee power to control all claims toget most for all creditors from limitedinsurance coverage
  12. 12. Private Action Trusts The “new kid” in town Ultra vires? Huge impact on case dynamics• Too big to defend (or too small tosettle)?• Convert to class action?
  13. 13. Settlement Timing issues ADR• Mediation• Arbitration Estate liquidation/recovery Bar of third party and creditor claims Class action• Procedures• Time
  14. 14. Q&AThanks for listening!

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