Free Opening Brief in Support - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 1 of 17

EXHIBIT E

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 2 of 17

In The Matter Of:
In Re: Coram Healthcare - Chapter 11

Hon. Arlin Adams

February 25, 2003

Brusilow & Associates

1926 Arch Street
-r ~-# T!1 ~ ~.. .i:,i riUUf TVT~_.# wt'si

Philadelphia, PA 19103-1404
(215) 977-9700 FAX: (215) 977-9773

Original File ADAM0225. VI, 268 Pages
Min-U-Script&J File ID: 2 731217649

Word Index included with this Min-U-ScriptCB

Case 1:04-cv-01565-SLR
In Re:. Coram Healthcare - Chapter 11

Document 174-3

Filed 08/20/2007

Page 3 of 17
Hon. ArOO Adams
Februar 25, 2003

Page 215

Page 217

11) Q: Here we are on October 3rd and
(2) Schreiber says to Bressler, with a copy to
(3) you,

(1) heard that?
(2) A: I almost hit the roof.

let's discuss these things. What's

(3) Q: Does that mean you got angry?

(41 the next thing that happened as far as you
151 now recollect in these discussions about

(41 A: No. I don't get angry.

IS) Q: Explain to me what "hit the roof"
IS) means in

IS) settlemenr?

Adams jargan.

~7) A: I think the next thing was that I
(S) told Mr. Bressler that this was a

(7) A: It sounded pretty high to me.

IS) Q: Sounded ridiculous?

IS) peculiarly good assignment for him to deal

(S) MR. KIPNES: Objection to

(10) with Mr. Crowley's lawyer. He seemed to (11) get along reasonably well with him, didn't
(12) always agree with him. He had many

(10) the form.

(111 A: It was awfully high. (121 Q: What did you tell Barry about it?
(13) A: I hardly had to tell him anything.

(13) discussions with him and he got the work to
(14) try to hammer out the best deal possible
1151 and to bring it back to me.

(14) He knows me and my attitude about ngures

11S1 Q: That was performing a,largely, a (17) business function rather than a legal
11S1 function when he weilt out to hammer out a

(15) like that. I doubt if I had to tell him. (1S) He said, "I know that you wil never even (17) consider anything like that." I said, "You
r1B) are absolutely right" or something to that
(19) effect.

(1S) deal?

(20) A: Combination business/legaL. (211 Q: Next. is a letter dated October 18
(221 from Mr. Sclireiber to Mr. Bressler with a
(23) copy to Crowley. It's

(20) Q: Now, I notice in here in paragraph 9
(21) that you are being requested - this is, (22) obviously, a request on behalf of Crowley (23) for you to agree to use your best efforts (24) to promptly seek dismissal of any
Page 216

Trustee number 6512

(24) through 14 inclusive. It's dated

Page 218

111 October i H. That would be number 23.
(2) (Trlistee-23, a letter dated
131 October 1 H. marked for identification.)

(1) derivative claim.
(2) A: That's what he was asking.

(3) Q: Is that the nrst time in the
(4) negotiations you recall that he asked to
(5) get a release?

(4) MR. KIPNES: The letter is
(51 from Mr. Steven K. Sims who, I believe, rS1 is a partner of Mr. Schreiber's,
(7) MR. LEVY: You are correct.

(S) A: I think so. I can't recall. (7 Q: It's a fact, isn't it, that much
(8) later you offered formally a deal to IS) Crowley in which you would not only use 110) your best efforts, but you agreed in any (11) plan that you would provide he would get a
(12) release?

IS) MR. KIPNES: With a copy to

(9) Schreiber.
(10)

BY MR. LEVY

(111 Q: Do you recall receiving this letter
(12) or a copy of this letter?

(13) A: No.

1131 A: I don't recall that precisely.
(141 MR. KIPNES: Objection to

(14) Q: Do YOll recall Barry Bressler

(15) discussing the contents of this lener with
(1S) you?

(15) the form.

(171 A: i think he came in and told me about
¡-,S) it.

