Jason S. Mazer and Cary D. Steklof (J. Albert Diaz)
Case: CDC Liquidation Trust v. AIG Europe
Case No.: 13-05202
Filing date: June 5, 2013
Settlement approval: Feb. 27, 2014
Settlement amount: $6 million
Court: U.S. Bankruptcy Court, Atlanta
Judge: Paul W. Bonapfel
Plaintiffs attorneys: Jason Mazer and Cary Steklof, Ver Ploeg & Lumpkin, Miami
Defense attorneys: Steve Brodie, Carlton Fields Jorden Burt, Miami
Details: CDC Corp., a Chinese software development company, filed for bankruptcy protection in Atlanta in 2011. The company was seeking shelter from litigation it lost in New York. The lawsuit was filed by Evolution Funds, a group of affiliated hedge funds that lent about $70 million to CDC.
Plaintiffs case: In New York Supreme Court, the Evolution Funds sought damages based on CDC’s alleged failure to redeem notes managed by the Evolution Funds. The court entered a $65.4 million summary judgment in favor of the Evolution Funds.
The funds filed a subsequent action in the same court against CDC Software Corp., a former CDC subsidiary, and some of CDC’s directors and officers for tortious interference with contract, tortious interference with prospective business relations, breach of fiduciary duty, malicious prosecution and libel per se. The complaint alleged CDC’s plan by its directors and officers to thwart the funds was nicknamed “Star Wars.”
CDC executives allegedly approved and implemented a plan to harass the Evolution Funds with meritless litigation and defamatory statements to thwart redemption of the notes.
After the bankruptcy filing, CDC paid $7.4 million to settle the second Evolution Funds lawsuit. AIG Europe Ltd., however, refused to indemnify CDC for the settlement and the cost of defending the executives. The court-appointed trustee running CDC, Marcus Watson, filed an adversary complaint claiming the insurer refused to honor its D&O policy.
Jason Mazer and Cary Steklof of Ver Ploeg & Lumpkin were special insurance counsel to Watson, a partner at the consulting firm of Finley, Colmer and Co.
The complaint stated the policy covered any claim made against CDC and CDC Software’s insured executives from Dec. 15, 2010, to March 15, 2013, for wrongful acts whether committed before or after the policy’s inception. It also covered any loss paid by CDC to indemnify its directors and officers, the complaint stated.
“AIG’s failure to act had caused CDC’s estate to incur unnecessary administrative costs and otherwise hindered its ability to make distribution to creditors,” the lawsuit alleged.
Watson sought reimbursement from AIG in January 2013 after the settlement of Evolution II. The complaint alleged the insurance company dragged out responses.
Mazer and Steklof were retained at the request of the liquidating trustee’s counsel, James C. Cifelli and Gregory D. Ellis of Lamberth, Cifelli, Stokes, Ellis & Nason in Atlanta.
Defense case: Brodie did not return a call for comment by deadline.
According to the adversary complaint, AIG Europe raised multiple coverage issues, including the proper allocation of policy proceeds between covered and uncovered claims. In July 2013, the case was stayed for mediation.
Outcome: On Jan. 22, Mazer informed the bankruptcy court that a $6 million settlement had been reached with AIG. Bonapfel approved it Feb. 23.
Post-settlement: The settlement money was paid by AIG, Mazer said.