Pie Face, an Australian pie and sausage roll franchise group, was facing serious financial troubles and losses that grew significantly between 2009-2012. In late 2014, the company was placed into voluntary administration and the administrators, Sule Arnautovic and Rod Sutherland, discovered that Pie Face's secured lender, Macquarie Bank, had appointed receivers who held $3.5 million in a Pie Face bank account, putting the company's survival at risk. A US distressed lender, TCA Global, then provided funding to repay Macquarie, allowing the administrators to continue operating Pie Face while pursuing a Deed of Company Arrangement that resulted in job cuts and store closures to try to turn the company around.
This document discusses how the law relating to wrongful trading protects unsecured creditors in insolvency. It examines key cases that found contributions from wrongful trading claims and the right to bring such claims are not assets of the insolvent company. This creates funding issues for liquidators pursuing claims. Conditional fee agreements and after-the-event insurance helped address this in England by allowing recovery of success fees and insurance premiums from defendants. However, their abolition and lack of similar measures in Scotland weakens creditor protections, as liquidators are less willing to take on the risk and cost of litigation without means of recovery. Overall, the document argues current law is ineffective at protecting creditors due to these funding constraints on liquidators pursuing wrongful
The document is a newsletter from the law firm Tharpe & Howell summarizing recent business law developments. It discusses several court cases related to personal guarantees, maintaining corporate separateness, employer liability for cyberbullying, and tenant waivers. It also provides information on new personal guarantee insurance, the proposed Cybersecurity Act of 2012, and vicarious liability when a special relationship exists.
Indonesia was working to attract foreign investment in 2006 to restore economic growth after becoming a new chapter for economic development. However, foreign investors were hesitant due to policy uncertainty, corruption, lack of confidence in courts, and infrastructure issues. To address this, Indonesia passed a new investment law in 2007 that offered financial incentives, reduced the time to establish a business, focused the investment agency on attraction and service, and gave regional governments responsibility for investment approval.
Inward FDI in Indonesia and its policy context, 2013 Arita Soenarjono
Indonesia has been an important recipient of foreign direct investment which played a key role in its economic development, especially after introducing investment laws in the 1960s-1990s. Inward FDI flows declined during the Asian Financial Crisis of 1997-1998 but have since recovered, growing through the global financial crisis of 2008-2009. The top investing industries are now manufacturing and services, with Asia being the major source region, especially countries like Japan, Singapore, and Malaysia. Indonesia was less impacted by the global financial crisis compared to other Southeast Asian countries due to its domestic market and less integrated position in global value chains.
Aranca Views | Rising FDI in Indonesia - A ReportAranca
Indonesia received FDI worth USD14bn & inflows in 2Q 2014 stood at USD7.4bn. Indonesia’s steady growth was driven primarily by robust consumer spending and foreign investment. Aranca's article highlights growth statistics & forecast of foreign direct investments in Indonesia.
Costa Rica is a Central American country with a population of 4.6 million people. It has no military and focuses on eco-tourism and high-tech industries. Costa Rica has pursued policies to integrate into the global economy through foreign direct investment, trade, and clusters in industries like electronics. As a result, Costa Rica has experienced consistent economic growth, rising GDP per capita, low unemployment, and is one of the most prosperous nations in Latin America.
Cemex is the world's largest building materials supplier and third largest cement producer. It has a history of successful domestic operations in Mexico through efficient manufacturing and superior customer service. Cemex pursued foreign direct investment to reduce reliance on the volatile Mexican market and capitalize on demand in developing countries. Cemex's strategy was to acquire inefficient cement companies and create value by transferring its skills in customer service, technology, and production management. However, Cemex faced challenges with its investment in Indonesia, where political pressure blocked its attempt to gain majority control of Semen Gresik despite an initial agreement.
This document discusses how the law relating to wrongful trading protects unsecured creditors in insolvency. It examines key cases that found contributions from wrongful trading claims and the right to bring such claims are not assets of the insolvent company. This creates funding issues for liquidators pursuing claims. Conditional fee agreements and after-the-event insurance helped address this in England by allowing recovery of success fees and insurance premiums from defendants. However, their abolition and lack of similar measures in Scotland weakens creditor protections, as liquidators are less willing to take on the risk and cost of litigation without means of recovery. Overall, the document argues current law is ineffective at protecting creditors due to these funding constraints on liquidators pursuing wrongful
The document is a newsletter from the law firm Tharpe & Howell summarizing recent business law developments. It discusses several court cases related to personal guarantees, maintaining corporate separateness, employer liability for cyberbullying, and tenant waivers. It also provides information on new personal guarantee insurance, the proposed Cybersecurity Act of 2012, and vicarious liability when a special relationship exists.
Indonesia was working to attract foreign investment in 2006 to restore economic growth after becoming a new chapter for economic development. However, foreign investors were hesitant due to policy uncertainty, corruption, lack of confidence in courts, and infrastructure issues. To address this, Indonesia passed a new investment law in 2007 that offered financial incentives, reduced the time to establish a business, focused the investment agency on attraction and service, and gave regional governments responsibility for investment approval.
Inward FDI in Indonesia and its policy context, 2013 Arita Soenarjono
Indonesia has been an important recipient of foreign direct investment which played a key role in its economic development, especially after introducing investment laws in the 1960s-1990s. Inward FDI flows declined during the Asian Financial Crisis of 1997-1998 but have since recovered, growing through the global financial crisis of 2008-2009. The top investing industries are now manufacturing and services, with Asia being the major source region, especially countries like Japan, Singapore, and Malaysia. Indonesia was less impacted by the global financial crisis compared to other Southeast Asian countries due to its domestic market and less integrated position in global value chains.