(1S) A: I would have to look at the document. (17) Q: Did you consider that the claim, (1S) given Judge Walrath's opinion, everything
119) she said, what you needed to consider, the
.(20) claim against Crowley had any value at all?
(211 MR. KIPNES: Objection to
(221 the form of the question. I instruct

(1S) Q: Did he tell you, for example, that
(20) Mr. ClOvv'ey asserted now a claim of 17.3 (21) milion dollars against Comm?

(22) A: i heard that, yes. I heard that
(23) figure.

(241 Q: W!iat "';IS your reaction when you

(231 the witness not to answer. Now, we are (241 talking about the proposed resolution of

Min-U-Scrip~

(57) Page 215 - Page 218

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 4 of 17

EXHIBIT F

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 5 of 17

EC~Î )

Schnader

l.;ca ~A1Jti~ i7'l.ltT s'!:~~ ;~~ J

ATTORNE.YS AT LAW

PM;I./..:i::.rHIA.!"A 19.C~."2'i

2!5.7S110'00 )'AX ~~S.~S' =:~5 ~;:t;- ~:~! ::l-

BARR Y E. BRESSLER

JanUa 7,2003

. Direct Dial :1 S.75!.20jO
Direct Fax 21 S. 7 5 i .220S
i,iom.. Address: bbtusi~J:n.de:om .

VIA FACSIMILE #312-621-1750
Scott N. Schreiber, Esquire
Much ShelistFreeq Denenberg Ament & Rubenstein.

200 ~ortLaSalle Street, Suite 2100
. Chicago, IL .6060Ì

Re: In re: Coram Healthcare Corp., Debtor

!Daniel D. Crowley .
Dear Mr. Schreiber:

Per our additiona discussions, Ar1in..~1. Adams, the Chapter II Trústee iN
Coram Healthcare Corporation (hCoram") and DaneJ D. Crowley ("Dan:') Ílave emered :mo a
. letter

agreement (the "Transition Agreement') fortemiinating. Dan's prior Emplpyme;t.

Agreement and extending his employment. The Transition Agreement \vill be submitted to the
Banptcy Court for

approvaL. . . , . .

.. .. Ths letter will serve tQ reflect .the intent as to an additional settlement agreement

("Settlement Agreement~) to be .entered into between the Trustee' and Dan. subject to a formal. .

agre~rrent being. drawn and ..subject, of c.oure, to approval of the Banptcy Court. rn~.
Settlement Agrèement is being negouated and finalized in connection with the Transitio~i
Agre~ment, ard wil.include the following term: .

1. AU of Dan's contracni and employniem claims for perfomlatce bonuses.
KERP.MI, and otherwse,

including any and all Claims under his old EmpJoyment Agreement.

not dealt \\~th in the Transition Agreement, wil

beIow. .

be compromised and satisfied by an additional

payment, IJponfinal Plan coIiation, of S2,OOO,00.0 and .the exchange oLreleasesproi:ideó

2, Dan wil.release the Trutee and .Deetors from an~' further claims as pai1 of the

Plan and tiie Trutee and Debtors wil in tumrelease Dan from all proposed derivative claims .and any other claims arsing out of or related to such proposed denvative ciaims that the Tri.stee.

Schnid.er Harrison Se.gal&Lew.is UP
H ~ rON.II.i.
k ~ W v 0 A (. ~ T , " I LA ~ EL , " I A . p.i Pi' TS B U ~ G ~. H 5."" N ~. ~ ~ \t¡ Ù ,, inipit;\ L:§~;i;.~ . ..i

CHC~55H;.FA. c~;u, HIll.r.¡ HP~..Lh.. CH.11.TRUSTEE

--,~ ~(J)

jr~~riadér
Page 2

.\ T' r 0 ii ~ E Y 5 AT t. 1\ W
ScOtt ~. Schreiber, Esq.

..
Dan to

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 6 of 17

Januar 7, 2003

. Coram any subsidianes, or any commttees or entities claig through them. may have agaist
the fullest extent approved by the Banptcy

Court.

3. The panes contemplate that the formal agreement reaecting the above n-ill be
finaled by Januar 31, 2003, and wi be presented to the Banptcy Court for approval

thereafer, but in any event before a. Plan to be proposed by the Trueeort or before Februar :8.
2003. .

