I was not concerned about the lack of an official committee until Broadbill withdrew as a named Plaintiff. I know that 4 other hedge funds recently stepped up to fill their void but ask yourself these questions:
(1) Will these funds also decide at some point to pull out as Plaintiffs? Might they pull out at an even more inopportune time than Broadbill chose? How about if they all pulled out on Friday September 9, 2011? Would my question seem “untimely” or “unwarranted” at that point?
(2) Do these funds have the stomach to stick around and fund the legal costs for the next couple of years (barring settlement) while the adversary is appealed time and again until the proceeding is reduced to a non-appealable decision? I have the stomach to go over the wall on a committee and tie up my capital and I know more than enough sophisticated holders and hedge funds to fill a committee who will also do so at a moment’s notice. Anyone here so inclined?
(3) Are any of these funds fiduciaries of the estate? Do they have a fiduciary duty to represent any other LTW holders’ interests? Does anything preclude them from pursuing their own pecuniary interests at some point? Will any of these new funds be better at communicating with other LTW holders than the first two funds? One returned communication would be an improvement.
(4) Why does a constituency (Equity) whose interests rank junior to the claims of LTW holders have an official committee while the LTW holders do not? They have no concerns regarding whether the funding source to protect their interests will ever disappear, yet the LTW holders currently must wrestle with those concerns and they will be proven to be senior in priority and at worst are pari passu. Additionally, the Creditors Committee who may one day actually represent LTW holders, currently opposes the interests of LTW holders in the adversary proceeding. These committees have inexhaustible resources to oppose LTW interests. Once this newly discovered equity recovery is signed and delivered do you suppose the Equity Committee will sit idly by or will they join vociferously along with the Debtors and Unsecured Creditors to try and blow the LTWs out of the water? Would anyone here like to have another committee with an endless source of funds opposing their interests?
The issue to me is not so much that there are a few hedge funds (who are not operating in a fiduciary capacity and who are free to walk at a moment’s notice) in place to currently represent LTW holders, the issue is more of right and wrong. LTW holders only need representation because the Debtors and their Board (in the collective infinite wisdom) neglected to fulfill their fiduciary duties to protect the interests of LTW holders. The funding of that legal representation should therefore be borne by the Debtors Estate and the LTW holders should be represented by a committee of fellow LTW holders who are operating in a fiduciary capacity and who will be characterized as “vigorous” and “indefatigable”.
Any of these questions resonate with anyone?