Aranca Views | Rising FDI in Indonesia - A ReportAranca
Indonesia received FDI worth USD14bn & inflows in 2Q 2014 stood at USD7.4bn. Indonesia’s steady growth was driven primarily by robust consumer spending and foreign investment. Aranca's article highlights growth statistics & forecast of foreign direct investments in Indonesia.
Costa Rica is a Central American country with a population of 4.6 million people. It has no military and focuses on eco-tourism and high-tech industries. Costa Rica has pursued policies to integrate into the global economy through foreign direct investment, trade, and clusters in industries like electronics. As a result, Costa Rica has experienced consistent economic growth, rising GDP per capita, low unemployment, and is one of the most prosperous nations in Latin America.
Cemex is the world's largest building materials supplier and third largest cement producer. It has a history of successful domestic operations in Mexico through efficient manufacturing and superior customer service. Cemex pursued foreign direct investment to reduce reliance on the volatile Mexican market and capitalize on demand in developing countries. Cemex's strategy was to acquire inefficient cement companies and create value by transferring its skills in customer service, technology, and production management. However, Cemex faced challenges with its investment in Indonesia, where political pressure blocked its attempt to gain majority control of Semen Gresik despite an initial agreement.
TYCO ACCOUNTING SCANDAL OF 1990s - & its Consequences.pdfmoher22734
• Tyco Inc. was founded in 1960 by Arthur J. Rosenburg
• It is a diverse producing and serving corporation which was initially supported by government research & defense contracts
• It became a publicly owned company in 1964
• It launched its IPO in 1974 and got Listed on NYSE in 1974
• Between 1982 and 2000 it undertook several subdivisions. Tyco has done business in over 1000 locations in 50 countries and hires 69,000 employees around the world.
• Tyco had made numerous acquisitions over the years, including 40 acquisitions since the 1980s and has numerous companies among the Fortune 500
• The firm's revenue increased exponentially from $3.1 billion in 1992 to over $40 billion in 2004, with the firm's market value estimated at over $100 billion
How did the Scam happen
• According to the Tyco Fraud Information Center, an internal investigation concluded that there were accounting errors, but that there was no systematic fraud problem at Tyco.
• Tyco's former CEO Dennis Koslowski, former CFO Mark Swartz, and former General Counsel Mark Belnick were accused of giving themselves interest-free or very low interest loans (sometimes disguised as bonuses) that were never approved by the Tyco board or repaid.
• Some of these "loans" were part of a "Key Employee Loan" program the company offered. They were also accused of selling their company stock without telling investors, which is a requirement under SEC rules
• Koslowski, Swartz, and Belnick stole $600 million dollars from Tyco International through their unapproved bonuses, loans, and extravagant "company" spending.
• Rumors of a $6,000 shower curtain, $2,000 trash can, and a $2 million dollar birthday party for Koslowski's wife in Italy are just a few examples of the misuse of company funds.
• As many as 40 Tyco executives took loans that were later "forgiven" as part of Tyco's loan forgiveness program, although it was said that many did not know they were doing anything wrong.
• Hush money was also paid to those the company feared would "rat out" Kozlowski.
• In 1999 the SEC began an investigation on accounting of acquisitions, including "spring-loading"- underreporting preacquisition earnings of an acquired company. However SEC took no actions.
• In January 2002, a tip drew attention to a $20 million payment made to Tyco director Frank Walsh, Jr which was later explained as a finder's fee for the Tyco acquisition of CIT.
• In June 2002, Kozlowski was investigated for sales tax evasion on $13 million in artwork that he had purchased with company funds. Post that, Kozlowski resigned from Tyco "for personal reasons"
• Kozlowski, Swartz, and Bolnick were charged for failure to disclose information on their multimillion dollar loans to shareholders.
• The SEC asked them to restore the funds in form of undisclosed loans and compensations.
Consequences of the Scam on:
• The Company
The foremost and major challenge faced by the company was the loss that was incurred because of the whole scam.
The document discusses several recent Delaware court cases that have implications for financial advisors, including In re Dole Food Co. shareholder litigation. It summarizes the key claims, findings, and conclusions of the Dole Food case, including that the court found the company's controller and president breached their fiduciary duties but did not find the financial advisor liable. It also summarizes allegations and issues discussed in In re PLX Technology and In re Zale Corp. shareholder litigation regarding potential conflicts of interest of financial advisors.
This document provides an overview of the legal services offered by Harneys, a multinational offshore law firm. It summarizes Harneys' various practice areas including banking and finance, corporate and commercial law, investment funds, distressed funds, litigation and insolvency, tax and regulatory, trusts and estates, and intellectual property. It also provides brief biographies of Harneys' partners and details on the firm's locations and contact information.
Ma and Pa invested their retirement savings based on the advice of an investment advisor. Their investments were in risky or fraudulent schemes that resulted in losses of most or all of their money. Now in their retirement with little income or assets, Ma and Pa are seeking ways to recover some of their losses. Potential avenues for recovery include pursuing legal action against the brokers and brokerage firms that sold them the investments, as these parties may have liability if they did not properly vet the investments or make suitable recommendations. Any funds recovered would likely only provide partial compensation and legal action could take several years.
