S&C Advises on American Realty Deal: Business of Law
By Elizabeth Amon – Oct 24, 2013 7:28 AM ET
Sullivan & Cromwell LLP, Morris Manning & Manning LLP, Venable LLP, Wachtell Lipton Rosen & Katz and Proskauer Rose LLP advised on American Realty Capital Properties Inc. (ARCP)’s agreement to buy Cole Real Estate Investments Inc. for about $6.85 billion as it seeks to become the largest owner of U.S. single-tenant buildings.
Sullivan & Cromwell is acting as special counsel to Christopher Cole and certain other executives in connection with the proposed acquisition. The S&C team, led by partners Alison Ressler and Benjamin Weber, also includes partners Matthew Friestedt on executive compensation and employee benefits and Andrew Mason on tax matters.
Morris Manning partner John G. Morris headed the real estate part of the deal for Cole. Lauren Burnham Prevost of Morris Manning handled the corporate side.
Wachtell’s team, acting for Cole, was led by partners Robin Panovka and Ronald C. Chen. Additional partners on the deal included Trevor S. Norwitz, corporate; Michael J. Segal, executive compensation and benefits; T. Eiko Stange, tax; William Savitt, litigation; and Ilene Knable Gotts, antitrust.
Venable partner James Hanks also worked on the deal, advising Cole.
American Realty Capital Properties was advised by Proskauer. The Proskauer team was led by Peter Fass and Steven Lichtenfeld, co-heads of the real estate capital markets group, and partner Daniel Ganitsky, mergers and acquisitions. Additional partners included Andrew Bettwy, finance, Ira Bogner, employee benefits; Sarah Gold, litigation; Les Loffman, tax; Eric Remensperger, real estate; and Kathy Rocklen, broker-dealer.
American Realty would pay 1.0929 common shares valued at $14.59 for each Cole share or $13.82 in cash, the companies said in a statement yesterday. The offer is 14 percent higher than Cole’s closing price Oct. 22. The merger has been approved by both companies’ boards, according to the statement.
The deal extends a series of acquisitions by New York-based American Realty, which this year agreed to purchase CapLease Inc. (LSE) and American Realty Capital Trust IV Inc. to expand its holdings of mostly single-tenant retail, office and industrial properties. The real estate investment trust was rebuffed this year in an effort to buy a predecessor company to Phoenix-based Cole.
Weil, Gotshal & Manges LLP is representing ARCT IV. Mergers and acquisitions partners Michael Aiello and Matt Gilroy were on the Weil team.
The combined company will have 3,732 properties in 49 U.S. states and Puerto Rico, according to the statement. The current largest single-tenant REIT, Escondido, California-based Realty Income Corp. (O), had 3,681 single-tenant buildings as of June 30.
American Realty said it had lined up $2.75 billion in financing and the Cole purchase should be completed early next year.
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MF Global Wants Creditors’ Fees Cut by $2.5 Million
MF Global Holdings Ltd., acting as the administrator under a confirmed Chapter 11 plan, wants the bankruptcy judge to cut $2.5 million from the fee request by Dewey & Leboeuf LLP and Proskauer Rose LLP, the law firms representing the official creditors’ committee.
The MF Global parent filed papers on Oct. 22 saying the two firms incurred “enormous” fees in connection with a U.K. affiliate’s bankruptcy abroad. The parent said the committee ran up “over $3.5 million” in fees just supervising the two MF Global trustees’ struggles to recover and settle claims with the U.K. affiliate.
The U.S. Trustee, who often takes a hard line on fees, didn’t have the same objection. The Justice Department’s bankruptcy watchdog asked the judge to cut Dewey’s fee by about $41,300 and Proskauer’s by about $23,500.
Martin Bienenstock, the partner who led the engagement for the creditors at both firms, said in an e-mail that the U.S. Trustee’s objection is “well informed and says it all.”
Together, the committee’s two firms are seeking about $8.75 million. The committee’s lawyers moved from Dewey to Proskauer when Dewey went out of business and into its own bankruptcy.
