The economic and legal environments are evolving. The COVID-19 pandemic impacted the economics of a broad range of businesses including law firms and insurance carriers, as well as the operations of the courts. All involved parties are challenged to develop approaches to achieve appropriate resolutions of disputes whether such disputes were attributable to the pandemic, current operations, bankruptcies/restructurings, or business/financial transactions.
H.S. Grace & Company, Inc.’s (“HSG”) focus is to assist clients and their counsel in addressing traditional litigation, as well as litigation attributable to COVID-19. We can enter a case at any point during its evolution and provide our services quickly, thoroughly and cost-efficiently. Our focus is to assist in evaluating damages, liabilities, and causation from a business perspective, as well as developing alternative resolution strategies and, where required, providing expert testimony in mediation, arbitration and courts.
The following are examples of how HSG assisted clients and their counsel in complex financial transaction issues.
Financial Institution’s Role in Failed Ponzi Scheme
Overview: Investors sued a financial institution (HSG client), which had provided custodial account services in connection with a bankrupt investment limited partnership. The investors claimed that the financial institution had made fraudulent representations, provided false financial reports, allowed investors’ funds to be commingled with the promoter’s funds, and vouched for the promoter. Investors sued for fraud, negligent misrepresentation, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty and fraud. HSG’s analysis showed that the financial institution generally played no part in the investors’ initial decision to invest and that the financial institution’s role with respect to the investors was very limited. HSG also determined there was no causal relationship between the investors’ losses and any actions of the financial institution.
Result: A satisfactory settlement was reached after extensive discovery.
International Multi-Billion Dollar Structured Finance Transaction
Overview: An oil-rich developing country had planned a major infrastructure project and HSG client (Plaintiff) arranged financing through a large, financially sophisticated entity (Defendant). Defendant backed off its obligation to provide financing at the last minute, asserting the financial structure was too complex. Plaintiff sued for bad faith breach of contract. HSG’s analysis demonstrated the economic viability of the transactions and broke down a highly complex series of transactions into a simple analogy that the jury was able to understand.
Result: Substantial eight-digit jury verdict for our client.
Corporate Divestiture, Valuation & Structure Issues from Spin-Off
Overview: A litigation trust funded by six banks (Plaintiff) sued certain directors and officers (Defendants) of a corporation, the Corporation, and its advisors, alleging that a spin-off had been intentionally structured to benefit the Defendants. Attorneys for the Plaintiff litigation trust hired HSG, which had worked for opposing parties in another complex commercial matter. HSG’s analysis identified numerous areas in which the designated directors and officers and certain of their advisors had operated outside of customary and normal business practices and determined that the board did not have appropriate checks and balances in place to ensure fair treatment of both parties.
The analysis also showed that management had improperly controlled the relative valuation of the entities to be split off by manipulating the forecasts used by the independent investment bankers and that management had hidden significant problems in the company, which was spun off, and ultimately failed.
Result: The client attained a nine-digit settlement from the specified directors and officers, the surviving company, and certain of its advisors.
