Enviva’s V&E lawyer ‘offended’ as retention battle heats up
- 9fin team
During today’s hearing for bankrupt wood-pellet producer Enviva, the temperature rose drastically when proposed debtors’ counsel, Vinson & Elkins’ David Meyer, said he was outright “offended” and “rather mad” at the US Trustee’s objection to the V&E retention application.
V&E is the latest proposed debtors’ counsel to find itself mired in a hard-fought retention battle. This comes immediately following Kirkland & Ellis’ retention fight Tuesday 7 May in Invitae, discussed here. The Enviva docket is here.
This hearing was scheduled after Judge Brian Kenney of the US Bankruptcy Court of the Eastern District of Virginia, in response to the US Trustee’s objection, found that Meyer of V&E failed to reference any wall of separation in his declaration regarding the firms handling of: (1) matters related to the debtors’ bankruptcy (2) V&E’s representation of the debtors’ officers and directors in pending shareholder and derivative litigation and (3) V&E’s work for Riverstone (a creditor in the bankruptcy) in unrelated matters.
Walls are overrated
Meyer explained that V&E does not have a wall of separation in place for lawyers working on Riverstone matters because no wall is needed; the matters are unrelated. As the debtors wrote in their reply, “there is no confidential information in the Riverstone files that would be pertinent to the lawyers working on the debtors’ matter, or vice versa.”
Meyer highlighted that there is plenty of precedent where law firms represented private equity firms in unrelated matters as evidence that these connections between debtors’ counsel and creditors in unrelated matters are routine for big-law firms, including Kirkland & Ellis’s debtor representation in Caesar’s, where they also represented TPG and Apollo in unrelated matters, and Skadden’s debtor representation of Stearns.
There are also different processes in place, which Meyers walked through, to prevent actual conflicts, including Baker Botts leading the special board committee investigation, and Kutak Rock, debtors’ local counsel, who can handle any issue with Riverstone that could arise.
Don’t harm the debtors
Meyer stressed that denying V&E’s employment application would be value destructive. He explained it would undermine a public company’s judgment, deprive the debtors of institutional knowledge, threaten the debtors’ ongoing restructuring, and establish an unworkable precedent.
Nicholas Herron, the US Trustee, said “the harm has been self-inflicted,” the debtors have not responded to the US Trustee’s requests, and “rules were not followed.”
Judge Kenney is taking the matter under advisement.
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