4. . If the Banptcy Court fails to. approve the Setement Agreement, al of the

undertgs of the paries Will be void and the paries wi retu to thei previous positions,
retaig aU clais which exist and al defenses thereto. upon appr.oval of

The . pares will only be legaly: bound the formal.agreement by the Banptcy Court;

. s~c;:ry, ",. i~~. ...

d B r / E. BRESSLER .

/~ .... . '.. lJ'.('.
/./ ",/ ¿I. .. /
V

cc: .-\lin M.. Adams, Chapter 11. T rusie.e

Mr. Danel D. Crowley

Therenns and Conditions above are hereby ageed to:

DANIL D. CROWLEY

A.RIN M ADAMS,.CHATER 1 i TRUSTEE

~"':~.
-.
)'. .. t-

'- oo~Ú

PHDATAI068!::_:

S : h ni d : r H a r r ! so:: s! q I. I ~ L t Vf i s ~ i. ~ \

CH~11 TRUSTEE. "",.::=-~..

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 7 of 17

EXHIBIT G

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 8 of 17

ProTEXT Transcript Condensing for Windows
SHEET i PAGE i
1

PAGE 3
IT IS HEREBY STIPULATED AND

VOLUME I

2 3
4

AGREED by and among counsel for the

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

respecti ve parties hereto that the
filing, sealing and certification of the
wi thin deposition shall be and the same are hereby waived.

5
6

ARLIN M. ADAMS, Chapter 11 Trustee of the

7

IT IS FURTHER STIPULATED
AND AGREED that all objectionsi

i:St.cit.t.5 ,):_~~;.~.~

P0st-~0~f~~ma~:nr.

CORPORATION, a Delaware Corporation and of CORA, INC., a Delaware Corporation,

except as (0 the Iorm of the question, shall be reserved to the
7

VS. 04-1565
10 DANIEL D. CROWLEY; DONALD J. AMRAL; WILLIAM J. CASEY; 11 L. PETER SMITH; AND SANDRA L.

Plaintiff CASE NO.

time of the trial.

12

IT is FURTHER STIPULATED AND

13
14

AGREED that the within deposition may be
signed before any Notary Public with the

12 Defendants
13

SMOLE Y i

15

same force and effect as if signed and
sworn to before the Court.

16
17

15 9:34 a.m.
14

Tuesdayi March 27, 2007

18

19 20 21 22

16
17

18 Videotaped deposition of ARLIN
M. ADAMS, held at the law offices of

19 Schnader Harrison Segal & Lewis, LLP,

23
24

20 Philadelphia, Pennsylvania, 19103,
22

1600 Market Street, Suite 3600,

pursuant to notice before Cynthia A.

25
22

21 Whyte, Registered Professional Reporter

and Notary Public.

23
24

23
24

25

25

PAGE 2

PAGE 4

r
L

INDEX
WITNESS:
PAGE
n.. ll"" l'"..".... DY lll. n::U:::L,)

A P PEA RAN C E S:
SCHÑAûER HARRISûN SEGAL & LEWIS LLP
Counsel for Plaintiff Arlin M. Adams,

'l~
~ 5

ARLIN M. ADAMS, ESQ.

Trustee

1600 Market Street Suite 3600

6
7 8

ADAMS EXHIBITS
NO.
Exhibi t 1 Exhibi t 2

Philadelphia, PA 19103
(215) 751-2050

DESCRIPTION

PAGE

Chronology
Transcript, 2/25/03 Transcript, 3/3/03 Letter, 12/24/02, to

7

BY: BARRY E. BRESSLER, ESQ.
bbresslerêschnader. com

9

52
52

AND: RICHARD A. BARKASY, ESQ.
rbarkasy~schnader. com

10 11 12

Exhibit 3
Exhibi t 4

Mr. Schreiber from

KEKER & VAN NEST LLP

10 Counsel for Defendant Daniel Crowley

Mr. Bressler
Exhibit 5

80

11 San Francisco, CA 94111-1704
(415) 391-5400
12
BY;

710 Sansorne Street

13
14

Letter, 1/7/03, to

Mr. Schreiber from

ELLIOT R. PETERS, ESQ.
epetersêkvn. corn

Mr. Bressler
Exhibi t 6
Exhibi t 7

81

13
14
AND:

15 16
17

Disclosure Statement

11
120 122

WARREN A. BRAUNIG, ESQ. wbraunigGkvn. com

E-mail string

15 16

Exhibit 8
Exhibi t 9

Emplo¡ment Agreement
Letter, 10/28/03, to

18 19

Mr. Schepacarter from
Mr. Barkasy
Exhibi t 10

17 ALSO PRESENT: VINCENZO PETULLA,
18

130

Videographer

20 21
22

Letter, 10/3/06, to
Mr. Bressler from Mr.

