Motions - Hunton Andrews Kurth

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https://ecf.flsd.uscourts.gov/cgi-bin/Dispatch.pl?8027716656948Southern District of Florida
Notice of Electronic Filing The following transaction was entered by Bane, David on 4/16/2012 at 4:10 PM EDT and filed on 4/16/2012
Docket Text: MOTION For Order Authorizing Second Interim Distribution of Estate Assets by Marty Steinberg. (Attachments: # (1) Exhibit A, # (2) Exhibit B)(Bane, David)
9:03-cv-80612-KAM Notice has been electronically mailed to: Adam Jay Hodkin ahodkin@padulahodkin.com, britt@padulahodkin.com Adam M. Moskowitz AMM@kttlaw.com, jal@kttlaw.com, mia@kttlaw.com Adrian J. Villaraos avillaraos@shutts-law.com Andrew Kamensky akamensky@hunton.com Andrew David Zaron andrew.zaron@dlapiper.com, jacqueline.figueroa@dlapiper.com Andrew L. Jiranek AJiranek@JiranekCompany.com Camilo A Mejia cmejia@hunton.com, mquintela@hunton.com Carmen Contreras-Martinez ccontreras@gjb-law.com, eserres@gjb-law.com, gjbecf@gjb-law.com Christopher E. Martin martinc@sec.gov, gonzalezlm@sec.gov Courtney Anne Caprio ccaprio@stroock.com, mirizarry@stroock.com Craig Vincent Rasile craig rasile@dlapiper.com, akamensky@hunton.com, monica.tucker@dlapiper.com Curtis Bradley Miner curt@colson.com, michelle@colson.com, yolana@colson.com
9:03-cv-80612-KAM Securities Exchange v. Lauer, et al CASE CLOSED on 09/22/2009
Case Name: Securities Exchange v. Lauer, et al Case Number: 9:03-cv-80612-KAM Filer: Marty Steinberg WARNING: CASE CLOSED on 09/22/2009 Document Number: 2600
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NorgesInvestor Value AS PO Box 1863 Vika N-0124 OSLO Norway, Okabena Marketable Alternatives Fund LLC Fredrikson & Byron PA 200 S 6th Street Suite 4000 Minneapolis, MN 55402-1425 Okabena Partnership J Fredrikson & Byron PA 200 S 6th Street Suite 4000 Minneapolis, MN 55402-1425 Pictet & Cie Banquiers Bd Georges-Favon 29 Case postale 5130 1211 Geneve 11 Suisse, Anne E. Beaumont Friedman Kaplan Seiler & Adelman LLP 1633 Broadway New York, NY 10019-6708 David Blaylock Glankler Brown, PLLC 1700 One Commerce Square Memphis, TN 38103 David L. Snyder Neuberger Quinn Gielen Rubin & Gibber 1 South Street 27th Floor Baltimore, MD 21202-3282 Donald Alan Workman Foley & Lardner 3000 K Street NW Suite 500 Washington, DC 20007-5109 Imre Weinberger Wasserman Stotland Bratt Grossbaum 1155 Rene Levensque West Suite 2010 Montreal Quebec H3B2J8, Jeffrey Greilsheimer Hughes Hubbard & Reed
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1 Battery Park Plaza New York, NY 10004-1482 John P. Marangos 127 Coconut Palm Road Boca Raton, Fl 33432 John W. Bendall, Jr 130 East 75 Street New York, NY 10021 Johnathan B. Alter Bingham McCutchen One State Street Hartford, CT 06103 Jonathan M. Borg Pitney Hardin Kipp & Szuch LLP 7 Times Square New York, NY 10036-7311 Leonard H. Hecht 1270 Avenue of the Americas New York, NY 10020 Lynda J. Grant Labaton Sucharow & Rudoff LLP 140 Broadway 23rd Floor New York, NY 10005-1108 Michael Lauer 101 West End Avenue Apt. 8P New York, NY 10023 Nancy Jane Van Sant Sacher Zelman Van Sant Paul Beiley et al 1401 Brickell Avenue Suite 700 Miami, FL 33131 Steven E. Mackey United States Treasury One Century Plaza 265 Church Street New Haven, CT 06510 Timothy W. Walsh DLA Piper Rudnick Gray Cary US LLP 1251 Avenue of the Americas
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Document description:Main Document Original filename:n/a Electronic document Stamp: [STAMP dcecfStamp_ID=1105629215 [Date=4/16/2012] [FileNumber=9967644-0 ] [7ba8633d61e93851ff84d16dafcc2990e26230749c56faab560272a64acb067c63c 233c6f9e800d405b0efb31a28286cdf36bcdffdb2d74c9d38eeffb0a61dcf]] Document description:Exhibit A Original filename:n/a Electronic document Stamp: [STAMP dcecfStamp_ID=1105629215 [Date=4/16/2012] [FileNumber=9967644-1 ] [3bf805eac7660e0397046901a79a911 84a4129e35c642ae75a555074eb9f7cc3eab 09b4674d39c3ccb321c5c1ca74b08408c4c530ee5d198154526edbf2a4c16]] Document description:Exhibit B Original filename:n/a Electronic document Stamp: [STAMP dcecfStamp_ID=1105629215 [Date=4/16/2012] [FileNumber=9967644-2 ] [166512a2bb282c0c7094e80b2409586e1c64d7bc8d21c788a9ee62e85403d221a75 489068328e20d151fb7d2f06d160f5580fbc3b303b1b9a1429e2f5c70d5dc]]
