Cornerstone Research worked with Professor John Peavy of Texas Christian University, who testified regarding the viability of WorldCom prior to its bankruptcy filing in July 2002.
Retained by Gibson, Dunn & Crutcher
In a precedent-setting decision regarding the role of a directed trustee, our client, Merrill Lynch Trust Company, FSB (Merrill Lynch), won summary judgment. Cornerstone Research worked with Professor John Peavy of Texas Christian University, who testified regarding the viability of WorldCom prior to its bankruptcy filing in July 2002.
In a precedent-setting decision regarding the role of a directed trustee, our client, Merrill Lynch, won summary judgment.
Judge Denise Cote of the U.S. District Court for the Southern District of New York ruled in favor of Merrill Lynch, concluding that “[t]he publicly available information regarding WorldCom did not create at any time before June 25, 2002, a reliable picture of serious concerns regarding the short-term viability of WorldCom.” The court’s opinion was the first to adopt the guidance provided by a Department of Labor December 2004 Field Assistance Bulletin that a directed trustee has a fiduciary duty of inquiry “when it knows or should know of reliable public information that calls into serious questions the company’s short-term viability as a going concern.” This decision has been cited in several subsequent cases.
