“I cannot believe that a republic could hope to exist at the present time, if the influence of lawyers in public business did not increase in proportion to the power of the people.”
-Alexis de Tocqueville

• Fansteel, Inc.
• Onco Investment Company
• Bangor and Aroostook
  Railroad Company
• Circuit Systems, Inc.
• United Homes, Inc.
• Abtox, Inc.
• Denver’s Ocean Journey, Inc.

Frank/Gecker LLP has a national practice representing creditors’ committees, trustees on their most complex litigation and more than one dozen major public and private companies as outside in-house bankruptcy counsel on both their complex bankruptcy matters and on day-to-day debtor/creditor issues. We represent many other major corporations when they find themselves embroiled in bankruptcies and workouts in the Midwest or want to acquire assets from businesses in bankruptcy. In our experience, our clients do not like to see their names on the web sites of bankruptcy specialists, even though we usually work for them when they are on the creditor side of the table. When we look at long lists of clients on other law firms’ web sites, it does not really tell us much. If you would like to hear about how we serve as outside in-house bankruptcy counsel to major corporations, just call and ask. We will tell you all about it, name names and even put you in touch with our clients so they can tell you about our good work.

Nonetheless, we do think it is worth noting a few of our recent successful cases. If you are interested, read on.

In re Fansteel, Inc., United States District Court for the District of Delaware. Fansteel, Inc. was a 90-year old manufacturer of specialty metal products operating at eight manufacturing facilities in five states and Mexico. When Fansteel filed its Chapter 11 reorganization petition in the United States Bankruptcy Court for the District of Delaware, Fansteel had shut down a tantalum processing facility in Oklahoma creating a default under its license with the United States Nuclear Regulatory Commission (the “NRC” ). We were counsel to the Creditors’ Committee, comprised of Fansteel’s pre-petition lenders and major trade vendors. Because of the issues involving the NRC, the entire case was transferred and heard in the United States District Court for the District of Delaware. Fansteel faced seemingly insurmountable environmental claims but still insisted that it could keep all of its assets and pay creditors in stock. The Committee contested these positions and ultimately Fansteel and the Committee confirmed a joint plan of reorganization. The confirmed plan provided for a sale of four operating divisions to generate cash for creditors, isolated the environmental liabilities by transferring the affected assets to trusts and issuing collateralized notes to fund the remediation, implemented a decommissioning plan for the tantalum plant under an amended license with the NRC, and structured settlements with the United States Environmental Protection Agency and Pension Benefit Guaranty Corporation. Under the plan, unsecured creditors received a cash distribution of more than 50% of their claims plus the majority of shares in the reorganized Fansteel.

In re Onco Investment Company, United States Bankruptcy Court for the District of Delaware. In this Chapter 11 bankruptcy of the Oglebay-Norton mining and shipping conglomerate, we were counsel to a group of creditors that objected to confirmation of the plan of reorganization, which was supported by the Debtors and the creditors committee. After a blistering four-week discovery period, the four-day confirmation hearing covered a wide range of complex expert and factual testimony. We argued that the plan was not feasible and that it did not comply with the classification and impairment requirements of Chapter 11 because it did not provide for resolution or payment of the objecting creditors’ claims. The court denied confirmation and the Debtors quickly negotiated a settlement under which they will pay roughly $52 million to our clients.

In re Bangor and Aroostook Railroad Company, United States Bankruptcy Court for the District of Maine. In March 2001, the Bangor and Aroostook Railroad Company (“BAR”) entered into a series of agreements with our client, a major North American railway company (“RR”) whereby RR paid $5 million to BAR and BAR granted RR an easement and trackage rights over a railroad line owned by BAR and agreed to haul RR cars over the line at a specified rate. A year later, BAR filed for reorganization under Subchapter IV of Title 11, Railroad Reorganization, and sought to oust RR from the line pursuant to section 1170 of the Bankruptcy Code, under which the bankruptcy court may authorize the abandonment of a railroad line. We have been bankruptcy counsel to RR in this case of first impression, which wound its way from the Bankruptcy Court to the District Court to the Surface Transportation Board, and ultimately to the United States Court of Appeals for the First Circuit. The First Circuit held in favor of RR that the bankruptcy court does not have the authority under section 1170 to adversely abandon the lines or trackage rights of a non-debtor, on the petition of a debtor railroad who owned those lines at the time of bankruptcy. Howard v. Surface Transportation Board, 389 F.3d 259 (1st Cir. 2004).

In re Circuit Systems, Inc., United States Bankruptcy Court for the Northern District of Illinois. Before such lawsuits hit the headlines, we filed suit on behalf of the Plan Trustee of the Liquidating Trust of Circuit Systems, Inc. against the officers and directors of Circuit Systems, Inc. alleging that the directors of this publicly traded company breached their fiduciary duties by failing to scrutinize excessive compensation packages to management and by authorizing insider transactions that benefited management. The settlement of the suit in 2005 allowed the Plan Trustee to distribute over a million dollars to unsecured creditors.

In re United Homes, Inc., United States Bankruptcy Court for the Northern District of Illinois. In this case, we served as counsel to the Chapter 11 trustee of a large national home builder. The first phase of the case required the negotiation of a series of complex agreements with the secured lender, Residential Funding Corp. (“RFC”) providing for the sale of remaining developed and undeveloped real estate in Illinois, Michigan and Arizona, while preserving disputes over the proceeds. The sales ultimately generated $18 million, at which point litigation began over RFC’s assertion that it had a lien on those funds. The Trustee advanced a number of arguments concerning the validity of RFC’s liens and a failure to properly maintain liens on an Arizona subdivision. RFC and its title insurer failed in their motions to dismiss those claims and ultimately settled by paying $1.5 million and waiving deficiency claims in excess of $13 million.

In re Abtox, Inc., United States Bankruptcy Court for the Northern District of Illinois. Abtox, Inc. ( Abtox) was a rising private equity star that ran afoul of its creditors and the Food and Drug Administration and filed for Chapter 11 bankruptcy. We represented the Creditors' Committee and, ultimately, the post-confirmation trust (the "Trust") in litigation with Abtox's investors over their claim to have made secured loans to Abtox in the year before its bankruptcy. While most of the investors settled quickly, two healthcare investment funds went to trial against the Trust. The Trust argued that the investment funds, by virtue of their access to information and ex officio position on Abtox’s board of directors, were insiders and therefore were subject to a longer one-year period for avoidance of their liens as preferential transfers. The Court found that the investors were insiders and invalidated security interests the investors obtained during the year before bankruptcy. This argument rendered the investors unsecured on much of their claim and greatly increased the money available for distribution to other unsecured creditors.

In re Denver’s Ocean Journey, Inc., United States Bankruptcy Court for the District of Colorado. In this Chapter 11 bankruptcy of Denver’ s new aquarium, we represented a large public bottling company in a complex dispute over its claim arising from a rejected sponsorship agreement. The claim was by far the largest unsecured claim against the estate and Denver ‘s Ocean Journey, Inc. (“DOJ”) sought to disallow the claim and distribute payment in full to all other unsecured creditors. Briefing over the claim dispute raised a number of complex factual issues that could only be resolved though extensive and expensive discovery. In order to bring the matter to a head quickly, we staked out a position that would block confirmation of the plan of reorganization. This approach forced DOJ to negotiate rather than litigate and DOJ ultimately agreed to pay roughly half of the funds in the bankruptcy estate to our client.