The Bankruptcy Court ruled that certain secured obligations and associated liens incurred by Tousa and its subsidiaries to pay off a prior lender were avoidable as fraudulent conveyances. The District Court reversed this decision but the 11th Circuit Court of Appeals affirmed the Bankruptcy Court's original ruling, finding that the subsidiaries received no value from the payments and liens. The 11th Circuit held that the loan proceeds must be disgorged from the prior lender. This sets an important precedent that payments to creditors that simply delay bankruptcy without providing reasonably equivalent value can be considered fraudulent conveyances.
This document is the Trustee's first interim report filed with the United States Bankruptcy Court for the Southern District of New York covering the period from December 11, 2008 through June 30, 2009 regarding the liquidation of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff under the Securities Investor Protection Act. It provides an overview of the Trustee's efforts to investigate Madoff's fraud, recover assets, administer customer claims, pursue litigation, and coordinate with criminal authorities during the initial stages of the liquidation proceeding.
Kyko Global seek a temporary restraining order to enjoin Defendants Prithvi I...mh37o
This motion seeks a temporary restraining order and expedited discovery from the court. It summarizes that the plaintiffs provided factoring services and advanced $17 million to the defendants based on accounts receivable from five purported customers, but payments from those customers stopped and the plaintiffs believe the accounts receivable were fraudulent. It details the business relationship between the parties, the guarantees provided, and documents presented to verify the customer accounts. It states that when payments stopped, the defendants blamed another lawsuit but did not resume payments as promised. The plaintiffs now seek to prevent the defendants from transferring assets and discover whether the customer accounts were fake.
Rural-Metro - Aiding and Abetting (DealLawers) 3-9-16Kevin Miller
The document summarizes a Delaware Supreme Court case regarding aiding and abetting breach of fiduciary duty claims against a financial advisor, RBC Capital Markets. The key holdings were:
1) The board breached its fiduciary duties by approving a merger based on an unreasonable process influenced by RBC's actions to favor its own interests.
2) RBC knowingly participated in the breach by creating an informational vacuum and intentionally misleading the board, establishing scienter.
3) RBC was liable for aiding and abetting the breach of fiduciary duty, but financial advisors generally are not gatekeepers and liability requires egregious behavior like fraud on the board.
The $899 million Pennsylvania Rapid Bridge Replacement Project financial close marks a significant development for public-private partnerships in the US. It involves the largest road project in Pennsylvania history and arranged the largest Private Activity Bond financing for a P3 project in the US. The project bundles publicly owned bridge assets under a single construction contract and shares permitting risks between PennDOT and the private sector partner. It also establishes workforce requirements to benefit local communities. The success of the project's permitting process will be key as other states may pursue similar approaches.
The US housing market crashed in the late 2000s, forcing many homebuilders like Tousa Inc. into bankruptcy. Tousa had taken on over $1 billion in debt to fund its rapid expansion. In 2007, Tousa arranged $500 million in new loans from banks like Citigroup and Wells Fargo, using subsidiaries as co-borrowers. Most of the funds paid off prior loans. Within 6 months, Tousa filed for bankruptcy. The court ruled the 2007 loans were fraudulent conveyances under bankruptcy law since the subsidiaries received no value and became insolvent as a result. The court voided $500 million in debt and ordered the banks to return the funds.
1. The appellants appealed three orders from a circuit court case involving allegations of a multi-million dollar Ponzi scheme.
2. The circuit court granted motions to dismiss for lack of personal jurisdiction filed by the three appellees.
3. The appellants argue that Maryland law does not support the circuit court's findings and they request the court of special appeals reverse the dismissals.
Bernard Madoff ran the largest Ponzi scheme in history, defrauding thousands of investors of $65 billion. He founded Bernard L. Madoff Investment Securities in 1960 and grew it with help from friends and family who worked there. Despite claiming to use a split-strike conversion strategy, Madoff simply used new investments to pay earlier investors in a typical Ponzi scheme. The fraud collapsed in 2008 when many investors cashed out due to the financial crisis. Madoff pled guilty and was sentenced to 150 years in prison.
Digerati Technologies resolved legal disputes through a settlement agreement approved by the bankruptcy court. The settlement resolved all claims between Digerati and other involved parties from controversies dating back to 2012. As part of the settlement, Arthur Smith will remain the Director, Chairman, CEO, President and Secretary of Digerati, while Antonio Estrada will stay on as CFO and Treasurer. Robert Rhodes, William McIlwain and Robert Sonfield will no longer hold any positions with Digerati.
Washington Mutual (WaMu) was once the largest savings and loan in the US but suffered a crisis due to risky subprime lending and acquisitions. Key events were acquiring subprime lenders Long Beach Financial in 1999 and Providian in 2005, becoming overly dependent on unstable funding. Earnings deteriorated as defaults rose in 2007-2008 during the financial crisis. The FDIC seized WaMu in 2008, and JPMorgan Chase acquired its assets for $1.9 billion, wiping out stockholders. The crisis showed the dangers of unstable growth through subprime lending, poor acquisitions, and liability-dependent funding models.
This document discusses corporate fraud scandals like Enron and Tyco in the early 2000s and Bernie Madoff's Ponzi scheme in the late 2000s. It led to public calls for increased regulation to prevent future fraud and protect investors. In response, laws like Sarbanes-Oxley and Dodd-Frank were passed to reform corporate governance and increase transparency, though some question if human behavior can truly be regulated. All the fraud cases highlighted the failure of checks and balances and oversight to detect deception, and showed that consequences of being uncovered ranged in severity depending on the company's underlying operations.
