Morgan Lewis secured a victory for Stewart Lender Services (SLS) following a five-day bench trial before the Judge Kevin Gross in the US Bankruptcy Court for the District of Delaware in Allonhill LLC v. Stewart Lender Services Inc.
Debtor Allonhill sought damages from SLS in excess of $33 million on claims arising from SLS’s purchase of substantially all of Allonhill’s assets prior to its bankruptcy filing. The claims included a claim for fraudulent transfer, based on the assertion that Allonhill’s business was worth significantly more than SLS paid. Allonhill also alleged breach of the sale agreement that deprived Allonhill of earnout payments.
In his 129-page written decision, Judge Gross ruled in SLS’s favor on all of Allonhill’s affirmative claims and awarded no damages. He found that the consideration SLS provided for the sale after a marketing process and arms’ length negotiations was indicative of fair market value and that SLS ran the business post-sale consistent with the parties’ agreements.
Partner Andrew Gallo led the Morgan Lewis trial team, with assistance from partner Sam Rowley and associates Nathaniel Bruhn, Rhonda Yacawych, Laura McCarthy and Nakisha Duncan.