19 20
21
Exhib i t 11

Temin
Motion of Chapter 11

142

22 23
24

Trustee
23
Exhibit 12

163

Updated Report of Goldin Associates

24

170

25

25

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 9 of 17

ProTEXT Transcript Condensing for Windows
c- SHEET 21 PAGE 81
81

_ PAGE 83
83

appears to bear your signature.
(Adams Exhibit 5 was marked for

1 Q. Do you recall what the terms and
2 conditions were?

identification. )
Q. So the first question with respect to Adams 4 -- and if you want to tare some
time to review it, you go right ahead.

3 A. I do not recall.
4 Q. Do you recall that one of the terms
5 and conditions was that Dan Crowley would
6 continue to render essentiallj the same 7 services to Coram as he had before for a term

A. Go ahead. Ask me the question.
8 Q. Does Adams 4 bear jour signature?

8 of up to six months?

9 A. Is that mj signature on the last
10 page? Yes. 11 Q. And was this an agreement that you
12 as trustee entered into with Dan Crowley?

9 A. Correct.
10 Q. And would he receive during that
11 period a salary, a base salary, of $80,000 a

12 month?

13 A. When you say "is this," the letter?

14 Q. Correct.

13 A. Correct.

14 Q. Was that a raise for him?
15 A. I think it was an adjustment upward, 16 yeah.

15 A. It was an agreement that was entered
16 into bj Barrj Bressler wi th Crowley i s

17 attorney, Mr. Schreiber, which I saw and

17 Q. Pursuant to this agreement, he was
18 going to be receiving more base monthly salary

18 approved as to terms and conditions. That i s

19 what it says.
20 Q. On whose behalf was Mr. Bressler
21 acting iihen he entered into that agreement?

21 Q. Was he also, pursuant to this
22 agreement, eligible for a stay in performance

20 A. Correct.

19 than he had been receiving before that?

22 A. Say that again.
23 Q. On whose behalf iias Barrj Bressler
24 acting when he entered into that agreement?

23 payment, a stay bonus?

25 A. The trustee.

24 A. That 1 s what it sajs.
25 Q. And how much was that stay bonus?

PAGE 82
Q. Who is that? A. Myself.
Q. So is it a fair statement that this
is an agreement that you entered into with Dan

PAGE 84

82 r
A. I forget, but I think it was a
million dollars. I may be wrong. That i s my

84

~
q

recollection.
I ¡
q

Q. SO under this agreement Crowley was
going to receive $80,000 a month for up to six
months and a million dollars' stay bonus,

5 6
7 8 9

Crowley?
A. The terms and conditions, yes. See
that? "Agreed as to terms and conditions."
Do you see that on Page 4?

5
6 7

correct?

8 9

A. If he stajed.
Q. If he stajed, he was going to
receive about a million and a half dollars,

Q. Okay.
And that means that you agreed to
the terms and conditions --

10
11 12 13
14

10 11
12 13
14

correct?

A. To the terms and conditions.

A. Correct.
Q. And that was agreeable to JOU on
December 24, 2002, correct?

Q. -- contained in this letter?

A. Correct.
Q. And, in doing so, did you understand
that you were acting as the Chapter 11 trustee
for Coram?

15

15

A. I was willing to go along with it in
order to get rid of the claim that he had in

16
17 18

16
17

the amount of $17 million. You don't always
sign contracts that are agreeable to you, as

A. That i s the second time you have
asked that question in three minutes. The
answer is yes.

18

19 20 21 22 23
24

19

you knOll.

