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Unique Settlement Ruling in Smart World Case

By Lawrence P. Gottesman and Rebecca Tapie
July 29, 2004

It is the uncommon occasion when creditors seek the Bankruptcy Court's assistance to impose a settlement that compromises the debtor's asserted rights to recovery against third parties. While settlements are typically preferable to the debtor's engagement in contested and costly litigation, it is a challenge to convince a court to compromise a debtor's asserted claims. In a recent case in the United States Bankruptcy Court for the Southern District of New York, a settlement was negotiated and ultimately approved by the Bankruptcy Court over the vigorous objection of the debtors-in-possession (the “Debtors”), resolving a hotly contested adversary proceeding and third party claims. In Re Smart World Techs., LLC, Freewwweb LLC, and Smart World Communications, Inc., Case Nos. 00-41645 (CB) through 00-41647 (CB) (“In re Smart World I“). The Bankruptcy Court's order was upheld on appeal by the United States District Court for the Southern District of New York. Smart World Techs., LLC v. Juno Online Services, Inc. (In re Smart World Techs., LLC), 03 Civ. 9467 (DLC), 2004 U.S. Dist. LEXIS 8802 (S.D.N.Y. May 19, 2004) (“In re Smart World II“).

This case is unique: While some courts have permitted creditors' committees to initiate proceedings when a trustee or debtor-in-possession unjustifiably failed to bring suit or abused their discretion in not suing, implying a qualified right for creditors' committees to initiate suit with the approval of the Bankruptcy Court, Unsecured Creditors Committee v. Noyes (In re STN Enterprises), 779 F.2d 901 (2d Cir. 1985)) (“STN”), no case to the authors' knowledge had previously addressed the question of whether such implied right extended to permit resolution of a suit where the debtor-in-possession unreasonably failed to settle a suit.

Background

Before the petition for relief was filed, the Debtors were in the business of providing free Internet access to their subscribers. In the midst of a precipitous decline in the online advertising market that was the sole revenue source supporting its business model, the Debtors hired an investment bank to seek potential bidders for their assets. The Debtors did not then have the ability to continue their business operations due to lack of sufficient capital to pay for ongoing expenses.

Ultimately, a term sheet was signed between the Debtors and Juno Online Services, Inc. (“Juno”), another internet service provider. The term sheet contemplated a referral of the Debtors' subscribers to Juno and the payment by Juno based upon the satisfaction of certain conditions. The term sheet required that the transactions be consummated pursuant to a sale under section 363 of the Bankruptcy Code. After execution of the term sheet, the Debtors commenced voluntary cases under Chapter 11. The term sheet was presented to and approved by the Bankruptcy Court. Almost immediately after the Bankruptcy Court's approval of the term sheet, a dispute arose between Juno and the Debtors. As a result of this dispute, Juno commenced an adversary proceeding seeking a declaratory judgment, and a determination of monies due pursuant to the agreement. The Debtors counterclaimed, alleging breach of the term sheet.

The Settlement

The adversary proceeding was ultimately referred by the Bankruptcy Court to mediation. Juno, the Debtors, as well as the Official Committee of Unsecured Creditors (the “Committee”) and MCI WorldCom Network Services and UUNET Technologies, Inc. (collectively “WorldCom,” collectively with the Committee, the “Creditors”), the holders of the largest claims against the estates, participated in the mediation.

Juno and the Debtors were unable to reach an amicable resolution of their respective claims in the mediation process. Juno and the Creditors, however, negotiated and reached an agreement that provided for a settlement of the claims asserted by Juno and the counterclaims asserted by the Debtors in the adversary proceeding. The settlement, which provided for, inter alia, the cash payment by Juno of $5 million to the Debtors' estates, was premised on the assumption that even if the counterclaims against Juno succeeded, the Debtors would be unlikely to recover sufficient monies to cover the allowed claims against the estates. The Debtors opposed the settlement.

