Connecticut newsprint magnate and art collector Peter Brant is suing the law firm that handled the sale of one of his companies as part of a debt reorganization plan, claiming the lawyers cost him tens of millions in diminished assets to fund a pension plan. In the lawsuit filed in Superior Court in Stamford, Peter M. Brant of Greenwich is seeking an unspecified amount in damages from Shearman & Sterling, which is based in New York City. The professional malpractice lawsuit also names Douglas P. Bartner, a Shearman & Sterling partner, as a defendant.
Brant, of Greenwich is the owner of White Birch Paper Co., which along with his separate SP Newsprint company, filed for bankruptcy protection in 2010. Before his companies sought court protection from creditors, Brant was a billionaire, though he no longer appears on the Forbes magazine list of the richest Americans. Brant is married to the former supermodel Stephanie Seymour.
According to court documents, in 2009 White Birch Paper Co. faced financial difficulties as the result of the overall decline of the world economy and decline in the demand for newsprint. At the same time, SP Newsprint sustained operating losses of $74 million from 2009 to 2010. Brant retained the Shearman firm to represent him in a transaction to form a new company, which would combine the two companies and acquire $94.5 million of White Birch assets out bankruptcy.
Before the bankruptcy, Brant had owned 75 percent of the interests in both companies. To accomplish the restructuring plan, Brant bought the remaining 25 percent stakes in both for $16.9 million. He then entered into a deal to sell SP Newsprint’s assets to one of its creditors, GE Capital, for about $145 million.
In doing so, Brant became liable for SP Newsprint’s underfunded pension plan.
As a result, the lawsuit says, Brant was forced to provide the $76 million shortfall for the pension plan, which had to be funded from Brant Industry Inc. The Shearman & Sterling firm "knew or should have known" that the pension plan of the company was underfunded and that the sale would expose Brant to the liability, according to the malpractice lawsuit.
The firm "failed to advise plaintiff fully of the risks associated with the Sale of Interests Agreement as a result of SP Newsprint’s underfunded employee defined pension plans," the lawsuit says. "They failed to utilize the care, skill and diligence employed by attorneys specializing in complex commercial transactions, corporate reorganizations and bankruptcy."
The Shearman firm did not immediately respond to a call seeking comment.