As an alternative to cutting the firm’s compensation, MF Global asked the judge to appoint a fee examiner.
Louis Freeh, the Chapter 11 trustee for the parent, is asking for $1 million, only 25 percent of what he could have requested for the job. Because Freeh’s fee is considerably less than the law allows, the U.S. Trustee lodged no objection.
MF Global Holdings went into bankruptcy reorganization in October 2011 alongside its brokerage unit, MF Global Inc., after the discovery of a $1.6 billion shortfall in customer funds. The brokerage is in a parallel liquidation under the Securities Investor Protection Act.
The holding company Chapter 11 case is In re MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The liquidation of the broker is In re MF Global Inc., 11-bk-02790, in the same court.
Pillsbury Adds Environmental Enforcement Lawyer in Washington
Pillsbury Winthrop Shaw Pittman LLP said Matthew Morrison joined its Washington office as a partner in the environment, land use and natural resources practice.
He most recently was deputy director of the Office of Criminal Enforcement, Forensics and Training at the U.S. Environmental Protection Agency. He was also the prior acting director and associate director of the air enforcement division of the EPA’s Office of Civil Enforcement. Before that, he was a trial and supervising attorney in the environmental enforcement office at the U.S. Justice Department.
Morrison will advise clients on making effective compliance decisions and guide them on permitting, regulation and enforcement across major energy and manufacturing sectors, the firm said.
“Matt greatly enhances Pillsbury’s enforcement counseling and defense capabilities in the environmental field, bringing insights and experience gleaned from a long and distinguished career at EPA and the Justice Department,” Pillsbury Chairman James Rishwain Jr. said in a statement “We look forward to Matt helping us expand especially our air quality practice both regionally in Washington, D.C., Texas and California and across key industries, including energy, utilities, and chemical manufacturing.”
Pillsbury has lawyers at offices in the U.S., London, Abu Dhabi and Asia.
Morgan Lewis Adds Pittsburgh Environmental and Energy Lawyer
Morgan Lewis & Bockius LLP said Kenneth Komoroski and a group of associates joined the firm in Pittsburgh from Norton Rose Fulbright LLP.
Komoroski concentrates on oil and gas and environmental law. He represents clients in matters such as land use and zoning, permits, water usage and wastewater treatment, environmental issues, royalties, lease terms, local ordinances, and related litigation.
“Development of natural gas reserves in the Marcellus, Utica and Upper Devonian shales present exciting opportunities and will have enormous impact on U.S. energy independence and on economic development for the surrounding regions,” Chairman Francis M. Milone said in a statement. “Ken is at the center of the legal and business communities in this area, playing key roles not only in advising clients that have an interest, but also in serving as a leader in related associations that are moving thought leadership and related policy forward.”
Morgan, Lewis has more than 1,600 legal professionals in 25 offices across the U.S., Europe, Asia and the Middle East.
Loeb Gets Regulatory Insider for Media, Technology Teams
Loeb & Loeb LLP said David G. Mallen, the deputy director of the National Advertising Division of the Council of Better Business Bureaus, joined the firm as a partner in New York.
Mallen has almost 15 years of experience at NAD, the advertising industry’s self-regulatory body, which investigates and adjudicates issues relating to truth and accuracy, the firm said.
“David’s distinguished background enhances our ability to service clients on cutting-edge matters involving the convergence of advertising and promotions, emerging media, technology, privacy and consumer protection law,” Kenneth R. Florin, co-chairman of Loeb & Loeb’s advanced media and technology department, said in a statement.
Loeb has more than 300 attorneys at offices in Los Angeles, New York, Chicago, Nashville, Tennessee, Washington and Beijing, as well as an affiliate office in Hong Kong.
Denver’s Stettner Miller Attorneys Join Fisher & Phillips
Fisher & Phillips LLP, a labor and employment firm, acquired Stettner Miller PC, a four-lawyer Denver firm.
