The Committee understands that the Debtors are likely to release the claims against Sycamore for a small fraction of their value, before even filing a complaint detailing those claims. The Debtors have barred the Committee from participating in its settlement negotiations with Sycamore, so the Committee knows only the range of settlement consideration under discussion. A settlement even at the top end of that range would represent but a small fraction of the value of the claims against Sycamore, would constitute a breach of the Debtors’ fiduciary duties, and would be manifestly contrary to the interests of NWHI and its creditors. Until those claims are firmly in the control of a determined and truly independent adversary – the Committee – Sycamore will continue to toy with the parties and the bankruptcy process itself in its desperate attempt to avoid answering for its myriad pre-petition wrongs and breaches of duty to NWHI. And there can be no doubt that the Proposed Claims are orders of magnitude more valuable than the range of settlement under discussion between the Debtors and Sycamore.
NWHI is entitled to recover well over $1 billion from Sycamore, not including prejudgment interest, based on Sycamore’s fraudulent transfers and other misconduct described in this Motion and in the Proposed Complaint. In addition, the liens and obligations NWHI incurred in connection with more than $800 million in LBO debt should be avoided, with all payments of interest on the LBO Debt made by or on behalf of NWHI returned to the estate. NWHI also is entitled to recover damages for breach of fiduciary duty from Sycamore and the Jones Inc. directors, and to recover from the directors the full amount of transfers made to Jones Inc.’s shareholders (about $1.2 billion). Finally, an award of actual damages, punitive damages, and attorneys’ fees should be entered in favor of NWHI in connection with its claims for tortious interference and actual fraudulent conveyance and other willful misconduct. Allowing the Debtors to release these extraordinarily valuable claims in exchange for the relatively paltry sum the Debtors previously appeared poised to accept would constitute yet another windfall for Sycamore.”
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