From the files of the FARA Recovery team and its Strategic Partners.
Litigation Trusts are often the Special Purpose Vehicle (SPVs) used by investors or holders of distressed or non-performing (or believed to be lost non-recoverable) investment assets and claims. The following are examples of the broad scope of assets and claims that have been recovered:
Real Estate Development
Multiple special-purpose vehicles (SPVs) were created in pursuing claims for recovery arising out of $500+ million syndicated real-estate loans arranged by a large bank. Settlement and judgements received for the investors and claimants through the SPVs.
Employer-Employee Claims
A Litigation Trust was created to assist in the recovery for the creditors in a company for egregious claims of a breach-of-fiduciary-duty against its former officers and directors. The Federal District Court recently denied the defendant, officers and directors, motion to dismiss the $1 billion lawsuit in a lengthy reported decision.
Bankruptcy & Debt Restructuring
The Litigation Trust was formed by the creditors of a company, one of the largest operators of free-standing emergency rooms, after the company filed for bankruptcy, which the creditors, through the SPV, gained assistance
and leverage in the examination of the company assets in the bankruptcy court for maximum recovery to company’s creditors.
Hospitality and Entertainment
A Litigation Trust was created to seek recovery in various fraudulent-transfer actions arising out of the collapse of a significant hospitality and entertainment development. Through the SPV the investors obtained a land-mark victory for the investors and claimants in the Seventh Circuit which the Supreme Court recently upheld.
Banking & Financial Services
A Litigation Trust was created in connection with the recovery from multiple litigation claims arising out of the failure of, a commercial loan servicer with more than $900 million in outstanding loans. Creditors through the SPV brought substantial claims against several of the company’s former professional advisors were settled for confidential amounts.
Failed Bank and Failed Financial Company Recovery
An SPV was created for the creditors of a holding company of a failed Puerto Rico bank for the recovery of the failed bank’s assets.
Ponzi Schemes and similar Criminal, Fraudulent and Deceptive Practices
A Litigation Trust was created in pursuing the claims of over 400 victims including institutional investors of a Ponzi scheme against a national life insurance company for sheltered assets believed to be lost and non- recoverable.