September 4, 2012

Delaware Bankruptcy Court dismisses all remaining claims against Credit Suisse in Champion Enterprises matter.

Following a bench trial, Judge Kevin Gross, Chief Judge of the United States Bankruptcy Court for the District of Delaware, dismissed all remaining claims against Willkie client Credit Suisse AG, Cayman Island Branch in a fraudulent conveyance and lender liability action brought by the Official Committee of Unsecured Creditors of Champion Enterprises, a leading U.S. manufacturer of prefabricated housing and other real estate structures. Partner Joseph Baio served as lead trial counsel for the lender Credit Suisse.

The central issue that was tried was plaintiff’s claim that Credit Suisse, as Administrative Agent to the group of Champion’s lenders, breached a $187 million Credit Agreement by assigning Champion’s debt to an entity, MAK Capital Fund LP, without Champion’s prior consent as required under the Agreement.  Plaintiffs allege that this breach of the Credit Agreement by Credit Suisse triggered the acts that ultimately led to Champion’s eventual bankruptcy filing and resulted in approximately $100 million in damages to the group of unsecured creditors.

In an 81-page decision, the Court found that Champion’s breach of contract claims failed as a matter of fact and law.  The court found that: 1) based on its own counsels’ advice, Champion itself eventually recognized MAK Capital’s status as a Lender well before the bankruptcy filing; 2) Champion knowingly released claims relating to the alleged breach in an amendment to the Credit Agreement, rejecting the assertion that the release was secured through coercion; 3) plaintiff failed to offer any competent evidence that the alleged breach caused Champion or plaintiff to suffer any damages; and 4) plaintiff’s expert failed to prove the existence of any non-speculative damages whatsoever, having offered subjective estimates of value that were based on untested, unverified and unreliable projections.

The Willkie team was led by partner Joseph Baio and associates Stephen B. Vogel and Teri M. Seigal.

Joseph Baio
Joseph T. Baio Senior Counsel Investigations & Enforcement

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