20

Q. Well, but in signing that contract,
you were agreeing to pay him that amount of
money if he stayed, correct?

Q. What were the terms and conditions that you were agreeing to as you understand
them when you affixed your signature to this

21
22 23
24

A. I was agreeing as the trustee in
consideration of what I was going to get as a
resul t as the trustee.

document, Adam 4?

25

A. The agreement speaks for itself.

25

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 10 of 17

Pro

TEXT Transcript Condensing for Windows
PAGE 95
93 95

SHEET 24 PAGE 93
1 Q. Was that jour understanding of what
2 JOU were agreeing to when you put jour

1 A. Whatever it says.

2 MR. BRESSLER: -- you are
3 trying to mislead him because only Adams 4 4 was the subj ect of the hearing that

3 signature--

4 A. Yes.
5 Q. -- on Page 2 of Adams 5? 6 So had this agreement which you
7 signed been approved by the court, you would 8 not have been able to bring this lawsuit

5 day.
6 A. That's another example of the harm
7 that was caused by the breach of the fiduciarj

8 relationship.
9 Q. Do you have a recollection of what
10 the effect vias going to be if the bankruptcy

9 against Dan Crowleji correct?

10 MR. BRESSLER: I'll object to

11 the form. This says it i S a letter of 12 intent contemplating --

11 court granted your motion on March 3 of 2003?

12 A. The effect was going to be? It
13 viould have eliminated Mr. Crowley's, quotei

13 A. 1'm not so sure about that, and
14 that i s a legal question. Get an expert. 15 Q. When you were testi fying in court on
16 March 3 of 2003, were you intending to release
17 all claims Coram had against Dan Crowley as is

14 claim, end quote, for this $17 million, and
15 that was very important to me because with the

16 existence of that claim it made it impossible
17 to sell this companj, another defect brought

18 set forth in Adams Exhibit 5?

18 about by the fiduciary relationship.
19 Q. And in exchange for that he was

19 MR. BRESSLER: 1'11 object to

20 the form. He alreadj said --

20 going to get a release?
23 extract that from us.

21 A. If that i s what it saysi that's what
22 it says. 23 Q. Do you have an understanding on that

21 A. In exchange for that, yes, that
22 iias -- he extracted that. He was able to

24 issue one way or the other?
25 A. 1'm not sure what we would have

24 Q. You agreed that he was going to get 25 a release, right?

PAGE 94
done.

94 ~
Ij ~
5 6

PAGE 96
96

A. Yeah. Welli we all agree with
extractions. I go to a dentist. I agree to
the extractioni but it hurts.

Ii
q

Q. SO if you look at Adams 4 and Adams
5 together i is ita fair statement that the arrangement that you were a proponent of in
court on March 3, 2003 was to give Dan CroVllej

Q. kid YOü also ògreed to pay him three
and a half million dollars, right?

5
6 7

approximately three and a half million dollars

A. Agreed in order to get rid of the
17.5 claim.
Q. Were you aVlare in January, February and March of 2003 that Coram paid Mr. Crowley
$80,000 a month pursuant to the agreement

and a release from future claims against him
by Coram or its trustee?
MR. BRESSLER: I will obj ect.

7
8

8
9

9

10 11
12

A. Whatever the legal -MR. BRESSLER: I'll obj ect to
the form.

10 11 12 13
14

iihich was Adams Exhibit 4?
A. I imagine I was.
Q. And did JOU agree to that?

13
14

A. Whatever the legal connotations of
those documents are i thej are.

A. Well, that i s what the document says.
Q. Did you agree that he could keep
that money that he had already been paid after the court did not grant your motion to approve
that agreement?

15

16
17

Q. But is that your understandingi sir? A. I wasn't sure about what viould

15 16
17

happen.
Q. SO you went to court on March 31
2003, with your three lawyers and you weren't

18

18

19

19

A. No.
MR. BRESSLER: I will obj ect to
the form.

20 21 22
23
24

sure what was going to happen if jour motion

20 21 22
23
24

was granted?
MR. BRESSLER: I'll obj ect to

A. No, I never agreed to that.
Q. Did you ask him to give back that
money to Coram?
.1\. I think i,e did, but I never agreed

the form. He has already testified as to
it. The documents speak for themselves
and --

25

25

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 11 of 17

EXHIBIT H

Case 1:04-cv-01565-SLR

Document 174-3
,
~:

Filed 08/20/2007

Page 12 of 17

l
-IN RE:

UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWAR

Case No. 00-3299
_....
- ..~.,

l:-::' ,

~~.# ~:..::

r....

