Free Reply Brief - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR

Document 141-2

Filed 05/10/2007

Page 1 of 41

EXHIBIT C-l

.' " , ,

..

Case 1:04-cv-01565-SLR DocumentFD :"l.. -06- 2002 17: 3S MUH Sr£ r ST 141-2
"1Y Ø6 20 15: 4S FR -

Filed 05/10/2007

Page 2 of 41
:-õl ~21 ~. 22.- ê3

9164496ØS9 TO SCI8~ P. Ø2/Ø3

, . .

6C~?
May 6, 2002

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REDACTED
.JJ.

Stee Feinbe
Dea Steve,
I have ~ ~¡ about our when you msd tl I ha

di last wek. In retrspe it di~t unJd as you said

to come to Ne. Yor!tii . L ..,..

Well thse pas 30 month have ~ be hmrme. While I am crSt clea thán -

Iive not done anyt~nan. I su have suer dey. i am in a job tha I Would
never ever have aced at a rate of pay th I ea 8-9 yea ago. I am ciuesbed in .

. luS be a'goo sOldier.' . . .
At th s~e time, I have ba my my monthly retaer

. endless Ch I I molas. I am th ocly pen at Cora th ha be paidnO/hing rase. No nothg. .
on th lpOO Ml or the KE(s) or the 2001 MI or anytg.. No

-~y, Ilotlg wiw th;e C~ Agree:mcm I have ba to paysigicantlegaJ bils. I .. havebe.unle topareipat in aiynew-busess de. All ths~and my professona
reuttion ha ben tred, to. But il you once sad, I'mworlg with you 'and

with Cerened ruing my ca flow.J ht,~c..u wId I~ .

own Company (DyIc) totiiy upnded. I have had

Cerberu so it doe'tmatttb my icpuon ba be hur Right?

I an alrealliIlg when you sird oncc th I shouldth abut it al æhavi¡.;. '''ssed
the wrng woma". I owe it to myself

to tell you, Steve, th I guss I don't opee the

n.. c). :;
-n c:. L-.

sae way~ .
a
. "numbe .an~ p~bal w..

-

=æ.,

if the she we on tÍe other fot, and it
o se ine.

r-.
-l ::

.. hvould bavebc Cag oft jus to se howyou wer dÒg. lW9uld iithave be
badèr you to regnov. Chew V ei1 would not hac ben chain . to ge yo beyouinet,tb.Tru tó¡Ct your rcgnon done. If

.an len? l' rety:ÎJ th

. lito me Notg.. . Iftbshwe on tbe oth foo your legal bils would have be prmptly would haé fou¡fto the en on th frnt side: I

Soni WI. .. .. ... yo shuld have si:py fi aie. If not, why havc I bee put at I have done a lo righ Nothg to dese wht ha .
paid! .1... .
would never have

I ha;doíi .

you.

.. see you lai..lets se ho it tu Qu Mr. Breler ha told lnO th 1iniee don't. .
. wi to give usc ádviceahut en~a the contror my gettg ~d~ :a~ also have sinartlawyeran he's su th the'yca figu

st back and sad '

sad, we out hQw to get me pad. . He has no

obj~tion to my beg pad for wordone or for te th coilt

. CRX 00063 ...

Case 1:04-cv-01565-SLR FR Document 141-2 MAY % æe2 ~5: 46

I"r -lOb- 2002 17: 3S l1 5H I ST FDA

Filed 05/10/2007

91~9659 TO SQ-EI3ER

Page 3 of :~1 :i, ;::;, ~: 5õ: 41
~ . 23/Ø3

'"

mør
It wiii be your na reon to st to say "Dan's mad", WelL, lea honestly tell you

th I am not "ma" at anyone.
I th tht

Fried did a tcblc job hag th ca. He mis-advise me, didn't

ca corrctly; . . . , . J

focu propely, porly prep me, and didn't hadle most any import aspect of ths

remmended him I did it on m own . e answer tht

11 Loke w '

Fried ¡ave in. our And, I

didn't have to hi

Chan sliply because you.