Mercer Capital's Portfolio Valuation: Private Equity and Venture Capital Mark...Mercer Capital
The document discusses fraudulent conveyance and solvency opinions. It provides:
1) An overview of fraudulent conveyance laws and how solvency opinions are used to evaluate transactions that could potentially leave a company with inadequate capital or unable to pay its debts.
2) A summary of the four tests used in solvency opinions - whether a transaction leaves a company balance sheet solvent, cash flow sufficient to pay debts, with adequate capital, and with surplus assets over liabilities and capital.
3) An example of how Mercer Capital provides solvency opinions to evaluate potential fraudulent conveyance issues for transactions like leveraged buyouts and dividend recapitalizations.
The document summarizes the failure of IndyMac Bank. Some key points:
- IndyMac was a large mortgage lender based in California that failed in 2008 due to risky loans like option ARMs and reliance on borrowing rather than core deposits.
- It grew aggressively from $5B to $30B in assets between 2000-2008 through risky loan origination and sales.
- When the housing market declined, IndyMac's loan losses increased and it failed to maintain adequate loss reserves.
- It also engaged in loose underwriting like stated income loans with little verification of borrower details.
- The FDIC seized IndyMac's assets but still expects to lose $40B, wiping out
Highly respected legal publisher Chambers and Partners has published the 2024 edition of its Corporate M&A Global Practice Guide. We are thrilled to be the exclusive author of the Canadian M&A section of this prestigious guide for the fourth year running.
This document is a complaint filed by Senior Health Insurance Company of Pennsylvania (SHIP) against Beechwood Re Ltd., B Asset Manager, L.P., Beechwood Bermuda International, Ltd., Beechwood Re Investments, LLC, Illumin Capital Management, LP, and several individuals. SHIP alleges that it invested $320 million with Beechwood pursuant to investment management agreements but that Beechwood failed to deliver the guaranteed annual returns, misused the funds, and provided false investment valuations and returns. The complaint asserts claims including deceit, intentional misconduct, and breach of fiduciary duty.
TYCO ACCOUNTING SCANDAL OF 1990s - & its Consequences.pdfmoher22734
• Tyco Inc. was founded in 1960 by Arthur J. Rosenburg
• It is a diverse producing and serving corporation which was initially supported by government research & defense contracts
• It became a publicly owned company in 1964
• It launched its IPO in 1974 and got Listed on NYSE in 1974
• Between 1982 and 2000 it undertook several subdivisions. Tyco has done business in over 1000 locations in 50 countries and hires 69,000 employees around the world.
• Tyco had made numerous acquisitions over the years, including 40 acquisitions since the 1980s and has numerous companies among the Fortune 500
• The firm's revenue increased exponentially from $3.1 billion in 1992 to over $40 billion in 2004, with the firm's market value estimated at over $100 billion
How did the Scam happen
• According to the Tyco Fraud Information Center, an internal investigation concluded that there were accounting errors, but that there was no systematic fraud problem at Tyco.
• Tyco's former CEO Dennis Koslowski, former CFO Mark Swartz, and former General Counsel Mark Belnick were accused of giving themselves interest-free or very low interest loans (sometimes disguised as bonuses) that were never approved by the Tyco board or repaid.
• Some of these "loans" were part of a "Key Employee Loan" program the company offered. They were also accused of selling their company stock without telling investors, which is a requirement under SEC rules
• Koslowski, Swartz, and Belnick stole $600 million dollars from Tyco International through their unapproved bonuses, loans, and extravagant "company" spending.
• Rumors of a $6,000 shower curtain, $2,000 trash can, and a $2 million dollar birthday party for Koslowski's wife in Italy are just a few examples of the misuse of company funds.
• As many as 40 Tyco executives took loans that were later "forgiven" as part of Tyco's loan forgiveness program, although it was said that many did not know they were doing anything wrong.
• Hush money was also paid to those the company feared would "rat out" Kozlowski.
• In 1999 the SEC began an investigation on accounting of acquisitions, including "spring-loading"- underreporting preacquisition earnings of an acquired company. However SEC took no actions.
• In January 2002, a tip drew attention to a $20 million payment made to Tyco director Frank Walsh, Jr which was later explained as a finder's fee for the Tyco acquisition of CIT.
• In June 2002, Kozlowski was investigated for sales tax evasion on $13 million in artwork that he had purchased with company funds. Post that, Kozlowski resigned from Tyco "for personal reasons"
• Kozlowski, Swartz, and Bolnick were charged for failure to disclose information on their multimillion dollar loans to shareholders.
• The SEC asked them to restore the funds in form of undisclosed loans and compensations.
Consequences of the Scam on:
• The Company
The foremost and major challenge faced by the company was the loss that was incurred because of the whole scam.
The document discusses several recent Delaware court cases that have implications for financial advisors, including In re Dole Food Co. shareholder litigation. It summarizes the key claims, findings, and conclusions of the Dole Food case, including that the court found the company's controller and president breached their fiduciary duties but did not find the financial advisor liable. It also summarizes allegations and issues discussed in In re PLX Technology and In re Zale Corp. shareholder litigation regarding potential conflicts of interest of financial advisors.
This document provides an overview of the legal services offered by Harneys, a multinational offshore law firm. It summarizes Harneys' various practice areas including banking and finance, corporate and commercial law, investment funds, distressed funds, litigation and insolvency, tax and regulatory, trusts and estates, and intellectual property. It also provides brief biographies of Harneys' partners and details on the firm's locations and contact information.
