Asset Recovery – Recovering The Largest Possible Amount At The Lowest Possible Cost
In any Chapter 11 bankruptcy, the recovery of assets by the debtor’s estate is an essential objective for the debtor, the unsecured creditors, and other parties in interest. In many cases, asset recovery will be the only realistic means making a distribution on creditor claims.
Togut, Segal & Segal LLP pursues assets of the estate in a wide variety of situations:
- Preferential payments
- Fraudulent conveyances
- Accounts receivable collections
- Rebates and overcharges
- Tax refunds
- Unliquidated tort or contract claims
The Togut Firm excels at recovering assets in complex Chapter 11 cases. Whether serving as lead counsel for the debtor, as conflicts counsel, or in a trust administration capacity following confirmation of a plan, we devote equal attention to both sides of the asset recovery equation: the aggregate amount we can recover for the estate and how much it will cost to collect it. Our focus on efficiency in asset recovery stands as one of the major strengths of our practice.
Our ability to streamline the investigation and analysis of recovery methods means that creditors and claimants receive a higher proportion of those assets. Litigation costs incurred on behalf of the estate are first-priority administrative expenses that are paid before other unsecured creditors, and it is not unheard of for lawyer fees to consume the entire value of any assets brought back into the estate. By controlling costs and because of our efficiencies, the Togut Firm preserves the most value for creditors and claimants. Because of our size, efficiencies, and lower-than-market billing rates, we can handle cases more economically than virtually any other New York City firm. That helps us be part of the solution in repaying creditors rather than part of the problem. The lower the cost, the higher the creditor recovery.
Togut, Segal & Segal LLP has recovered millions of dollars that would otherwise have been unavailable to creditors. In just three cases – Enron, Collins & Aikman, and Tower Automotive – we recovered more than $175 million in cash for the bankruptcy estates in preference payments alone. In the Enron case, we did the following:
Bank of America litigation
Prosecuted an adversary proceeding and judgment motion against Bank of America seeking recovery of approximately $120 million that Bank of America had seized from Enron bank accounts on the eve of its Chapter 11 filing. Prior to the court issuing its ruling on Enron’s summary judgment motion, the parties reached an agreement whereby Bank of America paid Enron $80 million in cash and waived claims against Enron’s estate exceeding $100 million.
Mega-Litigation Against Financial Institutions
Developed and actively participated in the prosecution of the so-called “MegaComplaint” asserting claims against a number of financial institutions (including Citigroup, JPMorgan Chase, Royal Bank of Canada, Royal Bank of Scotland, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Barclays, Merrill Lynch and Deutsche Bank), seeking to recover transfers from these financial institutions as preferential transfers and constructive and/or intentional fraudulent conveyances and to equitably subordinate billions more in claims. Ultimately, settlement recoveries on account of the MegaComplaint totaled more than $2 billion.
Commercial Paper Litigation
Identified potential preferences in the amount of $1.2 billion relating to the early redemption of Enron’s commercial paper within 90 days of the bankruptcy filing and litigated actions against approximately 180 defendants (including JPMorgan and Mass Mutual). The Togut Firm ultimately obtained $200 million in cash recoveries and over $100 million in claim waivers for the Enron estate on account of this litigation.
Equity Transactions Litigation
Identified and actively participated in the prosecution of preferential and/or fraudulent transfers seeking the recovery of approximately $886 million relating to stock/equity transactions between Enron and: (a) UBS ($420 million); (b) Lehman Brothers ($235 million); (c) CSFB ($230 million); and (d) Bear Stearns ($26 million). Lead counsel in the Bear Stearns action, and co-counsel in the other actions, opposing motions for summary judgment and motions to dismiss based primarily on the safe harbor defenses set forth in sections 546(e) and (g) of the Bankruptcy Code. Cash settlements were ultimately reached, resolving all the actions.
Corporate Resources Services, Inc.
Corporate Resources Services Inc.: Counsel to James S. Feltman, the Chapter 11 trustee. Obtained and enforced an Omnibus Bankruptcy Rule 2004 order authorizing broad subpoena power to assist the trustee with his investigation of potential causes of action concerning a $100 million tax fraud. The Togut Firm commenced and litigated more than one dozen fraudulent transfer actions, which have so far resulted in recoveries of approximately $10 million. The Togut Firm achieved a wide variety of litigation victories in these adversary proceedings, including obtaining orders: striking expert valuation testimony, dismissing counterclaims and affirmative defenses, and denying withdrawal of the reference.
Our attention to detail and skill promotes prompt and favorable settlements. In one Chapter 11 case, our lawyers settled 349 out of 350 identified claims without the need for trial or protracted litigation.
Helpful to our work is that our senior partner, Al Togut, has been a Department of Justice-certified bankruptcy trustee since 1981. He has served in tens of thousands of cases, including Refco, which is the largest Chapter 7 liquidation ever. Al administered more than $4 billion worth of assets in that case. He has obtained recoveries from all kinds of defendants, including banks and even BlackRock. He is an expert in fraud cases, and his investigations led not only to asset recoveries but also to the imprisonment of bad actors. His recent investigation into the fraudulent conduct of a bankruptcy lawyer led to the lawyer’s disbarment and imprisonment. All in, as a Chapter 7 trustee, he estimates that he has administered more than $5 billion worth of assets over the course of his career.