Came across this posted on another board. I wonder if this is the same Mr Gerber? (lol). Not the first mistake he has made, IMO
"Bankruptcy Judge Steps Aside In Wake Of Anna Nicole Smith Ruling
Publication Date 07/13/2011
Source: Dow Jones News Service
Bankruptcy Judge Steps Aside In Wake Of Anna Nicole Smith Ruling
A bankruptcy judge said he will step aside in a billion-dollar lawsuit against BearingPoint Inc.'s former officers in light of a recent Supreme Court decision involving the estate of Anna Nicole Smith that curtailed the bankruptcy court's ability to rule on certain issues.
Judge Robert E. Gerber of the U.S. Bankruptcy Court in Manhattan said he made a mistake when he required a court-appointed trustee to sue the former BearingPoint officials in his court.
Gerber said he would allow the trustee to pursue the BearingPoint lawsuit in a Virginia state court, citing a recent Supreme Court decision that found the bankruptcy court lacked the constitutional right to make a final ruling in the inheritance dispute between the estates of Smith and Pierce Marshall, the son of her husband, oil magnate J. Howard Marshall II.
In that case, Stern v. Marshall, Chief Justice John Roberts, writing for the majority, likened the dispute to "Bleak House," the Charles Dickens novel about a lawsuit that persists in British courts years beyond the lives of its parties.
"Here, I fear, the additional litigation resulting from my inability to fully rule will have its own Bleak House implications, not unlike the Bleak House litigation referred to by the Stern v. Marshall court itself," Gerber wrote.
While the bankruptcy court's jurisdiction over the BearingPoint lawsuit wasn't at issue, Gerber said he was concerned, in the wake of the Supreme Court ruling, that litigants could "tie up this case, and countless others, in knots" if they didn't like how a bankruptcy judge ruled.
"Subject matter jurisdiction isn't the problem; the problem is the Bleak House direction this case would take if prosecuted here while parties have the opportunity to complicate it interminably while jousting over my ability to issue final orders," Gerber wrote.
Gerber's decision frees the trustee to pursue the suit in the Circuit Court for Fairfax County, Va., where BearingPoint's headquarters had been located.
Trustee John DeGroote, a former BearingPoint executive hired to manage a trust created to pursue recoveries for the firm's creditors, intends to sue former BearingPoint Chief Executive Edwin Harbach and eight former directors for alleged breaches of fiduciary duty.
A draft of the lawsuit filed in bankruptcy court claims Harbach "hijacked" the company's sales process, causing BearingPoint to ignore opportunities to sell the company or its units before it filed for bankruptcy in 2009.
The bankruptcy resulted in the liquidation of BearingPoint's assets. Those sales brought in some $424 million in proceeds, resulting in losses of $624 million to $1.88 billion, according to the draft complaint.
Lawyers representing Harbach and the former directors couldn't immediately be reached for comment.
BearingPoint, which was spun off from KPMG LLP in 2000, filed for bankruptcy protection in February 2009 to slash its $2.2 billion debt load. At the time, the company had 130 offices worldwide and employed 15,000 employees, including about 8,000 in the U.S. The McLean, Va., company first intended to reorganize by swapping debt for equity, but later abandoned that path and sold off its assets.
Gerber approved BearingPoint's liquidation plan in December 2009. Under the plan, unsecured creditors, owed hundreds of millions of dollars, received just pennies on the dollar for their claims. The trustee was named to head the liquidation trust that pursues lawsuits on behalf of the estate for the benefit of creditors.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Patrick Fitzgerald; Dow Jones Daily Bankruptcy Review; 202-862-3544; patrick.fitzgerald@dowjones.com
(END) Dow Jones Newswires
07-13-11 1442ET
Copyright (c) 2011 Dow Jones & Company, Inc
AI