I supose if I had be more tr¡ maybe (mybc) I would not have wrtt tle memo
abouurying to get upside on your position ifl did a ¡r Job at Cora I didn't have

ta the assignen at Cora In respct I should have siply toldyou "no",
If

I h8 ben more tn, mayb (maYbe)! would not have'asked tor a fonn contrct. outg thngs lie lega. bills being pad, ~de bèmg sh I gues r jus. di,dn 't
. know you tht well when :we eitcd th relaonship. . Hiry has taugt. me had
lessOns abut "ames" when it comes to money. To th

..

to

day, you ar stll telling me

th the 200 MI was baS upn the gi on the CPSsae even thou¡h I have told you.

. it didn't more ties th lean count. EBITA was$3? Milionw/oCPS an $54 .
Milion wiit. I Would have 'eamedanother $4.25 Milion if

..

~;:/

.,

.D. . . ' . . ife- :z ;. c: rr :z -_.' :: ~
I inCluded the gai. I

didn't. . ,

C" C:

long eduction. An yes 1 st lüceandad yo~a lOL .AdmJi~ 0 and have bUllt Adi your inteUectan your fai . "tmt I. al lie me a lot, when it .
comes

to bein back to b . meone in good and bad times. i rey like me a lot

. . unti¡on ,someone to do wbthy say they will do, No question

. .

: Tht's it . ¡1m Bet keeÎf& A WU!'l of tl5 DOlc. Ysu 98te88 )'J. i jus wated you to ..
. kiw howl

am feelig On th pIcwar day. .

\ ... ~ ClOwl~

REDACTED

CRX0006'l .

Case 1:04-cv-01565-SLR

Document 141-2

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Page 4 of 41

r~ )l j1( .
t;, '" Hence, I expec that you'll honor the commitment

that you made to me over dinner: after
assets

Cora's plan is confed or

its

sold, I'll be reinstated with Cereniand receive

$5,00,00 frm Cerers. Also, Cerer wil indemify me for all of my legal fee,
plus pay me the difference betwee what I

ultimately receive frm Coram by way of

bonuses,

and $ i 1,200,00. . If this'Ís not our deal, pleaejust send this letter back to me,

~./

,.

c~ 00065
:)

Case 1:04-cv-01565-SLR

\. i,

"'y -0- 20 19: 2B r- Sl I ST FD ~y æ 20 17:30 FR -

Document 141-2

Filed 05/10/2007

Page 5 of 41

9164496059 TO'SOI8ER P,02/Ø4

561121 ;:, â2-'Ø4

£c-¡o

Solu tions W Dyamic

Healthcare

-May 8, 2002

450 ParAveue
NewYodc New York

Ce Capita

Mr. Stevc Fcinbe

REDACTED

~ si ".t .to..- I di e. ,.
De ~~~c, . . ,

meeg rey jus didn't unold as you said it would w me to come

sued it, I

I have be thnking a gi dea about our dier las wek ~, ' e I have st haven't formy end my contr with Ccrbe

. V'

to New York to meet "fa to " . .. in rens to my in~ui abut the ~

amount du OU abut the in an "ha a nube", but it wa to

Weu,tb pa 30 mont hae su be unus for me. Wh lam cr clea tht
I

(\

have not do anyt¡ to hur or devc anYo, I su hae suer .dealy. I am in a

job th I wouJd never ever haeaced at a ra of

pay am en in en. Ch i J mola.. I am th only th I ea 8-9 year ago. pen in Seor.. .
ar in my emloymen coDt With Cora No ra No nothg. .

Manement at Co th ba be pad nothng on the So apprved inntiveS th
11m a goo soldier.

At th sa ti I have ba my own

my moy re wiCc ened ni¡ ~ floW. I have signcat legal .
bil I have be uileto

ComP.Y (Dynamc)totay.uped I have ha '

ea¡s All th immy prfesona reutaon ha be trhed to. . ./

paCipae in any new bu des, dAmligig my fue .

