Rick Pedone is a member of Nixon Peabody’s Business & Finance Department. Rick represents distressed companies, strategic buyers of financially troubled businesses, purchasers of distressed debt, creditors and other parties in the financial restructuring and bankruptcy processes. Many of the matters that Rick handles involve litigated disputes, allegations of fraud and insolvency proceedings pending in multiple jurisdictions.
Rick also provides corporate governance and liability avoidance advice to private equity firms, and directors and officers dealing with special situations. In addition, he serves as outside general counsel to several growing businesses and as a member of the board of advisors for a specialty financial services firm.
What do you focus on?
Distressed M&A
Much of my work is focused on developing and implementing strategies for the purchase and sale of businesses and/or assets that are financially distressed or encumbered by disputes or litigation that could precipitate financial distress.
Financial Default and Cross-Border Insolvency Disputes
Over the past ten years I have represented corporate trust fiduciaries in dozens of matters involving litigation and/or bankruptcy. Examples include: representing an indenture trustee in connection with $1.8 billion in debt in the Energy Future Holdings Bankruptcy, the world’s largest failed LBO; the resolution through Chapter 15 of a difficult cross-border default; first chair trial of bondholders’ rights to $230 million in prepayment premiums and valuation of fourteen power plants; and numerous securitization and swap-related bankruptcy matters and plan litigation related to corporate governance. Many of these disputes have involved insolvency proceedings pending in multiple jurisdictions.
Financial Fraud Litigation and Related Franchise Matters
Many of the most difficult financial disputes today, whether in or out of bankruptcy court, involve allegations of fraud. Litigation concerning such disputes frequently triggers financial distress. Matters that I have handled include the representation of a franchisor whose lender/investor accused it of fraudulent conduct, the representation of a hedge fund that was the victim of a Ponzi scheme in litigation and then the commencement of an involuntary bankruptcy case and the representation of franchisors such as Planet Fitness and Dunkin’ Donuts in disputes with their franchisees.
What do you see on the horizon?
Increasingly, financial disputes will involve proceedings pending in multiple countries. Businesses that invested in China and other developing “capitalist” systems will find unprecedented opportunities and legal/political challenges as these systems face financial stress.
Recent Speaking Engagements and Legal Education Activity
- Lecturer, “Co-Operation and Co-Ordination in Practice” (with S. Atkins & T. Graulich), INSOL International Global Insolvency Practice Course, Dubai
- Moderator, “Current Issues in Oil and Gas Bankruptcies,” American Bankruptcy Institute Northeast Conference
- Speaker, “Driving Value out of Distress: Target Identification and Due Diligence,” The Deal
- Speaker on shifting alliances and strategy in a franchise bankruptcy case, American Bankruptcy Institute Northeast Conference
- Speaker on Cross-Border Insolvency Issues at presentation on Bankruptcy and the Global Economic Crisis, Italy-America Chamber of Commerce
- Panelist, “The Derivatives Market, What Comes Next,” discussing impact of bankruptcy on derivatives contracts
- Speaker, “Bankruptcy Issues in Franchising,” International Franchise Association Legal Forum
- Panelist, Harvard Business School Symposium on Turnaround Management
- Speaker on bankruptcy issues, commercial lease drafting and negotiation
- Speaker and award recipient, Turnaround Management Association
- Speaker, “Expert Witness Discovery Issues in Bankruptcy,” Boston Bar Association
Publications
- “The Evolution of Chinese Bankruptcy Law: Challenges of a Growing Practice Area, Inside the Minds: Recent Developments in Bankruptcy Law in China”; Aspatore Books, 2010. (Co-author)
Illustrative Matters
Representative Restructuring and Distressed M&A Matters
- Energy Future Holdings Corp. Represent unsecured bond trustee in connection with $1.8 billion debt in the bankruptcy cases of Energy Future Holdings Corp. and 70 of its affiliates (collectively, “EFH”) in the Delaware Bankruptcy Court. EFH was the largest generator, distributor, and retail provider of electricity in Texas, with more than 40 coal, nuclear, and gas-fired power plants. The cases are the product of the largest leveraged buy-out in history. With over $49 billion in liabilities and $36 billion in assets, EFH’s Chapter 11 case is also the largest operating Chapter 11 case ever filed in Delaware. Work included litigation related to appointment of creditors’ committee, evaluation of claims arising out of the LBO, litigation related to corporate governance, intercompany claims, bond holder entitlement to post-petition interest, makewhole premiums totaling more than $200 million, potential violations of Trust Indenture Act, value of net operating losses (NOLs) and contested plan of reorganization.
- In re: Lehman Brothers Holdings, Inc. Representing corporate trust and finance clients in connection with derivatives contracts and variety of other issues, including cross-border matters related to Lehman affiliates. Derivative disputes involved over $600 million. Work includes ongoing litigation concerning allowance of RMBS “put-back” claims and defense of litigation related to CDO distributions.
- In re: The Educational Resources Institute (“TERI”). Represented U.S. Bank as indenture trustee for 19 trusts holding debt secured by student loans in connection with bankruptcy of guarantor. Litigated perfection issues and crafted settlement and voting procedures allowing approval of compromise.