The Motion to Approve the Settlement

In view of the Debtors' refusal to join the settlement, Juno and the Creditors were faced with the procedural problem of how to obtain approval of the settlement. The Second Circuit had made clear in STN that a creditors' committee could initiate an adversary proceeding when the debtor-in-possession had unreasonably refused to do so, but neither STN nor any of its progeny had explicitly addressed whether a creditors' committee or an individual creditor could settle a pending adversary proceeding when the debtor-in-possession unreasonably refused to do so. Believing that such authority was implicit in the reasoning and policies underlying STN, the settling parties filed a motion (the “Settlement Motion”) with the Bankruptcy Court seeking an order, inter alia, 1) authorizing the Creditors to intervene in the pending adversary proceeding pursuant to section 1109 of the Bankruptcy Code and Rule 24 of the Federal Rules of Civil Procedure and Bankruptcy Rule 7024; 2) authorizing the Creditors to enter into and perform the settlement on behalf of the Debtors and their estates; 3) approving the settlement pursuant to Bankruptcy Rule 9019; and 4) finding that the settlement would be binding upon, inter alia, the Debtors, their estates and their creditors and equity holders.

While the standards to approve a settlement are well established, there is a paucity of direct authority addressing the issue of intervention for the purposes of settling a pending adversary proceeding. Section 1109(b) of the Bankruptcy Code provides in pertinent part that “[a] party in interest, including … a creditors' committee … [and] a creditor … may raise and be heard on any issue in a case under this chapter.” The Second Circuit held in Term Loan Holder Committee v. Ozer Group, L.L.C. (In re Caldor Corp.), 303 F.3d 161 (2d Cir. 2002), section 1109(b) of the Bankruptcy Code gives a party in interest the absolute right to intervene in an adversary proceeding. 303 F.3d at 175-76. The settling parties argued that the Creditors, as the ultimate parties with an economic interest in any recovery in the adversary proceeding, were certainly parties in interest, and therefore had an absolute right to intervene, even if the purpose of such intervention was to implement a settlement.

The settling parties also relied upon Rule 24(a) of the Federal Rules of Civil Procedure, made applicable to the adversary proceeding by Bankruptcy Rule 7024. Rule 24(a) permits intervention:

“(1) when a statute of the United States confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest … “

Section 1109(b) of the Bankruptcy Code grants an absolute right to intervene. The settling parties also argued that mandatory intervention was also required under Rule 24(a)(2): Continuation of the adversary proceeding without the intervention of the Creditors might, as a practical matter, impair or impede their ability to protect their interests in the subject matter of the adversary proceeding, inasmuch as continuation of the adversary proceeding by the Debtors would have resulted in delay and posed a material risk that the recoveries by the Creditors would have been substantially less than monies available pursuant to the settlement.

Assuming that the intervention was authorized, the settling parties had to persuade the Bankruptcy Court that the Creditors should be authorized to settle the adversary proceeding. In the Second Circuit, it is fairly well established that a creditors' committee or an individual creditor may be authorized to commence an action on behalf of the estate when the debtor has unjustifiably failed to do so. See, e.g., Glinka v. Murad (In re Housecraft Industries U.S.A., Inc.), 310 F.3d 64, 70-71 (2d Cir. 2002); Commodore International, Ltd. v. Gould (In re Commodore International, Ltd.), 262 F.3d 96, 100 (2d Cir. 2001); STN, 779 F.2d 901, 904 (2d Cir. 1985). Such relief will generally be granted where there is a colorable claim that the debtor refuses to prosecute and authorization of the committee or individual creditor to prosecute such claim would benefit the estate.

The settling parties argued that, while not expressly addressed by these cases, the same principles are equally applicable to settlement of claims. This result obtains because, in the final analysis, the goal is to manage the estate in the best interests of the estate's creditors — which necessarily includes prosecuting claims that the debtor has unreasonably failed to assert. Where the debtor fails to do so, it breaches its fiduciary duty to the creditors. It is equally clear that a debtor breaches its fiduciary duty to creditors when it “rolls the dice” and insists on prosecuting claims that should be settled, in the hope that it may obtain a recovery for equity that is otherwise out of the money.

The settling parties argued that the granting of intervention by the Creditors and the authorization to settle the adversary proceeding to the Creditors carried as a necessary corollary that the settlement would be binding upon the Debtors and those claiming through the Debtors as if the Debtors themselves had entered into the settlement; otherwise such intervention and authorization by the Bankruptcy Court would be meaningless.

Following a hearing, the Bankruptcy Court granted the Settlement Motion and the Debtors appealed to the United States District Court for the Southern District of New York.