CRX 00071

Case 1:04-cv-01565-SLR

Document 141-2

Filed 05/10/2007

Page 6 of 41

:-y -Ø- 20 1'3 :21 f1 9- I ST FM
MAY Ø8 200 17: 3Ø FR -

9164969 TO SOlBE

56112~ ;,. a:Ø4
P. 03Ø4

Pa¡loO Piaes
Let daed May 9,200 to Mr. Steve Feiner

REDACTED

Mr. Bresler ha told me penaly th th Tru doe't wat to teUus what to do, or .
give advice about en thcontr or my getg pad by Cerb. He al sad, th
"you gUys have sm lawyers" .,. and hc'sce th they ca. . . "fgu out how to make th payment an terme tbcontr". He ha sad, th he ha no objection to my "being pad by Cer for

work dOne unlat to Co or for en a pre-

exig contrn. So, why don't we havetl atrnys work up a

an when we al are in agment th it is word propey, go ahea an teU Mr. - .
Breler th unes thè Truee spcicay objects . . . C~wiey' s be paid by
Cerbe for pror scrvce reere for

teon agrment

non-Coram work'and for enin the contrct

eary, an th with th the A¡rt is beg mutly termtecl Then mae the
payment and en tQ Agrent .
Steve, itwi be your na rection to st to say that "Da's ma". Well, I ca
honesty tell you th i ai not ma at anyone. Not at al. I jus wa aU of ths over and 1
would1ito be pad

by Cora for the resuts I delivere to COta and. .. by Cerbeus

for th wQrk Dýnc did relate tQ Ceer'iion-Coraminvesents.
Asai asde, I owe it to myself to tell you stght out th I do th th David Friedman
did a

teble job hadlin t, cae. Contr wht Boris Feldm wa able to do with

the NJ litigaon to wh David Fried did in Delawae.. Fried mis-advised tne and
Cora's Boar didn't foc or focus improperly positioned the whole cas, ba

propely. poorly pre me and the cas,
a tlawedRerganûonPlan was not fuly
importt aspet of-th ca very welL.

en¡aged and didn't hadle most any

In retrsp whcnyou as me to st in and save Cor I shuld have simply told
you

tutngdown jobs li tb..ou ofba. I di4n't 'N 1b job, an it (Cora) wa't Diy prblem; Now, 2 ~ ye la. lmst ther. be YO plea with me to step, in 'sa Cor 1ithi complei melt.down tht you fea1be re COra"ba
an be sa", aD fo my ~ I hae ¡on on to be wriiyac of all sort of.. tI. bla for ev th pnor maem ever did wrn¡ and ... houn to

"IlO" and let Cor io prmpty

down.

the dr Jtisa fa

th I ha be routnely

. th l; oftb ea Th rety is wh sever oth Co CEOs ba completely .

.~ I açy save Co and ha done i whole lot oftb ver verrigbt th .
no live th Compy i di to cont in ex ifCori ever emerges fr

Ch i i with i rer¡an Cata sttu.
. es I juS didn't roy know you ver wd wh we ener into our rela p.
. BUt m.. . h. ta me ver ba lesns ab th lev ' csia" some
folk exPrience . mes to acy tie

"Pi' " peormce when the

coes . To tb day, evn .. .' ,sme th the 2000 MI wa baed upon

a ga OD th sae oíCP even thou . in opeCour to the contr,

and hay y told you more ti th I ca count .

CRX 00072

Case 1:04-cv-01565-SLR

:"'Y"'OO-202 19:2e r1 SfIST ~
n:Y æ 2002 17:31 FR -

Document 141-2

Filed 05/10/2007
9164969 TO ~ I 8ER

Page 7 of 41

5õ:~21 ~. ~~/34
~ . Ø4/Ø4

Pa¡e 3 of 3 Pa¡es

Le date May 9,200 to Mr. Ste Feinber

200 EBITA wa $37 Millon

it.. I would hae 0 er $4.25 Mion
didn)..

e sae of CPS an 554 Milion with '

iicluded th ga on th sae. I

r In fa to myscW' thnk th I should be ¡xd no for th pro 'ona work tht I

th 18 Bet pay mt ~~, ftcs au \lj~fied i:emrven) or ~i¡die~'(ãds ful ~

prvide to asst with invesents ma in your non-Cor portolio. I am concered

I' . tad' . '? .
Myundcg of th wa done for Ce an for the lamaslåg th you plea move prmpty to -(.,...... Terinon Agrentconst wi this Uide:di and

theory ther is soeld of a seret COlly wb tb rey is't. '. ''\ anouS tha unorese events sometes overe goo inte . . get hit by

a bu' and begone, Cer could get . . . whlevIr. The point is tht then
your commtient is that abse an objecon by the Chapter i i
eay tention of the Agrment between us.