- In re: Calpine. Represented Wilmington Trust Company as collateral agent and trustee for approximately $2.4 billion in debt secured by 14 power plants. Managed intercreditor disputes with second and third lien debt; litigated and conducted trial of parties’ rights to default interest and prepayment premiums; argued district court appeal regarding prepayment dispute.
- Mortgage originator bankruptcies. Represented corporate trust clients in connection with mortgage originator bankruptcies.
- GT Advanced Technologies. Served as local bankruptcy counsel to Apple supplier GT Advanced Technologies in case filed to address issues raised by contracts with Apple.
- Supervalu. Represented California Self-Insurers Security Fund in connection with lien enforcement related to nearly $1 billion claim. Coordinated negotiation and litigation of lien rights and eventual modification in connection with sale to purchasing entity sponsored by Cerberus.
- Connect EDU (BK.SDNY). Represented venture capital lender and investor in SDNY Chapter 11 and purchase/lift-out of subsidiary using claims to credit bid.
- Confidential. Advised higher education provider on restructuring matters following termination of Title IV eligibility.
Cross-border Restructuring Matters
- In re: Tembec. Represented HSBC as indenture trustee in connection with CBCA proceeding in Toronto and Chapter 15 proceeding in New York related to unsecured indentures totaling more than $1 billion.
- NewSat. Advised Australian satellite operator on debt and restructuring options in USA and abroad.
Corporate Governance and Advice to Directors and Officers
- Confidential. Advised venture investor and director in connection with potential claims and wind-down of business through California receivership.
- Confidential. Advised venture investor and director in connection with bankruptcy and obtaining releases.
- Software Company (confidential). Advise executives of software company regarding potential personal liability and claims against former director.
Franchise Disputes and Franchise Related Restructuring Matters
- Planet Fitness. Represented Planet Fitness and investors in litigation concerning breaches of fiduciary duties and other matters against system’s largest franchisee. Negotiated purchase/transfer of certain assets of franchisee to resolve matter. Other representation of Planet Fitness included contested confirmation trial in bankruptcy of significant multi-unit franchisee.
- Confidential. Represented franchisor as lender and franchisor in connection with workout matter involving multi-unit franchisee.
- In re: Ground Round. Represented 38 franchisees of Ground Round restaurant chain in franchisor’s bankruptcy. Coordinated prosecution of claims by franchisees to purchase franchise system out of bankruptcy using claims as payment. Conducted claims and related bankruptcy litigation and negotiated sale of company to new “cooperative” established by franchisees. Negotiated and litigated lease assignments, conducted evidentiary hearings, and defended related appeal.
- Confidential National Multi-brand Franchisor. Represented franchisor in connection with resolution of disputes with lender and investor through confidential mediation with former bankruptcy judge. Structured sale to lender/investor.
- Dunkin’ Donuts. Represented Dunkin’ as franchisor and lender in multi-unit franchisee bankruptcy. Prosecuted franchise-related and secured claims. Managed bankruptcy sale process, including issues related to assumption and assignment of franchise agreements and enforcement of rights of first refusal.
- CleanNet of New England. Represented cleaning system debtor in Chapter 11 case brought to resolve litigation over status of franchisees as employees.
- Metromedia Restaurant Group/Bennigan’s. Represented franchisor in bankruptcy of multi-unit franchisee.
Real Estate Restructuring Matters
- 185 Devonshire St. Represented lender and then purchaser of debt and foreclosing party. Conducted foreclosure on office building in Boston’s financial district and managed related commercial lease disputes.
- Carnegie Abbey. Represented agent in workout of $184 million construction loan secured by luxury condominiums on Narraganset Bay.
- Forbes Park. Represented lender in workout and foreclosure sale of partially completed 300-unit apartment complex on 17 acres of environmentally challenged urban waterfront land.
- In re: Cold Spring Golf Course, Inc. Represented golf course contractor and used claims to propose and obtain confirmation of third-party plan forcing sale of course and related development to contractor.
Alternative Investment Fund Matters
- A.A.G. Roosevelt. Represented hedge fund prosecuting litigation, involuntary bankruptcy, and related non-dischargeability dispute involving fraud and Ponzi scheme.
- Fletcher Asset Management. Represented fund manager in connection with affiliate bankruptcy.
Committee Work
- Creditors’ Committees. Served as lead advisor to members of EFH Corp. Committee and Thornburg Mortgage Committee, and as counsel to committee in Arch Wireless and Stairmaster cases.
Litigation
- Eiffage Construction (Massachusetts Superior Court). Defended veil-piercing action brought against French construction company. Case dismissed for lack of personal jurisdiction after five-day bench trial.
- Promissory Note Litigation. Represented distressed investor in action against partner in international law firm for amounts due on note. Served as lead counsel in five-day jury trial over calculation of balance due.
- Chelsea Housing Authority/Michael E. McLaughlin. Represent housing authority on a pro bono basis in litigation against former executive director and directors for claims of funds, negligence, and breaching fiduciary duties.
- RMBS-related Litigation. Serve as coordinating counsel for HSBC in connection with all RMBS litigation brought by underlying borrowers.