District Court Decision

The District Court affirmed. In doing so, the District Court opined that the settlement was in fact reasonable. In re Smart World II, 2004 U.S. Dist. LEXIS 8802, at * 4. The District Court was mindful of the fact that if the Debtors were to vacate the settlement, litigate the underlying claims and lose in the adversary proceeding, the Debtors' estates and their creditors would receive nothing. Id. at * 4-5. The Debtors had conceded this as well as acknowledging that even if successful in their litigation, recovery could be less then the proposed settlement sanctioned by the Bankruptcy Court. Id. The District Court also considered that experienced counsel with substantial claims against the Debtors' estates had negotiated the settlement and were willing to accept the negotiated amount — the funds being the only “viable source” of recovery. Id. at * 5.

The District Court rejected the Debtors' argument that any motion to settle claims under Rule 9019(a) must be brought by the bankruptcy trustee or the debtor-in-possession, and here, their consent to the settlement was required and not given. Id. at *5. The District Court, noting that neither party had pointed to any case law addressing this precise point, stated that “it is axiomatic, however, that the bankruptcy courts are courts of equity, empowered to invoke the equitable principles to achieve fairness and justice in the reorganization process.” Id., citing In re Momentum Mfg. Corp., 25 F.3d 1132, 1136 (2d Cir. 1994). The District Court emphasized the importance of the Bankruptcy Court's role as a court of equity charged with equitable power pursuant to Section 105(a) of the Bankruptcy Code. The District Court noted that “[the Debtors] had a fiduciary obligation to protect the interests of [their] creditors and maximize recovery for the estate” and when they “failed to act as [they] should, others may act in the best interests of the estate, even in the absence of explicit authorization in the Bankruptcy Code.” In re Smart World II, 2004 U.S. Dist. LEXIS 8802, at *5. The ultimate dilemma was if the settlement reached was vacated, there was a risk that the creditors of the Debtors' estates would receive nothing. The District Court noted that when the Debtors opposed the settlement, “[they] put at risk the concrete opportunity for [their] creditors to obtain some recovery.” Id. at *5. The Debtors' willingness to risk the guaranteed recovery under the proposed settlement was characterized by the District Court as an “unrealistic hope that continued litigation would be so wildly successful that it might yield some recovery for its equity holders.” Id. at * 7. The District Court concluded that “the Bankruptcy Court was entitled to act and to approve the settlement even without any motion from or the consent of the debtor-in-possession.” Id. at * 7. (The Debtors have filed an appeal. The appeal is pending and expected to be heard in the fall of 2004.)

Implications of Decision

The decisions in In re Smart World I and II offer a powerful tool to creditors' committees and creditors when faced with a debtor-in-possession that seems intent on betting on speculative litigation to the detriment of creditors in the hope of obtaining a windfall that will put equity holders in the money in an otherwise insolvent estate. While creditors have always had the remedy of seeking appointment of a Chapter 11 trustee, termination of exclusivity or conversion to Chapter 7 to address egregious behavior by a debtor-in-possession, the lesser alternative of intervention and settlement may make it easier for creditors to obtain relief. Moreover, the “medicine” of appointment of a Chapter 11 trustee, termination of exclusivity or conversion to Chapter 7, all of which carry significant consequences, may be worse than the disease, thereby making creditors hesitant to seek such relief.

These decisions also offer potential relief to nondebtor defendants ensnared in litigation with a debtor-in-possession that seems intent on prosecuting such litigation for its own purposes. The authors suspect that, given the cost of such litigation (both in legal fees and insofar as such litigation may delay overall resolution of Chapter 11 cases), defendants may find a receptive audience in creditors' committees and major creditors.

Finally, the authors submit that Bankruptcy Courts will be receptive to the rationale underlying these decisions. Both the Bankruptcy Code and the Bankruptcy Courts are weighted heavily in favor of settlement. A procedural mechanism that opens another avenue for settlement is likely to obtain the hearty endorsement of the Bankruptcy Courts.



Lawrence P. Gottesman is a member of Brown Raysman Millstein Felder & Steiner LLP (BRMFS”, where he serves as co-chair of the firm's Creditors' Rights and Business Reorganization Group.  Rebecca Tapie is an associate in the firm's Litigation Group.  Dalila Best, a summer associate of the firm, assisted in the preparation of this article. BRMFS represented Juno Online Services, Inc. in connection with the matters discussed in this article.

