Announcements

Quigley Company Fends Off Motion for Examiner

SRZ fended off a motion for Quigley Company Inc., a Chapter 11 debtor and wholly owned subsidiary of a major public company, by the United States Trustee (“US Trustee”) for the Southern District of New York seeking a bankruptcy court order directing the appointment of an examiner. The US Trustee relied, among other things, on a provision in the Bankruptcy Code mandating the appointment of an examiner when the debtor has at least $5 million of “fixed, liquidated” unsecured debt. On October 21, 2008, Chief Bankruptcy Judge Stuart M. Bernstein denied the UST’s motion after oral argument, finding that the appointment of an examiner would not be in the creditors' interest. Any fact issues raised by the US Trustee, explained the court, were already subject to pre-trial discovery between the parties relating to Quigley's heavily contested reorganization plan. 

The firm showed that the US Trustee’s motion was factually and legal defective. First, the US Trustee failed to satisfy the $5 million statutory threshold of fixed, liquidated and unsecured claims. Virtually all of Quigley’s debt (about $3 billion) is held by personal injury asbestos claimants with unliquidated claims. Only Quigley’s parent held most of the other unsecured claims against Quigley, but the statute excludes insider claims from consideration. 

SRZ also demolished the US Trustee’s assertion that Quigley and its corporate parent had “a confidential” undisclosed joint defense agreement. Aside from the routine nature of the agreement, Quigley proved that it had delivered a copy of the agreement to the US Trustee 15 months prior to the filing of the examiner motion. Although the US Trustee had threatened at the time to seek a court ruling on Quigley’s assertions of privilege, it failed to do so. Indeed, discovery relating to Quigley’s proposed reorganization plan has been ongoing for at least two years. Any issues raised by the US Trustee could easily be dealt with in the ongoing discovery process.

Quigley was represented by partners Michael L. Cook and Lawrence V. Gelber, with the help of associate Victoria A. Lepore.