Landis Rath & Cobb, together with Faegre & Benson LLP (predecessor to the firm Faegre Baker Daniels LLP), represented U.S. Bank as the indenture trustee for holders of $225 million of debt securities issued by U.S. Timberlands. The issuer transferred a significant portion of its property, valued at approximately $72 million, to affiliated entities in violation of the indenture’s restrictive covenants. On behalf of the indenture trustee and its constituency of bondholders, we commenced litigation in Delaware against the issuer, its related entities, and certain of its officers and directors, alleging breach of the indenture, fraudulent transfer, and breaches of fiduciary duty. After a two-week trial, we negotiated a favorable settlement of the claims for the benefit of the indenture trustee and bondholders. Under the settlement, the issuer agreed to file a bankruptcy petition in Delaware and sell its assets to provide a 67.5 percent cash recovery to bondholders – a 60 percent premium to the trading price of the bonds prior to commencement of the litigation. The indenture trustee and bondholders entered into a support and lock-up agreement in support of the issuer’s plan of reorganization.
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