A partner with King & Spalding, LLP (K&S), Zachary Andrew McEntyre focuses on cases involving corporate defense in class actions and insurance recovery disputes. Zachary Andrew McEntyre belongs to a global legal team with a background spanning diverse types of commercial litigation and knowledge of the pulse of regulatory developments. An article by K&S attorneys published in The Review of Banking and Financial Services brought focus to the Neiman Marcus bankruptcy and the fiduciary duties of creditors who are appointed to the Official Committee of Unsecured Creditors toward other Committee members and other unsecured creditors. The context was one of a chapter 11 case in which the Committee was formed as a fiduciary, with a duty to maximize recovery for unsecured creditors. As appropriate, this involves an adversarial approach regarding the claims of secured creditors and the debtors. At the same time, a Committee member maintains the right to focus on fulfilling its own interests, as long as they do not conflict with fiduciary duties. That said, it is not permissible to leverage a position as Committee member in advancing only one’s individual interest. The authors of the paper argue that Marble Ridge, a Committee member, neglected its fiduciary responsibilities toward other unsecured creditors. A US Trustee finding in June, 2020, was that Marble Ridge had “breached its fiduciary duty of loyalty” owed to other creditors by pressuring an outside investor not to bid against Marble Ridge on a key transaction seen as essential in undertaking a successful chapter 11 reorganization. This led to significant negative outcome for Marble Ridge, as the entity resigned from the Committee and was forced to liquidate investor-backed funds.

1. Zachary Andrew McEntyre

2. A partner with King & Spalding, LLP (K&S), Zachary Andrew
McEntyre focuses on cases involving corporate defense in class
actions and insurance recovery disputes. Zachary Andrew McEntyre
belongs to a global legal team with a background spanning diverse
types of commercial litigation and knowledge of the pulse of
regulatory developments.

3. An article by K&S attorneys published in The Review of Banking
and Financial Services brought focus to the Neiman Marcus
bankruptcy and the fiduciary duties of creditors who are
appointed to the Official Committee of Unsecured Creditors
toward other Committee members and other unsecured creditors.

4. The context was one of a chapter 11 case in which the Committee
was formed as a fiduciary, with a duty to maximize recovery for
unsecured creditors. As appropriate, this involves an adversarial
approach regarding the claims of secured creditors and the
debtors. At the same time, a Committee member maintains the
right to focus on fulfilling its own interests, as long as they do not
conflict with fiduciary duties. That said, it is not permissible to
leverage a position as Committee member in advancing only one’s
individual interest.

5. The authors of the paper argue that Marble Ridge, a Committee
member, neglected its fiduciary responsibilities toward other
unsecured creditors. A US Trustee finding in June, 2020, was that
Marble Ridge had “breached its fiduciary duty of loyalty” owed to
other creditors by pressuring an outside investor not to bid
against Marble Ridge on a key transaction seen as essential in
undertaking a successful chapter 11 reorganization. This led to
significant negative outcome for Marble Ridge, as the entity
resigned from the Committee and was forced to liquidate
investor-backed funds.