Tru, Dync Hcithcar Solutions wi be pad $5 Mion for the non-Coramwork

have your atrney dr up a ~
let the mater be

kDwnto the Tii's atrney wh ca objecor not. Then the Agrment ca be

~ cabe paid for the non.Coram work th Idid for Cerrus.

Regads .
~ CJ\A~.'
Cc: Mr. Scott Schreib, Es.

Da Croley .... --

RECACTED

CRX OOn73.

Case 1:04-cv-01565-SLR

Document 141-2

Filed 05/10/2007

Page 8 of 41

EXHIBIT C-2

Case 1:04-cv-01565-SLR

Document 141-2

Filed 05/10/2007

Page 9 of 41

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
respective parties hereto that the

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

filing, sealing and certification of the
wi thin deposition shall be and the same are hereby waived,

5 6

ARLIN M. ADAMS 1 Chapter i i

7

IT IS FURTHER STIPULATED
AND AGREED that all objections,

Trustee of the Post-Confirmation Bankruptcy Estates of CORA HEALTHCARE CORPORATION, a Delaware Corporation and of CORA, INC., a Delaware Corporation,

except as to the form of the question, shall be reserved to the time of the trial. IT IS FURTHER STIPULATED AND

VS, 04-1565
10 DANIEL D, CROWLEY; DONALD J,

Plaintiff CASE NO,

7

12 13
14

AMRA; WILLIAM J. CASEY;

AGREED that the within deposition may be
signed before any Notary Public with the same force and effect as if signed and
sworn to before the Court.

11 L, PETER SMITH; AND SANDRA L,

12 SMOLEY, Defendants
13

15

16
17

15 9:34 a.m,
14

Tuesday, March 27, 2007

lS
19 20 21 22 23
24

16
17

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

19 Schnader Harrison Segal & Lewis, LLP,

20 Philadelphia, Pennsylvania, 19103,
22

1600 Market Street, Suite 3600,

pursuant to notice before Cynthia A.

25 22 23
24

21 Whyte, Registered Professional Reporter

and Notary Public.

23
24

25

25

_ PAGE 2

~ PAGE
1

4

INDEX
WITNESS:
ARLIN M. ADAMS, ESQ.
PAGE

2

A P PEA RAN C E s:
Counsel
SCHNADER HARRISON SEGAL & LEWIS LLP for Plaintiff Arlin M. Adams,

3
4

By Mr, Peters

5

Trustee

5

1600 Market street suite 3600 Philadelphia, PA 19103 (215) 751-2050
BARRY E. BRESSLER, ESQ, bbressler~schnader. com

6 7
S

ADAMS EXHIBITS
NO.
DESCRIPTI ON
PAGE
7

Exhibit 1
Exhibi t 2

Chronology
Transcript, 2/25/03 Transcript, 3/3/03

BY:
AND:

9

52 52

RICHAD A, BARKASY, ESQ.
rbarkasy~schnader. com

10 11 12 13
14

Exhibi t 3

Exhibit 4

Letter, 12/24/02, to

Mr. Schreiber from

10
11 12

Counsel for Defendant Daniel Crowley 710 Sansome Street San Francisco, CA 94111-1704
(415) 391-5400
BY:

KEKER & VAN NEST LLP

Mr. Bressler
Exhibit 5

SO

Letter, 1/7/03, to

Mr. Schreiber from
Mr. Bressler

ELLIOT R, PETERS, ESQ,
epetersêkvn. corn

13
14
AND:

15

Exhibit 6
Exhibi t 7

Disclosure Statement

ii
120 122

Sl

WARREN A, BRAUNIG. ESQ,

16
17

E-mail string

wbraunigêkvn. corn

15 16
17
ALSO PRESENT:

Exhibi t 8

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

lS
VINCENZO PETULLA,

Exhibi t 9

Mr. Schepacarter from

19

Mr. Barkasy
Exhibit 10

130

lS
19

Videographer

20
21 22

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

20
21

Ternn
Exhibit 11

14
163

Motion of Chapter 11

Trustee
23
Exhibit 12

22 23
24

Updated Report of
Goldin Associates

24

170

25

25

Case 1:04-cv-01565-SLR

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81

PAGE 83
83

1 appears to bear your signature.