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CASE NO. 03-806 12 CIV-MARRAIHOPKJNS
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
MICHAEL LAUER, LANCER MANAGEMENT GROUP, LLC, and LANCER MANAGEMENT GROUP 11, LLC,
Defendants,
and
LANCER OFFSHORE, INC., LANCER PARTNERS, LP, OMNIFUND, LTD., LSPV, INC., and LSPV, LLC,
Relief Defendants. 1
RECEIVER'S MOTION FOR ORDER AUTHORIZING SECOND INTERIM DISTRIBUTION OF ESTATE ASSETS
Marty Steinberg, court-appointed receiver (the "Receiver") of Lancer Management
Group, LLC ("LMG"), Lancer Management Group 11, LLC ("LMG II"), Lancer Offshore, Inc.
(b'Offshore"), The Omnifund, Ltd. ("Omnifund"), LSPV, Inc. ("Offshore LSPV"), LSPV, LLC
("Partners LSPV"), Alpha Omega Group, Inc. ("Alpha Omega"), G.H. Associates, LLC ("G.H.
Associates"), and CLR Associates, LLC ("CLR") (collectively, the "Receivership Entities"), and
formerly the responsible person for Lancer Partners, L.P. ("Partners"),' hereby files this Motion
for Order Authorizing Second Interim Distribution of Estate Assets (the "Motion"), and in
support thereof states the following:
I Offshore, Omnifund and Partners are referred to collectively as the "Funds."
Case No. 03-806 12 CIV-MARRAIJOHNSON
INTRODUCTION
Since his appointment on July 10, 2003, the Receiver has accumulated cash on behalf of
the Receivership Entities as a result of selling various assets, including, without limitation,
securities, warrants, as well as real and personal property, and through the settlement of certain
litigation initiated by the Receiver. Through the date of this Motion, the estates of the
Receivership Entities collectively hold approximately $21,000,000 in cash.2 Also, since his
appointment, the Receiver has reviewed, analyzed and objected to or allowed nearly all of the
approximately $2.3 billion in claims filed against the Receivership Entities. Based upon his
analysis, and after litigating and resolving multiple omnibus claim objections, the Receiver
reduced the total universe of allowed claims against the Receivership Entities to $643,601,967,
excluding certain claims that the Receivership Entities have against each other. In addition,
based upon a Court-approved settlement among Partners and the Receivership Entities, Partners
holds an allowed claim against the Receivership Entities in the amount of $110,679,277, while
the Receivership Entities have an allowed claim against Partners in the amount of $643,601,967.~
The Receiver continues to liquidate assets of the Receivership Entities and to prosecute certain
litigation, which he believes will generate additional value for the investors and creditors of the
This amount does not include amounts held by the Receiver pursuant to settlements reached in John Bruhl, et al. v. PricewaterhouseCoopers, International Limited, et al., Case No. 03-23044- CIV-MARRA with various PwC and Citco entities, to be distributed to the Class, or amounts held by the Receiver related to Eric Hauser's restitution payments as ordered in United States of America v. Michael Lauer, et al., Case No. 08-20081-CR-JORDAN, or amounts held by the Receiver that are currently subject to an asset freeze order and not immediately available for distribution.
Under the terms of the Court-approved settlement, the claim of Partners against the Receivership Entities will not share in certain litigation recoveries achieved by the Receivership Entities, or in monies that Partners distributes to the Receivership Entities on account of the Receivership Entities' claim against Partners. See also n. 10 discussing recently filed motions for attorneys' fees by various individuals.