The new lawyers, including two partners, will join Fisher & Phillips’ Denver office on Nov. 1. Bruce Anderson and Sue Schaecher join as partners. Robert Miller joins as senior of counsel. Stettner Miller’s other senior shareholder, Ken Stettner, is retiring.
“These attorneys share our commitment to providing value to clients through business-focused advice and smart litigation strategies,” Denver managing partner Todd Fredrickson said in a statement.
Miller has represented management clients in labor relations and employment matters for than 35 years, including in trials and appeals of labor and employment cases before administrative agencies and courts.
Anderson has litigation experience in state and federal court bench and jury trials, arbitrations and alternative dispute resolution proceedings, and in matters before the National Labor Relations Board, Equal Employment Opportunity Commission and state fair employment agencies.
Schaecher has represented employers in labor and employment-related matters since 1984. Her practice includes representing employers in bench and jury trials and appeals in state and federal courts, arbitrations, mediations, proceedings before state and federal administrative agencies, government audits, investigations, drafting policies and negotiating agreements.
The acquisition boosts the number of Fisher & Phillips Denver attorneys from six to 10. The firm has 300 attorneys in 31 U.S. offices.
Littler Adds Gardere Hospitality Industry Vice Chairwoman
Littler Mendelson PC, a labor and employment firm, added Celeste R. Yeager as a shareholder to its Dallas office. Yeager was previously a partner at Gardere Wynne Sewell LLP and vice chairwoman of its hospitality industry team.
Yeager represents clients in employment disputes, including class and collective actions before local, state and federal courts. She also has a traditional labor practice representing clients with organized workforces before the National Labor Relations Board and counseling clients on avoiding union organizing, handling campaigns and negotiating collective-bargaining agreements.
Littler Mendelson has more than 980 attorneys and 57 offices throughout the U.S. and globally.
Malaysia Shariah Legal Hub Bid Seen Challenging
Malaysia, which pioneered Islamic finance more than 30 years ago, will face an uphill battle in its attempt to make itself an international center for Shariah dispute resolution, say local and foreign law firms.
The Law Harmonisation Committee is working to encourage use of Malaysian rules for cross-border Islamic deals instead of English law, Badlisyah Abdul Ghani, a member of the panel and the chief executive officer of CIMB Islamic Bank Bhd., said at an Oct. 7 briefing in Kuala Lumpur.
Regulations are being amended to remove loopholes that discourage Shariah deals to make the nation the preferred place to settle disputes, Abdul Hamid Mohamad, the committee’s chairman, said at the briefing.
Malaysia, accounting for around 60 percent of outstanding sukuk worldwide, is counting on a complete set of professional services to cement its lead in the Islamic finance industry, which will more than double to $2.67 trillion in assets by 2017, according to PricewaterhouseCoopers LLP. Foreign lawyers may be resistant to the shift as they aren’t familiar with Malaysian law, said Megat Hizaini Hassan, head of the Islamic finance practice at Lee Hishammuddin Allen & Gledhill in Kuala Lumpur.
“We are at the center of the Islamic finance world at the current moment,” Baiza Bain, managing director at Amanie Advisors Sdn., a Kuala Lumpur-based Islamic finance consulting firm, said in an interview. “How do you consolidate that position further? The only way is to have a legal system that will inspire confidence in the players to come and do business.”
The country had $148 billion of sukuk outstanding at the end of June, the Malaysia International Islamic Financial Centre said in August. Shariah-compliant assets stood at 420 billion ringgit ($133 billion) in August, or 21 percent of Malaysia’s total banking holdings, central bank data show.
The Southeast Asian nation has a single set of laws that govern both Shariah-compliant and non-Islamic commercial contracts, and they can sometimes render Islamic deals less competitive, the committee’s Abdul Hamid said. The aim is to create a comprehensive system for Islamic financial investors, he said.
“That is a very tall order, an extremely ambitious plan,” Jawad I Ali, the Dubai-based global deputy head of King & Spalding’s Islamic finance practice, said in an interview. “What is almost impossible to reverse is the dominance of English law in international transactions, whether it’s a Shariah-compliant transaction or not.”
