This email is to follow up the email I sent you last week concerning a potential development in the Hull House bankruptcy case. We now know what the proposed settlement is, between the Board of Directors and the Trustee.
Attached you will find a copy of the Motion filed by the Trustee last week which requests that the Court approve a settlement reached between the Trustee, the Hull House Board of Directors, and the accounting firm for Hull House (Quattro).
This Motion has been set for hearing on at 10:00 a.m. in Room 742, on December 4, 2013, at the Dirksen Federal Courthouse, 219 S. Dearborn St. in Chicago.
The Trustee represents the bankrupt estate in the interest of all the Creditors. It is the Trustee’s job to pull together all the available assets of Hull House, include them in the estate, and then to recommend to the Court a distribution of those assets in accordance with the guidelines set forth in the bankruptcy statute. If you recall, the Union (among others) had urged the Trustee to investigate whether the Hull House Board of Directors had any legal liability for the collapse of Hull House, and if so, to bring legal action against them for damages. We were aware that the Board was insured by a $10 million policy which would cover some of the claims, in the event that a court found that they were liable. The Trustee did pursue this course of action, and retained Special Counsel to investigate a possible lawsuit against the Board, and also against Quattro, the accounting firm for Hull House.
The attached Motion reports upon the actions of the Trustee and the Special Counsel, and sets forth the amount of the proposed settlement. I recommend that you read it.
Briefly summarized, this document reports that the Special Counsel served subpoenas upon the Board and Quattro, obtaining nearly 25,000 pages of information pertaining to the potential lawsuit. Counsel assessed the merits of possible legal action against the Board and Quattro, who denied liability. An all-day conference was held on September 9, involving the Board, Quattro and the Special Counsel, and supervised by a federal bankruptcy court judge. The parties reached a proposed settlement which would add $850,000 to the assets of the estate, paid by the Board and Quattro. According to this proposed Settlement, the insurance carrier for the Hull House Board of Trustees will pay $525,000 into the estate. Quattro will pay another $325,000, and will also withdraw its claim against Hull House for nearly $500,000.
If approved by the bankruptcy court, the liability of the Board and Quattro would be fixed at $850,000, and that amount would be added to the estate for distribution to the creditors. The Special Counsel will be compensated $170,000 for its work on the case, which will come out of the settlement amount.
It appears that the Special Counsel has acted with due diligence to pursue possible claims against the Board, and based upon his assessment of the merits of the case and the cost of complex litigation, has concluded that a lawsuit against the Board and the accounting firm would not likely result in a judgment which would provide a substantially greater amount than that reached in the settlement talks. This settlement was reached with the participation and assistance of a federal judge, as well. I am advised by our attorney that, barring any unusual developments, the Court will most likely approve the proposed settlement.
What does this mean for our claims? It means that a net amount of $680,000 will be added to the estate, which will then be among the assets available to pay the claims of the creditors. Based upon the fact that there are several secured creditors which huge claims which are ahead of us in line, however, it is unlikely that much money, if any, will remain to pay the various claims of the employees.
Our attorney will be attending the hearing on December 4, and will be reporting back on any further developments. It is not clear whether the Motion will actually be ruled upon on that day, and if the Court does rule, it will not be with a full-blown hearing, with testimony, cross-examination, etc. There won’t be much to see or hear. But hearings of the bankruptcy court are open to the public, so you may certainly attend if you wish to. In any event, I will report back to you again after December 4th.
Please review the attached document. If you have any questions, please feel free to contact me by email, regular mail, or phone, and I will attempt to answer your questions as best as I can. If a number of our former members wish to have a group meeting, I will schedule one and send you notice.
Robert T. (Tim) Yeager
NOLSW/UAW Local 2320
542 S. Dearborn Street, Suite 490
Chicago, IL 60605-3503
312-461-0543, ext. 101
866-270-6659 toll free
Trustee's Motion to Approve Compromise or Settlement Per Rule 9019 and To Limit Notice.pdf