Case No. 03-806 12 CIV-MARRAIJOHNSON
Receivership Entities. The Receiver recognizes, however, that due to the pending litigation, the
final liquidation of assets and resolution of litigation is not imminent. Thus, in order to avoid
delay in disbursing cash to investors and creditors of the Receivership Entities that currently hold
allowed claims, the Receiver files this Motion to authorize a second interim distribution.
BACKGROUND
I . In or around September 1995, Michael Lauer ("Lauer") formed Offshore, a
British Virgin Islands ("BVI") international business corporation ("IBC"), as an offshore hedge
fund for the purpose of investing in various securities.
2. Omnifund is also a BVI IBC originally incorporated by Lauer in January 1999 as
the Orbiter Fund, Ltd. ("Orbiter"). In March 2002, Lauer merged Orbiter and The Viator Fund,
Ltd., another BVI IBC incorporated in September, 1999, to forn~ Ornnifund. Ornnifund is
similarly an offshore hedge fund formed for the purpose of investing in securities.
3. Partners was a Connecticut limited partnership formed by Lauer as a domestic
hedge fund for the purpose of investing in securities.
4. On April 16, 2003, Partners commenced a voluntary Chapter I I bankruptcy case
styled In re Lancer Partners L.P., Case No. 03-50492 (the "Bankruptcy Case"), before the
United States Bankruptcy Court for the District of Connecticut (the "Connecticut Bankruptcy
Court").
5. On July 8, 2003, the United States Securities and Exchange Commission (the
"SEC") commenced an enforcement action (the "Enforcement Action") against Michael Lauer,
LMG, LMG 11, Partners, Offshore, Omnifund, Offshore LSPV, and Partners LSPV before the
United States District Court for the Southern District of Florida (the "District Court"), based
upon a host of alleged securities law violations concerning Lauer's operation and management of
the Funds.
Case No. 03-806 12 CIV-MARRAIJOHNSON
6. On July 10, 2003, the District Court entered the Order Appointing Receiver (the
"Receivership Order") in the Enforcement Action which, among other things, appointed Marty
Steinberg, Esq. as the Receiver for LMG, LMG 11, Offshore, Omnifbnd, Offshore LSPV and
Partners LSPV.
7. Pursuant to the Receivership Order, this Court directed the Receiver to "[take
immediate possession of all property, assets and estates of every kind" of the Receivership
Entities and "to administer such assets." This Court further directed the Receiver to
"[ilnvestigate the manner in which the affairs of [the Receivership Entities] were conducted and
institute such actions and legal proceedings, for their benefit and on their behalf ... as the
Receiver deems necessary." Finally, this Court directed the Receiver to "[mlake or authorize
such payments and disbursements from the funds and assets taken into control, or thereafter
received by the Receiver."
8. In accordance with the authority bestowed upon him in the Receivership Order,
the Receiver filed a number of ancillary proceedings against numerous third parties, asserting a
variety of claims (the "Ancillary Actions"). The Receiver also commenced an orderly
liquidation of the Receivership Entities' assets, including without limitation, the securities owned
by Offshore and Ornnifund.
9. Shortly after the entry of the Receivership Order, on July 24, 2003, the Receiver
was designated the responsible person for Partners by the Connecticut Bankruptcy Court based
upon his role as the Receiver for LMG 11, the management company for Partners.
10. On September 3, 2003, the District Court entered an Order expanding the
receivership to include Alpha Omega and G.H. Associates as Receivership Entities.
11. On September 30, 2005, the District Court entered an order again expanding the
receivership to include CLR as a Receivership Entity.
Case No. 03-80612 CIV-MARRAIJOHNSON
12. On January 8, 2004, this Court entered a Case Management Order (the "Case
Management Order") that, among other things, established April 4, 2004 as the deadline to file
claims against the Receivership Entities.
13. Ultimately, investors and creditors filed claims against the Receivership Entities
in the total amount of $2,315,710,317, excluding the claim that Partners asserted against the
Receivership Entities, and the claims that the Receivership Entities asserted against one a n ~ t h e r . ~
14. On March 29, 2004, the Connecticut Bankruptcy Court entered an order
transferring venue of the Bankruptcy Case to this Court.
15. The Transfer Order provides in paragraph 2 that the Bankruptcy Case "is hereby
transferred to the United States District Court for the Southern District of Florida to be
administered by the District Court as a bankruptcy case under Title 1 I and pursuant to 28 U.S.C.