It is the uncommon occasion when creditors seek the Bankruptcy Court's assistance to impose a settlement that compromises the debtor's asserted rights to recovery against third parties. While settlements are typically preferable to the debtor's engagement in contested and costly litigation, it is a challenge to convince a court to compromise a debtor's asserted claims. In a recent case in the United States Bankruptcy Court for the Southern District of New York, a settlement was negotiated and ultimately approved by the Bankruptcy Court over the vigorous objection of the debtors-in-possession (the “Debtors”), resolving a hotly contested adversary proceeding and third party claims. In Re Smart World Techs., LLC, Freewwweb LLC, and Smart World Communications, Inc., Case Nos. 00-41645 (CB) through 00-41647 (CB) (“In re Smart World I“). The Bankruptcy Court's order was upheld on appeal by the United States District Court for the Southern District of New York. Smart World Techs., LLC v. Juno Online Services, Inc. (In re Smart World Techs., LLC), 03 Civ. 9467 (DLC), 2004 U.S. Dist. LEXIS 8802 (S.D.N.Y. May 19, 2004) (“In re Smart World II“).

This case is unique: While some courts have permitted creditors' committees to initiate proceedings when a trustee or debtor-in-possession unjustifiably failed to bring suit or abused their discretion in not suing, implying a qualified right for creditors' committees to initiate suit with the approval of the Bankruptcy Court, Unsecured Creditors Committee v. Noyes (In re STN Enterprises), 779 F.2d 901 (2d Cir. 1985)) (“STN”), no case to the authors' knowledge had previously addressed the question of whether such implied right extended to permit resolution of a suit where the debtor-in-possession unreasonably failed to settle a suit.

Background

Before the petition for relief was filed, the Debtors were in the business of providing free Internet access to their subscribers. In the midst of a precipitous decline in the online advertising market that was the sole revenue source supporting its business model, the Debtors hired an investment bank to seek potential bidders for their assets. The Debtors did not then have the ability to continue their business operations due to lack of sufficient capital to pay for ongoing expenses.

Ultimately, a term sheet was signed between the Debtors and Juno Online Services, Inc. (“Juno”), another internet service provider. The term sheet contemplated a referral of the Debtors' subscribers to Juno and the payment by Juno based upon the satisfaction of certain conditions. The term sheet required that the transactions be consummated pursuant to a sale under section 363 of the Bankruptcy Code. After execution of the term sheet, the Debtors commenced voluntary cases under Chapter 11. The term sheet was presented to and approved by the Bankruptcy Court. Almost immediately after the Bankruptcy Court's approval of the term sheet, a dispute arose between Juno and the Debtors. As a result of this dispute, Juno commenced an adversary proceeding seeking a declaratory judgment, and a determination of monies due pursuant to the agreement. The Debtors counterclaimed, alleging breach of the term sheet.

The Settlement

The adversary proceeding was ultimately referred by the Bankruptcy Court to mediation. Juno, the Debtors, as well as the Official Committee of Unsecured Creditors (the “Committee”) and MCI WorldCom Network Services and UUNET Technologies, Inc. (collectively “WorldCom,” collectively with the Committee, the “Creditors”), the holders of the largest claims against the estates, participated in the mediation.

Juno and the Debtors were unable to reach an amicable resolution of their respective claims in the mediation process. Juno and the Creditors, however, negotiated and reached an agreement that provided for a settlement of the claims asserted by Juno and the counterclaims asserted by the Debtors in the adversary proceeding. The settlement, which provided for, inter alia, the cash payment by Juno of $5 million to the Debtors' estates, was premised on the assumption that even if the counterclaims against Juno succeeded, the Debtors would be unlikely to recover sufficient monies to cover the allowed claims against the estates. The Debtors opposed the settlement.

