maintained by John DeGroote Services, LLC, Trustee

 

An Introduction to the Case

The allegations below are paraphrased from those set forth in the Complaint filed on July 21, 2011:

In July 2007, BearingPoint, Inc. was one of the largest professional and IT consulting firms in the world, with an aggregate value of as much as $2.3 billion.  Nineteen months later, in February 2009, BearingPoint was bankrupt, and was later liquidated, yielding approximately $400 million in net proceeds.  The Complaint filed in this dispute seeks redress for the alleged breaches of fiduciary duty that caused this loss to the Company’s shareholders and creditors, and alleges specific instances where BearingPoint’s directors failed to develop, manage and oversee the Company’s sales process, instead allowing it to be dominated by a self-interested Chief Executive Officer who had a personal interest in ignoring significant segments of the marketplace in order to maintain his management position, vest certain equity interests, and obtain new equity holdings in the purchasing entity.  The Complaint further alleges that the failures of the directors were avoidable, and directly resulted in the decline of the Company’s value and inability to obtain the best price available for its assets, which the directors could have achieved by either selling the Company as a whole for a price in the approximate range of $1 billion to $1.4 billion or by selling the Company’s businesses for an aggregate price of $1.56 to $2.3 billion. The Complaint further alleges that, instead, the directors’ failures led to BearingPoint’s bankruptcy and liquidation of its business units and other assets, yielding net proceeds of approximately $400 million and resulting in losses of $627 million to $1.88 billion.

The Complaint alleges that, as members of the Board of Directors (the “Board”) of BearingPoint, Inc. (with its affiliates, “BearingPoint” or the “Company”), each of the Defendants had a fiduciary duty to actively prepare, determine, develop, and manage a strategy to pursue and maximize the highest value for the Company. Read More

Case Updates

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Case Update – June 27, 2013

July 1st, 2013 - Case Updates

In accordance with the Settlement Agreement and following receipt by the BearingPoint, Inc. Liquidating Trust of the agreed-upon $55,000,000, an Order of Dismissal was signed by the Circuit Court for the County of Fairfax, Virginia, dismissing the Complaint filed by John DeGroote Services, LLC against F. Edwin Harbach, Albert L. Lord, Roderick C. McGeary, J. Terry Strange, Douglas C. Allred, Betsy J. Bernard, Spencer C. Fleischer, Jill Kanin-Lovers and Edward Munson.  A Notice of Dismissal was also filed by F. Edwin Harbach, Roderick C. McGeary, and Edward Munson to dismiss the Adversary Proceeding against John DeGroote in the United States Bankruptcy Court for the Southern District of New York, while John DeGroote similarly filed a Notice withdrawing those portions of his Motion for an Order (A) Enforcing Confirmation Order, (B) Holding F. Edwin Harback, Roderick C. McGeary, and Eddie R. Munson in Contempt, and (C) Imposing Sanctions for Willful Violation of Confirmation Injunction that remain pending in that same Court.

Case Update – April 17, 2013

April 17th, 2013 - Case Updates

Order to Approve Settlement Entered

Today the United States Bankruptcy Court for the Southern District of New York granted the Motion for Entry of an Order Approving Settlement, filed on March 21, 2013, entering an Order approving the proposed settlement. Under the settlement the Trust will receive $55,000,000, with no admission of liability, and a release of claims, by all parties.

Case Update – March 21, 2013

March 21st, 2013 - Case Updates

Motion to Approve Settlement Filed

Today John DeGroote Services, LLC filed with the United States Bankruptcy Court for the Southern District of New York a Motion for Entry of an Order Approving Settlement Between the Liquidating Trust and F. Edwin Harbach, Albert L. Lord, Roderick C. McGeary, J. Terry Strange, Douglas C. Allred, Betsy J. Bernard, Spencer C. Fleischer, Jill Kanin-Lovers and Edward Munson and Authorizing Settlement Payment.  Under the settlement the Trust will receive $55,000,000, with no admission of liability, and a release of claims, by all parties. Three former directors of BearingPoint have agreed to dismiss a lawsuit they recently filed in Virginia against John DeGroote, and DeGroote has agreed to dismiss his request to the New York Bankruptcy Court to hold the three former directors in contempt and impose sanctions for violating a court order by filing the lawsuit against him in Virginia.

Case Update – February 12, 2013

February 13th, 2013 - Case Updates

On February 8, 2013, the Defendants filed a Motion for Summary Judgment along with Briefs in Support of the Motion.  The Memo in Support of Defendant Harbach’s Motion is available here.  The Brief in Support of the Director Defendants’ Motion is available here, as well as an Index of associated shared Exhibits.   Plaintiff’s response is due on March 8, 2013.

A pre-trial conference is scheduled for Thursday, February 14, 2013, during which time the Hearing on the Motion for Summary Judgment will be scheduled.

Case Update – February 7, 2013

February 8th, 2013 - Case Updates

The hearing before the United States Bankruptcy Court for the Southern District of New York on the Motion for an Order (A) Enforcing Confirmation Order, (B) Holding F. Edwin Harbach, Roderick C. McGeary, and Eddie R. Munson in Contempt, and (C) Imposing Sanctions for Willful Violation of Confirmation Injunction (see prior update) took place on January 31, 2013, and a transcript of the hearing can be found here.

On February 7, 2013, the Court entered an Order finding that:

1.         The Confirmation Order is binding on the Former Directors; and

2.         The Former Directors filed a lawsuit against John DeGroote on November 15, 20[12], in the Circuit Court of Fairfax County, Virginia, (the “New Virginia Lawsuit”) in violation of the exclusive jurisdiction provision contained in 34(c) of the Confirmation Order and the doctrine arising from Barton v. Barbour, 104 U.S. 126 (1881).

The Court further ordered that:

A)        The Former Directors are enjoined from prosecuting or continuing the claims brought in the New Virginia Lawsuit in any forum other than that of the Honorable Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York;

B)        The Former Directors shall, within 10 business days of the date of the Order, voluntarily dismiss the New Virginia Lawsuit without prejudice or move to transfer it to the Court of the Honorable Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York and, both during and after such 10 business day period, exercise reasonable diligence to pursue approval of such motion to transfer; and

C)        The requests for a finding of contempt and imposition of sanctions contained in the Motion shall be continued sine die pending an evidentiary hearing on those issues if they are not by then moot.

(Update:  A Consent Order transferring the New Virginia Lawsuit to the United States Bankruptcy Court for the Southern District of New York was entered on February 22, 2013.)