Litigation Trust Counsel
Chapter 11 bankruptcy proceedings increasingly use “litigation trusts” to pursue litigation causes of action, sometimes the only remaining assets in debtor’s estate. Litigation trusts are relatively new, but have become more common and are funded by an initial cash allocation from the bankruptcy estate to pursue recovery for creditors.
The firm is versed on the creation and negotiation of litigation trust agreements and all aspects of compliance, counseling, and defense of trustees of litigation trusts. As the firm has a Delaware office and members of the Delaware bar with expertise in Delaware Trust law, the firm is particularly suited to represent litigation trusts and trustees. Our lawyers ensure compliance with taxing authorities, environmental agencies, labor and employment regulators (including ERISA obligations), and have advised corporate boards and officers in and outside of distressed situations. These same skills and experience have been used to provide effective counseling of litigation trustees and advisory committees to trusts.
A litigation trust allows an entity other than the debtor to pursue certain causes of action a debtor might be reluctant to pursue or cannot pursue because of conflicts. Elliott Greenleaf advises its committees and other potential to take a very critical view of avoidance actions against unsecured creditors and places its focus on other constituencies. In many cases the trend is to have a purchaser of assets take the avoidance actions to avoid friction with key suppliers and vendors.
The claims transferred to the litigation trust are often those brought against former directors or officers and other related parties. The firm has experience in the corporate law governing suits against directors and officers as well as the underlying insurance law and common insurance legal issues and practice related to indemnification, advancement, undertakings, under most jurisdictions, but especially under Delaware and Nevada where many entities are organized and incorporated.
The firm has experience in defense and pursuit of professional liability actions. Elliott Greenleaf uses this knowledge to pursue actions against law firms, accountants, actuaries, investment bankers and other professionals that have caused the insolvency or mismanaged the operations of the debtors to the detriment of its estate and creditors.
Elliot Greenleaf also has several lawyers who have worked both for chapter 7 trustees and engaged in claims objections for chapter 11 debtors. These lawyers and the firm have managed the claims objection process for various debtors and bankruptcy estates, efficiently managing the claims register and resolving and litigating substantive objections in large chapter 11s.