3 1334(a) through (c)."
16. On March 3, 2005, the Receiver filed his Amended Motion to Approve Protocol
for Interim Distribution of Estate Assets (DE 836, the "Amended Motion to Approve Protocol").
By the Amended Motion to Approve Protocol, the Receiver requested that this Court authorize
him to utilize the "Net Invested Capital" ("NIC") methodology for determining each investor's
allowed claims herein5
4 As discussed below, Lauer, Martin Garvey ("Garvey") and John Bendall ("Bendall") also have recently filed motions for attorneys fees seeking indemnification from the Receivership Entities.
The Receiver also requested that the Court authorize him to make an interim distribution to the investors. On May 25, 2005, the Receiver filed a Notice of Partial Withdrawal of Amended Motion to Approve Protocol for Interim Distribution of Estate Assets Without Prejudice (DE 948), pursuant to which the Receiver clarified that he was limiting the requested relief exclusively to selecting a valuation methodology for the determination of allowed claims, rather than to make an interim distribution. The Receiver needed to liquidate multiple disputed claims before he could make a meaningful distribution.
Case No. 03-806 12 CIV-MARRAIJOHNSON
17. On September 30, 2005, this Court entered its Agreed Order Granting in Part and
Deeming Withdrawn Remainder of Receiver's Amended Motion to Approve Protocol for
Interim Distribution of Estate Assets (DE 1079), wherein this Court authorized the Receiver to
utilize the NIC methodology as defined in the Amended Motion to Approve Protocol for
purposes of analyzing and determining allowed claims against the Receivership Entities, and
thereafter for purposes of making distributions.
18. Thereafter, the Receiver filed omnibus objections to the $2,3 15,7 10,3 17 in claims
filed against the Receivership Entities. As a result of those objections, the Receiver reduced the
total amount of allowed claims against the Receivership Entities to $643,601,967, excluding the
claim held by Partners against the Receivership Entities and the claims that the various
Receivership Entities held against each other.6
19. On May 2, 2006, the District Court entered an Order referring Partners'
Bankruptcy Case to the United States Bankruptcy Court for the Southern District of Florida (the
"Bankruptcy Court"). The Bankruptcy Case was assigned Case No. 06- 1 172 1 -JKO.
20. On March 25, 2008, the Receiver filed before this Court a Motion to Estimate the
Claim of Lancer Partners, L.P. (DE 2043, the "Receivership Motion to Estimate"). By the
Receivership Motion to Estimate, the Receiver requested that Partners' total claim against the
Receivership Entities be estimated in the amount of $1 10,679,277, the total amount of allowed
On August 17, 2006, this Court entered an Agreed Order on the Receiver's objections to claims against LMG I1 and Partners LSPV (the "Claims Order") [DE 15751. By the Claims Order, the Court directed that the claims against LMG I1 and Partners LSPV filed in the Receivership Case should be either disallowed, treated as claims filed against Partners in the Bankruptcy Case, or allowed as claims against Partners in the Bankruptcy Case. The Court specifically stated that "[ilt is the intent of this order that all Partners' investors shall share in the distributed assets of Partners LSPV and [LMG 111 in the same proportion that they share in the distributed assets of Partners." See also n. 10 discussing recently filed motions for attorneys' fees by various individuals.
Case No. 03-80612 CIV-MARRAIJOHNSON
claims by investors and creditors against Partners plus the face amount of remaining disputed
claims against Partners, for allowance and distribution purposes in the Enforcement Action. The
Partners' claim would receive distributions from the monetized assets of the Receivership
Entities, except for the recoveries generated by certain litigation brought by the Receivership
Entities.
21. On March 25, 2008, the Receiver, as the Responsible Person for Partners, filed in
the Bankruptcy Case a Motion to Estimate the Claim of the Receivership Entities Pursuant to
Section 502(c) of the Bankruptcy Code (the "Bankruptcy Motion to Estimate"). The Bankruptcy
Motion to Estimate requested that the Receivership Entities be allowed a single consolidated
claim against the Partners' bankruptcy estate in the amount of $643,60 1,967, the total amount of
allowed claims by investors and creditors against the Receivership Entities, for the purposes of
allowance and distribution in the Bankruptcy Case. The Receivership Entities' claim would
similarly receive distributions from the monetized assets of Partners, except for the recoveries
generated by certain litigation brought by Partners.
