Shareholder & Securities

Private Equity

11/28/2016

Susman Godfrey has extensive experience representing private equity firms. While private equity encompasses a wide diversity of industries and focus, Susman Godfrey recognizes that private equity firms face similar, recurring legal issues and litigation risks. From failed deals and shareholder disputes to intellectual property and antitrust allegations, Susman Godfrey understands the world of private equity and the litigation it routinely encounters.

Representative cases include:

  • In Dahl, et al v. Bain Capital Partners, LLC , et al, Susman Godfrey represented Texas Pacific Group in a class action brought against the nation's largest private equity firms. The plaintiffs alleged that the private equity firms conspired to allocate the market for leveraged buy-outs of public companies, by, among other things, submitting sham bids, agreeing not to bid and including "losing" bidders in the transactions. The suit named thirteen defendants, including Kohlberg Kravis Roberts & Co, the Carlyle Grup, Silver Lake Partners and Merrill Lynch & Co.
  • In Huntsman Corp. v. Leon Black, Joshua Harris, Apollo Global Management, et al, Susman Godfrey represented Apollo against allegations that it tortiously interfered in $10.6 billion merger of Huntsman and Basell. The lawsuit filed in Texas state court sought $3 billion in damages, $100 million to cover its breakup fee payable to Basell, and unspecified damages related to its business and its value. Hexion and Apollo asserted in a related lawsuit that Huntsman's lower profits and increased debt would plunge the combined company into insolvency, such that the banks that had agreed to finance the deal, Deutsche Bank and Credit Suisse, would be unlikely to lend money to complete the deal under those circumstances. After substantial litigation, the parties settled the dispute.
  • In Accredited Home Lenders v. Wachovia, Susman Godfrey won a temporary restraining order for AHL, which is a portfolio company owned by private equity firm Lone Star Funds. AHL had borrowed $750 million from Wachovia to originate mortgages, with Wachovia holding the loans as collateral. As the current value of that collateral declined, Wachovia made repeated margin calls on AHL -- a total of over $110 million in one year, all of which AHL paid promptly. Later, however, when AHL struck a deal to sell the loans to a third party for at least 85.875 percent of the unpaid principal balance, Wachovia attempted to scotch the deal by writing down the collateral value, imposing a particularly onerous $35.7 million margin call and then declaring AHL in default -- apparently calculating that if AHL were driven out of business, Wachovia could sell the collateral at a higher price. A Superior Court judge in San Diego put a hold on that action with a temporary restraining order. The matter settled shortly thereafter.
  • In Alcatel USA, Inc. v. Cisco Systems, Inc., Sevin Rosen Funds hired Susman Godfrey to represent its portfolio company, Monterey Systems, a telecom start-up, in litigation brought against Monterey by Alcatel. Alcatel asserted trade secret and copyright infringement claims. Susman Godfrey prevented Alcatel from obtaining a broad temporary injunction that would likely have crippled Monterey and killed a pending sale of the company to Cisco. After the sale was completed, Cisco retained Susman Godfrey to continue the litigation. Susman Godfrey ultimately won summary judgments on all counts.