Re: Equity's concern (The Contention made simple)
Given all of the facts, it leaves one questioning whether it isn’t a fool’s errand to even contemplate thinking of Trident and NXP as separate entities as the inextricable link between them gives meaning to the phrase “I can’t tell where I end and you begin”. What does seem to be separate and distinct, given the desired inquiries of the Equity Committee, is the perception of the potential divide between NXP’s fiduciary obligations to the estate (including ALL of its constituencies) and the representation of their own pecuniary interests.
The Equity Committee has also taken issue with certain portions of the Entropic APA that were purportedly revised, negotiated and driven solely by NXP, whereby certain avoidance actions and possible fraudulent conveyance actions against NXP would travel with the sale of the STB business. These valuable STB Avoidance Actions include (i) potential preference claims against NXP Semiconductors which received over $161 million in payments from TMFE in the one year prior to the Petition Date, (ii) possible fraudulent conveyance actions, if any, that may exist against NXP for at least the two years prior to the Petition Date and(iii) possible claims under section 549 for possible return of unauthorized post-petition transfers.
NXP’s recalcitrance made manifest in their abject refusal to comply with the Equity Committee's seemingly innocuous request for what amounts to a routine turn over of records and tendering of witnesses for deposition certainly raises some pretty serious questions about its conduct and whether there is anything to hide or if this is all just some big unfortunate coincidence. Given NXP’s over arching influence over almost every matter relating to Trident, it is both reasonable and necessary for the Equity Committee to want to conduct interrogatories to determine whether the events that led to the enormous value destruction at Trident (the numerosity of which tolls in the hundreds of millions of dollars redounding almost exclusively to the benefit of NXP) were at arms-length and conducted in good faith. Indeed, it is well within the ambit of the Equity Committee’s discretion to exercise its Fiduciary Duty and investigate whether NXP has eschewed or abdicated its Fiduciary Duty at any point before, during or after the near moribund estate had been bled dry via the seemingly toxic MSA that has rendered the company’s margins at the basement of their industry (20% vs 43% for the industry average) which sent the company careening towards its nadir, precipitating the bankruptcy filing and causing the loss of value for the company’s shareholders and the loss of jobs for the company’s workers.
In a separate motion also filed on March 1, [Dkt. No. 270], the Debtors are seeking permission to enter into an Amended MSA for the continuing benefit of NXP so that the MSA can be transferred over to Entropic. As a condition to the Amended MSA, NXP would be able to extract an additional $11 million from the Estate in the form of a Cure payment. Meanwhile, NXP can move its operations right on over to Entropic, unscathed and borne aloft by the fresh new MSA.
The case is, In re Trident Micro Systems,Inc., et al., Case No. 12-10069 (CSS)
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