CORA HEALTHCARE,

824 Market Street . Wilmington, DE 1 sB~ 1

. . . .. .. .. .. .. . .. . ..

Debtor,

March 3, 2003
9:30 A.M.
'., "
~, j ,-.':;~

.~

TRANSCRIPT OF TRUSTEE'S MOTION FOR AUTHORIZATION TO R~JECT THE EXECUTORY CONTRACT OF DANIEL CROWLEY BEFORE THE HONORABLE MARY F. WALRATH UNITED STATES DANKRUPTCY COURT JUDGE
APPEARANCES:

lor the Trustee:

Schnader Harrison Segal & Lewi , LLP Dy: DARRY E. DRESSLER, ESQ. WILBUR KIPNES, ESQ.

~
I

RICH~RD BARKASY, ESQ. 1600 Market Street, Suite 3600 Philadelphia, PA 19103

Wei.:r & Partner.s
By; JOHN B. YORK, ESQ. 824 Market Street Mall, Suite 01
P.O. Box 708

Wilmington, DE 19899
Office of the U. S. Truslee

By: RICHARD SCHEPACARTER, ESQ J. Caleb Boggs Federal Buildin 844 King Street, Lockbox 35 Wilminqton, DE 19001

Audio Operator:

JGnniicr M. Patone

Proceedings recorded by electronic sound recording, trLlnscript produced by transcription service.

e

E-mail: jjoourt~optonlin~ .n~t
(609) 586-2311
Fax No. (609) 597-3599

J&J COURT TRASCRIBERS r INC. 268 Ever9rean Avenue HamilLon, New Jersey 08619

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 13 of 17
..;

I

.

2
.

APPEACES: (continued)
For Daniel Crowley:

RICHAD H. CROSS. JR., ESQ. 1201 North Orange Street, St.

P.O. Box 1380 .
Wilmington, DE 19899
Much Shelis Freed Denenberq

& Rubenstein
By: SCOTT N. SCHREIBER, ESQ. 200 North LaSalle St., Suite 2 00 Chicago, IL 60601

For Unsecured Creditors:

Richards, Layton & FInger, P.A By: ETTA WOLFE, ESQ.

One Rodney Squò re
P.O. Box 551

Wilmington, DE 19899

'.
I

For Equity Committee:

saul, Ewíng, Remick & Saul, 1L By: MARK MINUTI, ESQ. 222 Deiaware Avenue, Suite 120 Wilmington, DE 19899
Jenner & Block, LLC By; RICHARD F. LEVY, ESQ.
STEVE TOMASHEFS KY, ESQ. One rOM Plaza

Chicago, IL 60611

Por. Senior Noteholders:

Neil; Gotshal & Mangeôi LLP By: ALAN B. MILLER, ESQ.
767 Fi! th Avenue

New York, NY 10153

For Cerberus Partners, I,P

Klett Rooney Lieber & Schorlin ~y; AOAM G. LANDIS, ESQ. tOoo West Street, 14th Floor

Wilmington, DE 19801
Schulte Roth & Zabel LLP By: HOWARD O. GODNICK, E:SQ. MICHAEL 1. COOK, ESQ. 919 Third Avenue

e

New York, NY 10022

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 14 of 17

.',

fi

Decision
1 and has kept out of whatever monetary claim Mr. Crowley may
2 have against Cerberus.

19

3 MR. LEVY; Mr. Schreiber said we ought to stick with
1 him. Merely resonance of what the director

i s witness i Mr.

5 Emeral said, "Well, hel $ doing a good job, let's stick with
6 him.".

7 And the cases that Mr. Bressler talks about do talk
8 about people who in the past have a conflict. I ce~tainly
9 think his past confiict twice colors what happened here today,
10 but it is the ongoing relationship that troubles us so.