The Motion to Approve the Settlement

In view of the Debtors' refusal to join the settlement, Juno and the Creditors were faced with the procedural problem of how to obtain approval of the settlement. The Second Circuit had made clear in STN that a creditors' committee could initiate an adversary proceeding when the debtor-in-possession had unreasonably refused to do so, but neither STN nor any of its progeny had explicitly addressed whether a creditors' committee or an individual creditor could settle a pending adversary proceeding when the debtor-in-possession unreasonably refused to do so. Believing that such authority was implicit in the reasoning and policies underlying STN, the settling parties filed a motion (the “Settlement Motion”) with the Bankruptcy Court seeking an order, inter alia, 1) authorizing the Creditors to intervene in the pending adversary proceeding pursuant to section 1109 of the Bankruptcy Code and Rule 24 of the Federal Rules of Civil Procedure and Bankruptcy Rule 7024; 2) authorizing the Creditors to enter into and perform the settlement on behalf of the Debtors and their estates; 3) approving the settlement pursuant to Bankruptcy Rule 9019; and 4) finding that the settlement would be binding upon, inter alia, the Debtors, their estates and their creditors and equity holders.

While the standards to approve a settlement are well established, there is a paucity of direct authority addressing the issue of intervention for the purposes of settling a pending adversary proceeding. Section 1109(b) of the Bankruptcy Code provides in pertinent part that “[a] party in interest, including … a creditors' committee … [and] a creditor … may raise and be heard on any issue in a case under this chapter.” The Second Circuit held in Term Loan Holder Committee v. Ozer Group, L.L.C. (In re Caldor Corp.), 303 F.3d 161 (2d Cir. 2002), section 1109(b) of the Bankruptcy Code gives a party in interest the absolute right to intervene in an adversary proceeding. 303 F.3d at 175-76. The settling parties argued that the Creditors, as the ultimate parties with an economic interest in any recovery in the adversary proceeding, were certainly parties in interest, and therefore had an absolute right to intervene, even if the purpose of such intervention was to implement a settlement.

The settling parties also relied upon Rule 24(a) of the Federal Rules of Civil Procedure, made applicable to the adversary proceeding by Bankruptcy Rule 7024. Rule 24(a) permits intervention:

“(1) when a statute of the United States confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest … “

Section 1109(b) of the Bankruptcy Code grants an absolute right to intervene. The settling parties also argued that mandatory intervention was also required under Rule 24(a)(2): Continuation of the adversary proceeding without the intervention of the Creditors might, as a practical matter, impair or impede their ability to protect their interests in the subject matter of the adversary proceeding, inasmuch as continuation of the adversary proceeding by the Debtors would have resulted in delay and posed a material risk that the recoveries by the Creditors would have been substantially less than monies available pursuant to the settlement.

Assuming that the intervention was authorized, the settling parties had to persuade the Bankruptcy Court that the Creditors should be authorized to settle the adversary proceeding. In the Second Circuit, it is fairly well established that a creditors' committee or an individual creditor may be authorized to commence an action on behalf of the estate when the debtor has unjustifiably failed to do so. See, e.g., Glinka v. Murad (In re Housecraft Industries U.S.A., Inc.), 310 F.3d 64, 70-71 (2d Cir. 2002); Commodore International, Ltd. v. Gould (In re Commodore International, Ltd.), 262 F.3d 96, 100 (2d Cir. 2001); STN, 779 F.2d 901, 904 (2d Cir. 1985). Such relief will generally be granted where there is a colorable claim that the debtor refuses to prosecute and authorization of the committee or individual creditor to prosecute such claim would benefit the estate.

The settling parties argued that, while not expressly addressed by these cases, the same principles are equally applicable to settlement of claims. This result obtains because, in the final analysis, the goal is to manage the estate in the best interests of the estate's creditors — which necessarily includes prosecuting claims that the debtor has unreasonably failed to assert. Where the debtor fails to do so, it breaches its fiduciary duty to the creditors. It is equally clear that a debtor breaches its fiduciary duty to creditors when it “rolls the dice” and insists on prosecuting claims that should be settled, in the hope that it may obtain a recovery for equity that is otherwise out of the money.

The settling parties argued that the granting of intervention by the Creditors and the authorization to settle the adversary proceeding to the Creditors carried as a necessary corollary that the settlement would be binding upon the Debtors and those claiming through the Debtors as if the Debtors themselves had entered into the settlement; otherwise such intervention and authorization by the Bankruptcy Court would be meaningless.

Following a hearing, the Bankruptcy Court granted the Settlement Motion and the Debtors appealed to the United States District Court for the Southern District of New York.