Ma and Pa invested their retirement savings based on the advice of an investment advisor. Their investments were in risky or fraudulent schemes that resulted in losses of most or all of their money. Now in their retirement with little income or assets, Ma and Pa are seeking ways to recover some of their losses. Potential avenues for recovery include pursuing legal action against the brokers and brokerage firms that sold them the investments, as these parties may have liability if they did not properly vet the investments or make suitable recommendations. Any funds recovered would likely only provide partial compensation and legal action could take several years.
The Bankruptcy Court ruled that certain secured obligations and associated liens incurred by Tousa and its subsidiaries to pay off a prior lender were avoidable as fraudulent conveyances. The District Court reversed this decision but the 11th Circuit Court of Appeals affirmed the Bankruptcy Court's original ruling, finding that the subsidiaries received no value from the payments and liens. The 11th Circuit held that the loan proceeds must be disgorged from the prior lender. This sets an important precedent that payments to creditors that simply delay bankruptcy without providing reasonably equivalent value can be considered fraudulent conveyances.
This document is the Trustee's first interim report filed with the United States Bankruptcy Court for the Southern District of New York covering the period from December 11, 2008 through June 30, 2009 regarding the liquidation of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff under the Securities Investor Protection Act. It provides an overview of the Trustee's efforts to investigate Madoff's fraud, recover assets, administer customer claims, pursue litigation, and coordinate with criminal authorities during the initial stages of the liquidation proceeding.
Kyko Global seek a temporary restraining order to enjoin Defendants Prithvi I...mh37o
This motion seeks a temporary restraining order and expedited discovery from the court. It summarizes that the plaintiffs provided factoring services and advanced $17 million to the defendants based on accounts receivable from five purported customers, but payments from those customers stopped and the plaintiffs believe the accounts receivable were fraudulent. It details the business relationship between the parties, the guarantees provided, and documents presented to verify the customer accounts. It states that when payments stopped, the defendants blamed another lawsuit but did not resume payments as promised. The plaintiffs now seek to prevent the defendants from transferring assets and discover whether the customer accounts were fake.
Rural-Metro - Aiding and Abetting (DealLawers) 3-9-16Kevin Miller
The document summarizes a Delaware Supreme Court case regarding aiding and abetting breach of fiduciary duty claims against a financial advisor, RBC Capital Markets. The key holdings were:
1) The board breached its fiduciary duties by approving a merger based on an unreasonable process influenced by RBC's actions to favor its own interests.
2) RBC knowingly participated in the breach by creating an informational vacuum and intentionally misleading the board, establishing scienter.
3) RBC was liable for aiding and abetting the breach of fiduciary duty, but financial advisors generally are not gatekeepers and liability requires egregious behavior like fraud on the board.
The $899 million Pennsylvania Rapid Bridge Replacement Project financial close marks a significant development for public-private partnerships in the US. It involves the largest road project in Pennsylvania history and arranged the largest Private Activity Bond financing for a P3 project in the US. The project bundles publicly owned bridge assets under a single construction contract and shares permitting risks between PennDOT and the private sector partner. It also establishes workforce requirements to benefit local communities. The success of the project's permitting process will be key as other states may pursue similar approaches.
The US housing market crashed in the late 2000s, forcing many homebuilders like Tousa Inc. into bankruptcy. Tousa had taken on over $1 billion in debt to fund its rapid expansion. In 2007, Tousa arranged $500 million in new loans from banks like Citigroup and Wells Fargo, using subsidiaries as co-borrowers. Most of the funds paid off prior loans. Within 6 months, Tousa filed for bankruptcy. The court ruled the 2007 loans were fraudulent conveyances under bankruptcy law since the subsidiaries received no value and became insolvent as a result. The court voided $500 million in debt and ordered the banks to return the funds.
1. The appellants appealed three orders from a circuit court case involving allegations of a multi-million dollar Ponzi scheme.
2. The circuit court granted motions to dismiss for lack of personal jurisdiction filed by the three appellees.
3. The appellants argue that Maryland law does not support the circuit court's findings and they request the court of special appeals reverse the dismissals.
Bernard Madoff ran the largest Ponzi scheme in history, defrauding thousands of investors of $65 billion. He founded Bernard L. Madoff Investment Securities in 1960 and grew it with help from friends and family who worked there. Despite claiming to use a split-strike conversion strategy, Madoff simply used new investments to pay earlier investors in a typical Ponzi scheme. The fraud collapsed in 2008 when many investors cashed out due to the financial crisis. Madoff pled guilty and was sentenced to 150 years in prison.
Digerati Technologies resolved legal disputes through a settlement agreement approved by the bankruptcy court. The settlement resolved all claims between Digerati and other involved parties from controversies dating back to 2012. As part of the settlement, Arthur Smith will remain the Director, Chairman, CEO, President and Secretary of Digerati, while Antonio Estrada will stay on as CFO and Treasurer. Robert Rhodes, William McIlwain and Robert Sonfield will no longer hold any positions with Digerati.
Washington Mutual (WaMu) was once the largest savings and loan in the US but suffered a crisis due to risky subprime lending and acquisitions. Key events were acquiring subprime lenders Long Beach Financial in 1999 and Providian in 2005, becoming overly dependent on unstable funding. Earnings deteriorated as defaults rose in 2007-2008 during the financial crisis. The FDIC seized WaMu in 2008, and JPMorgan Chase acquired its assets for $1.9 billion, wiping out stockholders. The crisis showed the dangers of unstable growth through subprime lending, poor acquisitions, and liability-dependent funding models.