11 Thanks.

)

12

THE COURT: Well, 11m going to deal with the

13 Trustee's motion for approval of the extension. And in doing
14 so, i agree that it is the business judgment rule that I just

J.5 consider.
16 To express my feelings

I'm going to paraphrase

. 17 someone I think epit.omizes the business judgment rule, and tha
18 is Warren Buffet. And he has said

that the ideal employee is

19 someone who's smart, hard-working and honest. But if the
20 employee isn't honest, you darn well better. hope he's stupid

21 and lazy, because otherwise you're in trouble.

22 There is no question in this case that Mr. Crowley i'
23 smart, hard-working, a brilliant businessman. nut I do not

e

24 believe he is honest. And his testimony today has not
25 convinced me that he has changed since the last time he

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 15 of 17

/. . í

6'

Decision
i testified.

19

2 Judge Adams has an impeccable reputation for
3 integrity. Quite frankly, I don't want his reputation or mine
4 sullied by approving continuing employment of an employee that

5 I do noL believe to be an honest person. I think being asked
6 today to trust that Mr. Crowley is complying with the Trustee'

7 request simply because there is no proof .that he has not
8 complied with the requirements imposed upon him by the Trustee
9 goes too far, given the fact that he has previously failed to

10 disclose relevant information. And quite frankly, the draft
11 documents that were produced continue to show at least in May

)

12 of 2002, after the appointment of the Trustee, continue to sho
13 what 1 believe is a continuation of Mr. Crowley's continued 14 efforts to continue to get reimbursement from Cerberus for
15 efforts underta ken in. this case.

16

It's a belief I have. There is no evidence that an

i 7 agreement was reached with Cerberus or that Cerberus
18 participated in it, but I think that the drafts show that Mr.

19 Crowley sought to have that continuatj on, sought to be paid,
20 albeit after çonfirmation, that is atter he was no longer
21 subject to the jurisdiction of this çoui:, sought to get
?? remuneration for efforts taken in this case, which quite 23 frankly j, not permissible.

e

24

And given that belief, I will not approve any

2S extension of employment. I've said before that fortunateJy 0

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 16 of 17

.

Decision 19
i unfortunately I'm in the position where principles can guide.
2 me, even though it may resul t in ~inancial harm to others. Bu
3 even saying that, I do take into consideration that my decisio
4 will have or may have some adverse effect on the business

5 operations.

6 But I am sati.sfied that the employees that were put
7 in place before and by Mr. Crowley, the systems that we"Ce put

8 in place can survive Mr. Crowley leaving. There àre plenty of
9 other competent, in fact, brilliant businessmen who can step.
10 in, whether from within this orqanization or from without.

11 And I think it's more important that the debtor,

)

12 under ,the supervision of this Trustee, not be tainted by any
13 suggestion that the senior exec

uti ve has anything other than

14 100 percent dedication to this entity and to this entity alone

15 16
17
11)

So, I wiii deny the motion.

I'll look for a form of order, Mr. Levy?
Need we go any further?
UN! DENTIFIED A'l"l'ORN¡'~Y: I think Nr. Levy has a

19

motion.
MR. LEVY: Your Honor, we have a motion, and that

20

21 motion calls for the termination of Mr. Crowley and an
2~ instruction to the Trustee to pursue dj sgorgement of

e

23 compensation collected.
24
THE COURT:

I'm going to hold that under advisement.

25

MR. LEVY:

Thank you.

Case 1:04-cv-01565-SLR

Document 174-3

Filed 08/20/2007

Page 17 of 17

e

Decision
1

19

THE COURT:

Because the ramifications of my decision

2 may have an impact on that.
3
4

MR. LEVY: Thank you very much, ïour Honor.
THE COURT: All right?
We' 11 stand adj ourned.

5
6

UNIDENTIFIED ATTORNEY: Thank you, Your HOIlor.

. 7 (Recording ends)
.a
9

*

*

-I.

CERTIFICATION
I, Betsy Wolfe, certify that the foregoing is a

10

11 correct transcript from the electronic sound recording of the

)

12 proceedings in the above-entilled matter.
13
14

15 Betsy Wo.1'Ee

~Íß u 1J

Date

16 J&J COURT TRANSCRIBERS, INC.

17

18

19

20
21

22 23

e

24

25