District Court Decision

The District Court affirmed. In doing so, the District Court opined that the settlement was in fact reasonable. In re Smart World II, 2004 U.S. Dist. LEXIS 8802, at * 4. The District Court was mindful of the fact that if the Debtors were to vacate the settlement, litigate the underlying claims and lose in the adversary proceeding, the Debtors' estates and their creditors would receive nothing. Id. at * 4-5. The Debtors had conceded this as well as acknowledging that even if successful in their litigation, recovery could be less then the proposed settlement sanctioned by the Bankruptcy Court. Id. The District Court also considered that experienced counsel with substantial claims against the Debtors' estates had negotiated the settlement and were willing to accept the negotiated amount — the funds being the only “viable source” of recovery. Id. at * 5.

The District Court rejected the Debtors' argument that any motion to settle claims under Rule 9019(a) must be brought by the bankruptcy trustee or the debtor-in-possession, and here, their consent to the settlement was required and not given. Id. at *5. The District Court, noting that neither party had pointed to any case law addressing this precise point, stated that “it is axiomatic, however, that the bankruptcy courts are courts of equity, empowered to invoke the equitable principles to achieve fairness and justice in the reorganization process.” Id., citing In re Momentum Mfg. Corp., 25 F.3d 1132, 1136 (2d Cir. 1994). The District Court emphasized the importance of the Bankruptcy Court's role as a court of equity charged with equitable power pursuant to Section 105(a) of the Bankruptcy Code. The District Court noted that “[the Debtors] had a fiduciary obligation to protect the interests of [their] creditors and maximize recovery for the estate” and when they “failed to act as [they] should, others may act in the best interests of the estate, even in the absence of explicit authorization in the Bankruptcy Code.” In re Smart World II, 2004 U.S. Dist. LEXIS 8802, at *5. The ultimate dilemma was if the settlement reached was vacated, there was a risk that the creditors of the Debtors' estates would receive nothing. The District Court noted that when the Debtors opposed the settlement, “[they] put at risk the concrete opportunity for [their] creditors to obtain some recovery.” Id. at *5. The Debtors' willingness to risk the guaranteed recovery under the proposed settlement was characterized by the District Court as an “unrealistic hope that continued litigation would be so wildly successful that it might yield some recovery for its equity holders.” Id. at * 7. The District Court concluded that “the Bankruptcy Court was entitled to act and to approve the settlement even without any motion from or the consent of the debtor-in-possession.” Id. at * 7. (The Debtors have filed an appeal. The appeal is pending and expected to be heard in the fall of 2004.)

Implications of Decision

The decisions in In re Smart World I and II offer a powerful tool to creditors' committees and creditors when faced with a debtor-in-possession that seems intent on betting on speculative litigation to the detriment of creditors in the hope of obtaining a windfall that will put equity holders in the money in an otherwise insolvent estate. While creditors have always had the remedy of seeking appointment of a Chapter 11 trustee, termination of exclusivity or conversion to Chapter 7 to address egregious behavior by a debtor-in-possession, the lesser alternative of intervention and settlement may make it easier for creditors to obtain relief. Moreover, the “medicine” of appointment of a Chapter 11 trustee, termination of exclusivity or conversion to Chapter 7, all of which carry significant consequences, may be worse than the disease, thereby making creditors hesitant to seek such relief.

These decisions also offer potential relief to nondebtor defendants ensnared in litigation with a debtor-in-possession that seems intent on prosecuting such litigation for its own purposes. The authors suspect that, given the cost of such litigation (both in legal fees and insofar as such litigation may delay overall resolution of Chapter 11 cases), defendants may find a receptive audience in creditors' committees and major creditors.

Finally, the authors submit that Bankruptcy Courts will be receptive to the rationale underlying these decisions. Both the Bankruptcy Code and the Bankruptcy Courts are weighted heavily in favor of settlement. A procedural mechanism that opens another avenue for settlement is likely to obtain the hearty endorsement of the Bankruptcy Courts.



Lawrence P. Gottesman is a member of Brown Raysman Millstein Felder & Steiner LLP (BRMFS”, where he serves as co-chair of the firm's Creditors' Rights and Business Reorganization Group.  Rebecca Tapie is an associate in the firm's Litigation Group.  Dalila Best, a summer associate of the firm, assisted in the preparation of this article. BRMFS represented Juno Online Services, Inc. in connection with the matters discussed in this article.

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