This document discusses corporate fraud scandals like Enron and Tyco in the early 2000s and Bernie Madoff's Ponzi scheme in the late 2000s. It led to public calls for increased regulation to prevent future fraud and protect investors. In response, laws like Sarbanes-Oxley and Dodd-Frank were passed to reform corporate governance and increase transparency, though some question if human behavior can truly be regulated. All the fraud cases highlighted the failure of checks and balances and oversight to detect deception, and showed that consequences of being uncovered ranged in severity depending on the company's underlying operations.
Mercer Capital's Portfolio Valuation: Private Equity and Venture Capital Mark...Mercer Capital
The document discusses fraudulent conveyance and solvency opinions. It provides:
1) An overview of fraudulent conveyance laws and how solvency opinions are used to evaluate transactions that could potentially leave a company with inadequate capital or unable to pay its debts.
2) A summary of the four tests used in solvency opinions - whether a transaction leaves a company balance sheet solvent, cash flow sufficient to pay debts, with adequate capital, and with surplus assets over liabilities and capital.
3) An example of how Mercer Capital provides solvency opinions to evaluate potential fraudulent conveyance issues for transactions like leveraged buyouts and dividend recapitalizations.
The document summarizes the failure of IndyMac Bank. Some key points:
- IndyMac was a large mortgage lender based in California that failed in 2008 due to risky loans like option ARMs and reliance on borrowing rather than core deposits.
- It grew aggressively from $5B to $30B in assets between 2000-2008 through risky loan origination and sales.
- When the housing market declined, IndyMac's loan losses increased and it failed to maintain adequate loss reserves.
- It also engaged in loose underwriting like stated income loans with little verification of borrower details.
- The FDIC seized IndyMac's assets but still expects to lose $40B, wiping out
Highly respected legal publisher Chambers and Partners has published the 2024 edition of its Corporate M&A Global Practice Guide. We are thrilled to be the exclusive author of the Canadian M&A section of this prestigious guide for the fourth year running.
This document is a complaint filed by Senior Health Insurance Company of Pennsylvania (SHIP) against Beechwood Re Ltd., B Asset Manager, L.P., Beechwood Bermuda International, Ltd., Beechwood Re Investments, LLC, Illumin Capital Management, LP, and several individuals. SHIP alleges that it invested $320 million with Beechwood pursuant to investment management agreements but that Beechwood failed to deliver the guaranteed annual returns, misused the funds, and provided false investment valuations and returns. The complaint asserts claims including deceit, intentional misconduct, and breach of fiduciary duty.
1. MARCH 2015 || AUSTRALIAN INSOLVENCY JOURNAL 11
02feature
PIE FACE
CASE STUDY
Pie Face Deed Administrator, Sule Arnautovic of Jirsch Sutherland,
discusses how the Pie Face Group came close to going under
before a foreign distressed lender extended a lifeline.
L
ess than six weeks after signing
off on the Deed of Company
Arrangement for the Pie Face
manufacturing and franchise group,
a majority of shareholders expressed
their dissatisfaction with one key
detail of the DoCA.
On 12 February 2015, at an
extraordinary meeting of the
company’s shareholders, Wayne
Homschek, Pie Face’s co-founder and
chief visionary was forced off the board
of directors.
Perhaps it’s fair enough. After
raising up to $40 million since founding
Pie Face in 2003, a radically diminished
Pie Face emerged from voluntary
administration with Homschek still on
the board on 30 December 2014.
Under the terms of the Pie
Face DoCA unsecured creditors
will get no more than 19 cents in
the dollar. Total creditor claims
(excluding inter-company claims)
stand at approximately $50 million.
Homschek’s continuing presence on
the board no doubt irked the many
facing serious losses.
Further undermining his
justifications for remaining on the
board were the director penalty notices
served on him by the Australian Tax
Office and Office of State Revenue,
which are also creditors. That’s quite a
Pty Ltd on 21 November 2014. Pie Face
Holdings owns 100 percent of Pie Face
Franchising and Pie Face Pty Ltd.
Their second report to creditors
revealed that Pie Face Holdings’ fund
raising activities were what was keeping
the operating companies afloat. And Pie
Face Franchising and Pie Face Pty Ltd
were failing to generate the returns they
and Pie Face Holdings needed to service
their obligations.
Pie Face Franchising issued the
franchise agreements. Pie Face Pty Ltd
made the pies and sausage rolls and
supplied the other goods for sale both
through Pie Face’s 24 company-owned
outlets and the 46 franchisee-operated
stores. And the latter entity was losing
heavily.
‘Accumulated losses of the Group
arise from the accumulated losses
of Pie Face Pty Ltd, which have
substantially increased between
2009 and 2012,’ the VAs said in
their second report to creditors on
18 December 2014.
‘It is also evident that the capital
raised through Pie Face Holdings had
been significantly exhausted through
Pie Face Pty Ltd. This is apparent
through the loan account from Pie Face
Holdings to Pie Face Pty Ltd totalling
approximately $33 million as at
November 2014.’
burden for someone lumbered, fairly or
otherwise, with primary responsibility
for Pie Face’s spectacular implosion in
the latter half of last year.
Publicly, Pie Face’s problems
appeared to snowball following
reports that American casino tycoon
Steve Wynne had filed a lawsuit in a
Delaware court on 3 October 2014
seeking $US20 million in damages
from Pie Face Holdings.
As well as being the parent company
of Pie Face Australia, Pie Face
Holdings is Wynne’s partner in US
company Pie Face Holdings Inc. And
while this wasn’t the first dispute to hit
Homschek’s embryonic US operations,
it was by far the severest vote of no
confidence.
