The U.S. Supreme Court Says It Will Not Review Bankruptcy Case Involving Crown Vantage Inc., Merrill Lynch and Company, PriceWaterhouseCoopers, And Others
Yesterday, the Supreme Court announced that it will not take a case involving Crown Vantage Inc. and its allegations that PriceWaterhouseCoopers LLP, Merrill Lynch and Co., Inc., a Credit Suisse Group unit, as well as other individuals and companies, approved a fraudulent transaction that had been executed by James River Corp., Crown’s parent company at the time. Crown Vantage says the fraudulent transaction is what caused it to file for Chapter 11 bankruptcy protection in 2001.
James River had set up Crown as a subsidiary in the transaction, which then left Crown with hundreds of millions of dollars in underperforming assets and debts. James then spun off Crown into a separate company.
According to Crown Paper Liquidating Trust, Crown’s bankruptcy trustee, the accounting firms and investment banks made false representations when they said that Crown “would be solvent and viable” after the transaction. In making these false representations, Crown Paper Liquidating Trust says, the investment banks and accounting firms helped defraud Crown Vantage’s creditors. Crown Vantage filed for bankruptcy protection five years later.
Defendants such as PriceWaterhouseCoopers, however, have argued that Crown’s corporate managers were just as guilty of wrongdoing, and because of this, the trust cannot sue them.
The 9th Circuit Court of Appeals and a district court agreed with the defendants and dismissed the case. The appeals court also said that lawsuits to recover damages should be brought by creditors and not the trustee.
A court filing by the trust says JP Morgan Chase and Co., in representing other creditors and itself, would receive half of any damages recovered.
What Is A Trustee?
In every bankruptcy case, the courts appoint an impartial trusted to act as the creditors’ representative. A trustee’s role will vary depending on each case and the kind of bankruptcy petition that has been filed.
In general, however, a bankruptcy trustee's role includes:
· Keeping financial records
· Making sure that fiduciary duties are executed and standards upheld
In Chapter 11 proceedings, a trustee’s responsibilities can include establishing official committees for a specific case, reviewing the bankruptcy reorganization plan to make sure information is accurate and adequate, monitoring deadlines to make sure they are met, and investigating any allegations of abusive conduct or fraud.
At Sagaria Law, P.C., our attorneys skillfully represent individuals and companies in Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, as well as in any matters that may arise as a result. Many of our clients reside in cities throughout Monterey County, Alameda County, and Santa Clara County, including the cities of Campbell, San Jose, Cupertino, Dublin, Emeryville, Fremont, Monterey, Santa Clara, and Carmel. To schedule a free consultation with one of our attorneys, contact Sagaria Law, P.C. today.
Supreme Court Turns Down Bankruptcy Case, Chron.com, February 26, 2007
Who is a Trustee, Bankruptcyhome.com
Related Web Resource:
Title 11 Bankruptcy, U.S. Code Collection, Cornell Law School
U.S. Trustee Program, Department of Justice
Bookmark: 
