Birdsall Execs To Pay $4M In Settlement With Trustee
Law360, New York (March 19, 2014, 2:46 PM ET) — A New Jersey bankruptcy judge on Tuesday gave final approval to a settlement allowing the trustee overseeing Birdsall Services Group’s bankruptcy to collect nearly $4 million from executives charged with evading the state’s pay-to-play law by using employees to make hundreds of thousands of dollars in political donations.
U.S. Bankruptcy Judge Michael B. Kaplan signed off on an order approving the settlement, under which Trustee Erwin H. Stier will recover $3.95 million for Birdsall’s bankruptcy estate and the former Birdsall executives will release over $10 million claims against the defunct engineering firm.
Stier hit the former executives with two adversary suits in September, saying they neglectfully lacked a compliance program to ensure they followed New Jersey’s pay-to-play law, which prohibits the state from entering into certain contracts with companies that have made or pledged to make political contributions. He also sought to recover more than $1 million in legal fees the engineering firm paid to defend itself and its executives in New Jersey’s investigation against the company.
Under the terms of the global settlement first proposed in February, both adversary cases will be resolved.
“I think it’s a good result for all parties involved, because there was a limited fund available and it was an equitable resolution of everyone’s right to those funds,” Daniel M. Stolz of Wasserman Jurista & Stolz PC, counsel for the trustee, told Law360 Wednesday.
Eatontown, N.J.-based Birdsall filed for Chapter 11 bankruptcy on March 29, 2013, three days after the state moved to seize all its assets in connection with an indictment charging the company and several executives — including former CEO and top shareholder Howard Birdsall — of conspiracy and money laundering for disguising nearly $500,000 in political contributions to dodge New Jersey’s pay-to-play restrictions and receive lucrative government contracts unabated.
New Jersey Attorney General Jeffrey Chiesa cried foul and immediately moved to dismiss the bankruptcy case, calling it a ploy to protect Birdsall’s assets from seizure. But New Jersey bankruptcy judge Michael Kaplan opted to let the case proceed under the direction of a Chapter 11 trustee and permitted Birdsall to use $3 million in cash that New Jersey had frozen, prompting the state to appeal.
In April, Birdsall cut a deal with state prosecutors to settle a lawsuit that sought to seize the company’s assets. Under the deal, Birdsall agreed to pay $2.5 million to settle the state’s civil forfeiture action, as well as $100,000 in attorneys’ fees. The company must also set aside another $1 million to cover any fines, penalties or restitution from the criminal case.
In June, the company pled guilty to the criminal charges under a deal that banned it from going up for government contracts in New Jersey for 10 years, in addition to paying the $1 million in fines and penalties it had agreed to previously.
The Birdsall case was converted to a Chapter 7 proceedingon Aug. 14, two days after Stier filed his adversary complaints.
Stier is represented by Daniel M. Stolz of Wasserman Jurista & Stolz PC in the fee action, and by Robert Hickok, Angelo Stio and Jeffrey Carr in the damages action.
Birdsall is represented by Mark B. Conlan and Karen A. Giannelli of Gibbons, P.C.
The bankruptcy case is In re: Birdsall Services Group Inc. et al., case number 3:13-bk-16743, in the U.S. Bankruptcy Court for the District of New Jersey. The adversary cases are Edwin H. Stier v. Howard D. Birdsall et al. and Edwin H. Stier v. Philip Angarone et al., case numbers 13-01807 and 13-01808, respectively, in the same court.
–Editing by Elizabeth Bowen.
If you have been in this cases, contact Wasserman, Jurista & Stolz, P.C ‘s experienced Chapter 13 Bankruptcy Attorney at Wasserman, Jurista & Stolz, P.C . Call
By: Stephanie Russell-Kraft
Article Source: Law360 |