22. On May 12, 2008, the Bankruptcy Court entered its Order Granting Motion to
Estimate Claim of the Receivership Entities Pursuant to Section 502(c) of the Bankruptcy Code,
wherein the Bankruptcy Court granted the Bankruptcy Motion to Estimate, allowing the
Receivership Entities a single consolidated claim against Partners in the amount of $643,601,967
for allowance and distribution purposes.7
Pursuant to the Bankruptcy Court's Order, the claim of Partners against the Receivership Entities will not share in (a) the proceeds of certain litigation brought by the Receivership Entities against its service providers, or (b) the proceeds of the claim that the Receivership Entities hold against Partners.
Case No. 03-806 12 CIV-MARRAIJOHNSON
23. On June 18, 2008, this Court entered its Order granting the Receivership Motion
to Estimate, allowing Partners a single consolidated claim for allowance and distribution
purposes against the Receivership Entities in the amount of $1 10,679,277.'
24. In addition, each of the Receivership Entities filed claims against the other, based
on various factors, including without limitation intercompany transfers made among the entities
prior to the commencement of the Enforcement Action.
25. On September 17, 2010, the Receiver filed his Motion to Approve Procedure for
Distributions to obtain approval from this Court for the Receiver's proposed procedure for
making distributions in the Receivership Case, and to address the issues relating to the
intercompany claims (DE 2405, the "Motion to Approve Procedure for Distributions").
26. By the Motion to Approve Procedure for Distributions, the Receiver sought
authority to, in effect, consolidate the assets and liabilities of all of the Receivership Entities for
the sole purpose of making distributions in the Enforcement Action to investors and creditors
with allowed claims therein,9 and to exclude from distributions the claims that the Receivership
' Pursuant to the District Court's Order, the claim of the Receivership Entities against Partners will not share in (a) the proceeds of certain litigation brought by Partners against its service providers, or (b) the proceeds of the claim that Partners holds against the Receivership Entities.
9 On August 17, 2006, this Court entered an order declaring that claims against Partners LSPV and LMG 11, the management company for Partners, would be treated as claims against Partners (DE 1574). On November 14, 2008, the Receiver filed a motion to transfer the assets of LMG I1 and Partners LSPV to the bankruptcy estate of Partners (the "Motion to Transfer," DE 21 69). On December 15, 2008, the District Court entered an Amended Order granting the Motion to Transfer, (DE 2197). In addition, on December 29, 2008, the Bankruptcy Court entered an order (the "Confirmation Order") confirming the First Amended Joint Plan of Liquidation of Lancer Partners, L.P. (the "Plan"). The terms of the Plan and Confirmation Order provide that (i) the assets of LMG I1 and Partners LSPV were transferred to the Liquidating Trust established pursuant to the Plan, and (ii) Gerard A. McHale will serve as the Liquidating Trustee. By virtue of these orders, the assets and liabilities of Partners, LMG 11 and Partners LSPV were effectively consolidated for distribution purposes.
Case No. 03-80612 CIV-MARRAIJOHNSON
Entities hold against each other. The rationale for this relief is set forth in more detail in the
Motion to Approve Procedure for Distributions.
27. On September 17, 2010, the Receiver filed his Motion for Order Authorizing First
Interim Distribution of Estate Assets (DE 2404, the "Motion for First Interim Distribution"),
seeking authority to distribute $32 million of the assets of the Receivership Entities.
28. On October 7, 2010, this Court entered its Order Granting the Motion to Approve
Procedure for Distributions (DE 2408, the "Order Granting Procedure for Distributions").
29. As of the date of this Motion, the total amount of allowed claims against the
various Receivership Entities, including Partners' claim in the amount of $1 10,679,277, is
$754,28 1,244. Until recently, the Receiver believed that all issues relating to claims of any sort
against the Receivership Entities had been reso~ved. '~
30. On October 7, 2010, this Court entered its Order Granting the Motion for First
Interim Distribution (DE 2407, the "Order Approving First Interim Distribution").
31. On October 20, 2010, Lauer filed his Emergency Motion for Court to Stay its
Order Approving First Interim Distribution (DE 2413, the "Emergency Motion to Stay").
l o As mentioned above, the Receiver notes that Lauer, Bendall, and Garvey each recently have filed motions for award of attorneys' fees and costs in the Enforcement Action (DE 2454, 2529, and 2584, respectively) years after the claims bar deadline. With respect to Lauer's motion for fees, the Magistrate Judge entered a Report and Recommendation that the motion be denied (DE 2524). Lauer has objected…