PIE FACE’S FINANCES LAID BARE
Behind the scenes though, Pie Face’s
accounts had for several years been
showing the unpalatable truth;
significant losses and mounting costs.
But its parlous financial position
was openly revealed to investors and
suppliers only after Sule Arnautovic
and Rod Sutherland of Jirsch
Sutherland were appointed voluntary
administrators.
The Jirsch Sutherland partners
took charge of Pie Face Holdings,
Pie Face Franchising and Pie Face
2. 12 AUSTRALIAN INSOLVENCY JOURNAL || MARCH 2015
02
feature
HOW THE SECURED CREDITOR
UNCOVERED CRITICAL FUNDS
While Wynne’s $US20 million lawsuit
looked on the surface to have been
the catalytic event leading to the
appointment of VAs, the truth is that
Pie Face’s worsening financial position
and its funding arrangements with
secured creditor Macquarie Bank
meant an insolvent restructure was
inevitable.
The appointment of the VAs in fact
followed an attempt by the board of
directors to reach an in-principle
refinance of Macquarie Bank, which
would have been conditional on a DoCA
being later executed.
As Sutherland and Arnautovic’s
reports show, Pie Face Holdings was
indebted to its secured lender for in
excess of $4 million. The loan – agreed
to in August 2011 – was due to be
repaid with interest by February 2014.
Realising at some point last year
he would have to bare Pie Face’s
soul to Macquarie if he was to avert
insolvency, Homschek assembled a
team of advisors:
• McGrathNicol to prepare a report
on whether a solvent or insolvent
restructure could save the Group
• Arnautovic and Sutherland to advise
on insolvency and restructuring
issues
• lawyer Tim Unsworth
• Main Street Capital, a specialist
finance broker and adviser, and
• Wellington Shields, a US-based
finance broker and adviser, tasked
with finding an alternate funder to
replace Macquarie.
Homschek wanted Macquarie to
agree to a restructure via a DoCA. The
promise was that if the lender agreed
it would be paid out after the DoCA was
accepted.
Homschek was able to make
the offer because by this time he
had identified a potential source
of alternate financing. He had
$US4 million sitting in an Australian
lawyer’s trust account, ready to
be released if Macquarie agreed.
But the secured lender wouldn’t be
rushed. It appointed Ferrier Hodgson
to undertake a detailed financial
investigation. Arnautovic recalls what
happened next.
‘There was $3.5 million dollars in a
bank account in the holding company
[Pie Face Holdings] that would provide
all the working capital to see the group
through the VA,’ Arnautovic recalls.
(The $3.5 million was essentially
payment in respect of licensing
arrangements Pie Face had with
parties in Japan.)
‘Macquarie then appointed Ferrier
Hodgson’s Steve Sherman and Peter
Gothard as receivers over the bank
account,’ he said.
SUTHERLAND AND ARNAUTOVIC
APPOINTED AS VAS BUT RECEIVERS
HOLD THE FUNDS
The appointment of receivers on
18 November 2014 forced Homschek’s
hand. Three days later Arnautovic and
Sutherland were installed as VAs.
‘We were absolutely up against it,’
Arnautovic admitted. ‘We were trying
to enter the job with at least $1 million
in starting funds to be able to pay the
trading costs because you can imagine
there were some serious trading
obligations in this matter’, he said.
‘The directors managed to put
together about $400,000 as an upfront
costs indemnity so we entered the VA
underfunded. Ordinarily we would’ve
loved to have advertised the business
and gone to the market a lot sooner
than we did, but for the first few
weeks we weren’t sure on a day to day
proposition whether we were going to
be shutting the thing down or not.’
The way Arnautovic tells it,
Macquarie’s refusal to buy into the
proposed restructure/refinance
(subject to a DoCA being executed)
fast tracked the involvement of the
alternative financier waiting in the
wings, US distressed lender TCA
Global.
‘The talks with TCA became less
about refinancing Macquarie after
the DoCA and more about refinancing
Macquarie first and taking the risk
themselves to keep the business
trading,’ Arnautovic said.
But while scenarios were swapped
between hemispheres, Arnautovic
and Sutherland and their team were
under pressure, trying to operate as a
going concern a group of companies
losing almost twice as much a week
as it earned. They needed a decision
fast.
‘It took until the 18th of December
to get any comforting flow of funds,’
Arnautovic said. ‘Macquarie and their
lawyers were very cautious. They
didn’t want to touch the cash at bank
in holdings even though they had
their foot on it because they were
concerned about priority employee
entitlements in the group.’
TCA GAMBLES ON A DOCA
The VAs advised Macquarie that there
were no employees in the holding
company, and then the talks with TCA
suddenly bore fruit.
‘The funder [TCA] paid out
Macquarie approximately
$4.6 million, the receivers took their
foot off the cash, the cash then went
partly to us and the balance to the
incoming funder. This flow of funds
was sufficient for us to keep the thing
open,’ Arnautovic said.
‘About a week to 10 days into it
we really had to talk to management
and ask what a restructured Pie
Face would look like and what had
to be pruned. In the end we let go
about 150 staff and closed about
20 company-owned stores.’
At the time of the VA’s appointment
Pie Face had approximately 400 staff,
many of them part-time and casuals
working in the company-owned
stores and at its head office and
manufacturing plant in leased
premises at Rosehill.
Arnautovic said it was tough but
necessary and the trickle of cash at
bank funds from the TCA refinance
gave the VAs time to consider whether
a sale of Pie Face as a going concern
was an option for creditors.