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Delaware Judges Can’t Hold Secret Arbitrations, U.S. Court Rules
Delaware’s Chancery Court, the country’s leading venue for securities litigation, can’t be used for secret arbitration proceedings in business disputes, a federal appeals court ruled.
The arbitration program set up by the state, which allowed publicly funded judges to make decisions behind closed doors on business cases, violates the public’s constitutional right to access to the courts, the U.S. Court of Appeals in Philadelphia said yesterday in a 2-1 decision.
“Logic weighs in favor of granting access to Delaware’s government-sponsored arbitration proceedings,” the appeals court said. “It would ensure accountability and allow the public to maintain faith in the Delaware judicial system.”
The decision voids a program Delaware established in 2009 with the objective of bringing more work to its judges in cases where more than $1 million is at stake. Delaware is the corporate home to more than half of the publicly traded companies in the U.S. and 63 percent of Fortune 500 companies, state officials say.
Delaware Chancery Court Chief Judge Leo Strine “is not commenting,” Ramona Monsen, a member of the court’s staff, said after the decision was made public.
The case is Delaware Coalition for Open Government Inc. v. Strine, 12-3859, U.S. Court of Appeals for the Third Circuit (Philadelphia). The lower court case is Delaware Coalition for Open Government Inc. v. Strine, 11-cv-01015, U.S. District Court, District of Delaware (Wilmington).
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Ecuador Judge Testifies He Was Bribed to Rule Against Chevron
A former Ecuadorean judge who presided over a pollution case against Chevron Corp. (CVX) testified that he and a colleague who issued a $19 billion judgment against the company in the environmental lawsuit were bribed.
The judge, Alberto Guerra, took the stand yesterday in Manhattan federal court during the trial in a racketeering suit in which Chevron alleged that the verdict in Ecuador was procured through fraud.
Guerra has said in a declaration filed with the court that he was paid thousands of dollars by lawyers for the plaintiffs to steer the case in their favor. Another former Ecuadorean judge who issued the $19 billion ruling, Nicolas Zambrano, was promised $500,000 from the proceeds, Guerra said in the November filing. Guerra said he also routinely ghost wrote judgments for Zambrano and was paid for those services.
“It could not seem as though all of the orders were being issued for the benefit of the plaintiffs,” he said through an interpreter in court yesterday, explaining why some of the rulings he was involved with favored Chevron. “The idea was to not have it look suspicious.”
Guerra said in court that he was given the bribes sometimes in the form of deposits in his bank account and other times in envelopes filled with $20 and $50 bills.
Zambrano has denied that he was bribed by the plaintiffs and that Guerra or the plaintiffs were involved in writing his decisions. He may testify later on behalf of lawyers for the Ecuadorean plaintiffs, who sued over pollution in the Amazon rainforest, the attorneys said.
Chevron, the second-largest U.S.-based energy firm, claims that lawyers for the plaintiffs, led by Manhattan attorney Steven Donziger, engaged in a scheme to extort money from the company during a 20-year legal battle over pollution in an Ecuador oil concession.
The company is seeking an order from U.S. District Judge Lewis Kaplan barring lawyers for the Ecuadoreans from trying to enforce the 2011 pollution judgment in countries where Chevron has assets.
Donziger claims that Chevron has agreed to pay Guerra at least $326,000 through 2015 for cooperation and favorable testimony. Guerra said in his November declaration that the company paid him for computer equipment and for gathering evidence useful to the case and not for the testimony.
In the environmental case, Donziger and other lawyers for indigenous people in Ecuador’s Lago Agrio region sought damages for Texaco Inc.’s alleged dumping of toxic drilling wastes from 1964 until about 1992 that polluted about 1,500 square miles (3,885 square kilometers). The lawsuit continued against Chevron when it acquired Texaco in 2001.
The racketeering case is Chevron Corp. v. Donziger, 11-cv-00691, U.S. District Court, Southern District of New York (Manhattan). The appeals court case is In Re Naranjo, 13-00772, U.S. Court of Appeals for the Second Circuit (Manhattan).
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