CLIENT ALERT: Potter Anderson & Corroon Selected as Counsel to the Committee of Customers in Lear Capital, Inc. Subchapter V Case
On July 20, 2022, Potter Anderson & Corroon (“Potter Anderson”) was selected as counsel to the committee of customers in the Subchapter V bankruptcy case of Lear Capital, Inc.1 (“Lear” or, the “Debtor”). Lear is a gold and precious metals firm that filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware (the “Court”) on March 2, 2022.
Typically, there is a presumption against the formation of an official committee of unsecured creditors in a Subchapter V case, and creditors’ committees in Subchapter V cases are exceedingly rare. However, Potter Anderson was successful in negotiating the appointment of an official committee of customer creditors here. The Voss Law Firm contacted Potter Anderson for assistance with three customers (the “Three Customers”) of Lear that were concerned that they were defrauded by Lear and were unsure how to navigate the bankruptcy process. On April 20, 2022, Potter Anderson, on behalf of the Three Customers, filed a motion to appoint a creditors committee of Lear’s customers (the “Committee Motion”). A hearing on the Committee Motion took place on May 4, 2022, whereafter, the Court took the matter under advisement. After the hearing, the Debtor, an ad hoc group of states and governmental agencies, and Potter Anderson, on behalf of the Three Customers, discussed at length a potential resolution of the Committee Motion, a resolution of a motion to dismiss, a bar date extension, and other concerns. After extensive discussion, the parties reached a settlement agreement (the “Settlement Agreement”) resolving their open issues.
On June 23, 2022, Delaware Bankruptcy Judge Brendan Shannon approved the Settlement Agreement that, among other things, allowed for (i) the formation of a Debtor-funded official committee of customer creditors; and (ii) a 90-day extension of case deadlines. The 90-day extension will allow the parties to discuss a mutually agreeable plan of reorganization which will be overseen by the case’s Subchapter V Trustee as mediator. On June 27, 2022, Judge Shannon entered an order on the Committee Motion, which directed the Office of the United States Trustee to form a committee, which then selected advisors.
Potter Anderson is honored to be selected as counsel to represent the customers committee and would like to thank the Voss Law Firm for its assistance in this matter. Potter Anderson would also like to congratulate Dundon Advisors for being selected as the committee’s financial advisor and is excited to work with them to reach an acceptable result for their client in this case.
1 Lear Capital, Inc., Case No. 22-10165 (BLS)
Lauren Kornsey, Senior Manager, Marketing and Business Development
About Potter Anderson
Potter Anderson & Corroon LLP is one of the largest and most highly regarded Delaware law firms, providing legal services to regional, national, and international clients. With more than 90 attorneys, the firm’s practice is centered on corporate law, corporate litigation, intellectual property, commercial litigation, bankruptcy, labor and employment, and real estate.