3. MARCH 2015 || AUSTRALIAN INSOLVENCY JOURNAL 13
‘The tricky thing with a sale
was working out how to get all
these franchise agreements, lease
agreements and employee issues
worked out in the statutory time frame,
particularly given the uncertainty still
applying to funding arrangements.
‘It became very obvious very quickly
that a sale was not a live option. People
might buy some equipment, or take
over some leases. But there wasn’t
going to be a global solution that
worked for creditors generally, and
in particular the secured creditors
of the Group being TCA Global and
convertible noteholders [owed some
$7.5 million].
‘So we basically dovetailed the
refinance out of Macquarie with TCA
into the initial DoCA contributions
to save the thing, and TCA obviously
wanted some new directors in place,
which is always tricky,’ Arnautovic
said.
‘TCA advanced a couple of million
US dollars to get the thing out of a
pickle and they have now advanced
another $US2 million to keep it
trading post-DoCA.
‘There are some seriously high-net
worth investors in the secured
convertible note ranks and they really
need to get some more funds into the
group to get to where they need to get
to,’ Arnautovic said.
The new board includes
representatives of TCA and various
convertible note holders. Pie Face
has raised more than $30 million
from high-net worth Australians
including the wealthy Darling family’s
Alfred Street Nominees, retailer
Brett Blundy, Rothschild Australia
chairman Trevor Rowe, and Fat
Prophets founder Angus Geddes. As
part of the DoCA, Pie Face’s directors
will also pursue a $US10 million
capital raising underwritten by
Wellington Shields.
But having endured a white-
knuckle ride as VA and now in his
role as a co-Deed Administrator,
Arnautovic isn’t letting Pie Face’s
reprieve obscure the challenges it
faces.
‘The problem with funding Pie Face
is there are no significant tangible
assets to secure your money against.
There’s no real estate, equipment and
fitouts are not worth much in a shut-
down, and most of the directors didn’t
want to provide personal guarantees,’
he said.
‘I was very surprised the TCA deal
happened ... but it got done with a
hell of lot of effort by all involved. The
real challenging aspect of it was the
trading risk and exposure that we put
ourselves under by believing we could
save it.
‘There were certainly some tough
conversations on the way through
the VA between Rod Sutherland and I
about what sort of tolerance we would
take risk to because there were big
numbers accumulating that we were
personally on the hook for, with no
really obvious parachute.’
Pie face let go about 150 staff and closed around 20 company-owned stores
4. 14 AUSTRALIAN INSOLVENCY JOURNAL || MARCH 2015
03feature
ARITA’S PROPOSED
INDEPENDENT INSOLVENCY
AND BANKRUPTCY TRIBUNAL
Plans to implement an independent tribunal to deal with conduct
matters and provide independent dispute resolution services.
NARELLE FERRIER
Technical Director,
ARITA
T
wo of ARITA’s key objectives are to maintain world
class ethical and professional standards and promote
the ideals of the profession to the public at large.
This often presents a challenge for ARITA, with the
need to both be an advocate for our membership body and,
occasionally, investigate and discipline individual members.
From a community perspective, this duality is especially
unsatisfactory; it can create the perception of a lack of
independence of our otherwise very robust approach to
professional conduct.
The ARITA 2017 Strategic Plan (available on our website)
outlines the Association’s commitment to upholding the
highest professional standards, including the requirement
that, in some instances, our members meet higher
standards than those imposed by the regulators and
courts.
The ARITA Code of Professional Practice (the Code),
now in its third iteration, has built a reputation for leading
professional standards. It has achieved wide recognition
and acclaim and is a key differentiator in the market: ARITA
members hold themselves to a higher level of account by
taking on Professional Membership.
Internally, complaints and concerns1
are managed
through a rigorous process with oversight by the ARITA
Insolvency Specialists Team. The Professional Conduct
Committee, drawn from ARITA members, deliberates on
significant matters.
ARITA expects that our members would welcome and
support a robust investigation process which aims to not
only identify and correct areas of concern, but also provide
for the ongoing education of our members and profession.
The majority of our members subject to member
discipline inquiry are generally receptive to the process.
However, it invariably displeases some practitioners (who
often regard it as harsh and believe ARITA should represent
them in complaints as opposed to questioning their
conduct) and some complainants (who see it as lacking any
transparency and independence).
A further impetus for improving our approach is a
growing public debate in political circles around the need
for regulation to be on a user-pays basis. Recently, ASIC
claimed that the regulation of insolvency practitioners cost
ASIC some $11 million annually.2
Although ARITA takes
issue with this claim, were this figure to be accepted and full
costs passed on, there would be a significant imposition on
the profession that would have major impacts on the viability
of some practices.
With this in mind, ARITA has been working on a new
member conduct framework that would see ARITA
retain proper governance over complaints and concerns,
preserve the leadership of our Code and deliver on issues of
independence.
AN IMPROVED FRAMEWORK
The improved framework embraces the processes already
well refined in the Code, but adds an Independent Insolvency
and Bankruptcy Tribunal, so that matters can be reviewed
with a higher degree of independence.
1 Concerns are similar to complaints, but arise from information available to ARITA about the professional conduct of a member other than by way of a complaint e.g. recorded
judgments, announcements of action taken by a regulator, media articles or general feedback from external parties, including other members. 2 Senate inquiry into the
performance of the Australian Securities and Investments Commission, Submission 45 – Supplementary Submission by ASIC, Supplementary submission on a better funding
model for ASIC, May 2014.