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Kaye Scholer Settles with U.S. Trustee in Bankruptcy Case

February 18, 2013

Kaye Scholer today announced that it and the U.S. Trustee have agreed on a settlement in the GSC Group Inc. bankruptcy proceeding. The settlement terms are subject to bankruptcy court approval.

“With this settlement we put this matter behind us,” Mark Liscio, Co-Chair of Kaye Scholer’s Bankruptcy & Restructuring Department, said. “The terms we negotiated fully reaffirm the professional standards that have always guided our firm,” he added.

The key elements of the settlement include:

  • No acknowledgment of wrongdoing by the firm, including intentional disregard of the bankruptcy court’s disclosure requirements.

  • Payment of $1.5 million, consisting of $1.15 million of the more than $5 million in fees already paid the firm, plus withdrawal of a pending application for $352,000 in unpaid fees.

  • Self-examination of the firm’s business acceptance/retention application policies and procedures for bankruptcy matters to assure that its disclosure systems remain best in class. The firm has agreed to retain an outside expert to assist in this regard.

  • However, the settlement does not impose an outside monitor to audit implementation of the firm’s retention and disclosure policies and procedures for bankruptcy matters. This contrasts with other settlements in the GSC proceeding that impose outside monitoring.

“We have an ongoing commitment to improve our internal procedures and processes,” Aaron Rubinstein, Chair of the firm’s Risk Management Committee, said.

It remains undisputed that the firm contributed to the exponential enhancement of the value of the GSC estate in the bankruptcy proceedings:

  • Instead of the $5 million initial bid from a stalking horse, the auction sale was for $235.7 million.

  • This ensured the repayment of additional creditors and demonstrated the true worth and strength of GSC’s assets.

For further information, contact John Lovallo at 917.612.8419 or jlovallo@levick.com.

About Kaye Scholer LLP
Founded in New York in 1917, Kaye Scholer combines the continuity and business acumen of a century-old law firm with a forward-looking, tech savvy, results-driven approach focused around lasting client relationships. With industry strengths in life sciences, financial services, technology, real estate and energy & infrastructure, Kaye Scholer offers strategic guidance and legal services to public and private entities facing litigation, transactional or governance challenges. Kaye Scholer’s lawyers regularly advise on matters across multiple legal jurisdictions, including in the US, Canada, UK, EU, China and Japan.

Media Contact:
John Lovallo- Telephone, 917.612.8419 or Email, jlovallo@levick.com

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