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

2 (Adams Exhibit 5 was marked for

3 identification.)

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 essentiall j the same

4 Q. SO the first question with respect
5 to Adams 4 -- and if you want to tal-e some

6 time to review it, you go right ahead.

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

7 services to Coram as he had before for a term

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 Barry Bressler wi th Crowley'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's

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

20 A. Correct.

19 than he had been receiving before that?

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

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

23 payment, a stay bonus?

25 A. The trustee.

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

PAGE 82
82

PAGE 84
84

1 Q. Who is that?

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

2 A. Myself.

3 Q. SO is it a fair statement that this
4 is an agreement that you entered into with Dan

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

5 Crowley? 6 A. The terms and conditions, yes. See
7 that? "Agreed as to terms and conditions."
8 Do you see that on Page 4?

7 correct?

8 A. If he stajed.
11 correct?

9 Q. Okay.

9 Q. If he stajed, he was going to

10 And that means that you agreed to
11 the terms and conditions --

10 receive about a million and a half dollars,

12 A. To the terms and conditions.

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

13 Q. -- contained in this letter?

14 A. Correct.
1Î for Coram?

15 Q. And, in doing so, did you understand
16 that you were acting as the Chapter 11 trustee

15 A. I was willing to go along with it in
16 order to get rid of the claim that he had in
17 the amount of $17 million. You don i t always

18 A. That's the second time you have

18 sign contracts that are agreeable to you, as
19 you knovl.

19 asked that question in three minutes. The 20 answer is yes.
21 Q. What were the terms and conditions
22 that you were agreeing to as you understand

20 Q. Well, but in signing that contract,
21 you were agreeing to pay him that amount of 22 money if he stayed, correct?

23 them when you affixed your signature to this
24 documen t , Adams 4?

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

25 A. The agreement speaks for itself.

25 result as the trustee.

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93

~ PAGE 95
95

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 was going to be if the bankruptcy
11 court granted your motion on March 3 of 2003?

9 against Dan Crowlej, correct?

10 MR. BRESSLER: I'll object to

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

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

13 A. I'm not so sure about that, and
14 that i s a legal question. Get an expert. 15 Q, When you were testifying 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: I i 11 object to

20 the form. He alreadj said --

20 going to get a release?

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

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

23 extract that from us.

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

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

_ PAGE 94 _ PAGE 96
1 done. 2 Q. SO if you look at Adams 4 and Adams
3 5 together, is it a fair statement that the

94 96
1 A. Yeah. Well, we all agree with

2 extractions. I go to a dentist. I agree to
3 the extraction, but it hurts.
4 Q. And you also agreed to pay him three

4 arrangement that you were a proponent of in 5 court on March 3, 2003 was to give Dan Crowlej
6 approximate

5 and a half million dollars, right?

1 y three and a half million dollars

6 A. Agreed in order to get rid of the
7 17 . 5 claim.
8 Q. Were you aware in January, February
9 and March of 2003 that Coram paid Mr. Crowley

7 and a release from future claims against him

8 by Coram or its trustee?

9 MR. BRESSLER: I will object.

10 A. Whatever the legal -11 MR. BRESSLER: I'll obj ect to 12 the form.
13 A, Whatever the legal connotations of
14 those documents are, thej are. 15 Q. But is that your understanding, sir?
16 A. I wasn't sure about what would
17 happen. 18 Q. SO you went to court on March 3,
19 2003, with your three lawyers and you weren't

10 $80,000 a month pursuant to the agreement

11 which was Adams Exhibit 4?

12 A. I imagine I was.
13 Q. And did JOU agree to that?

14 A. Well, that's what the document says.
15 Q. Did you agree that he could keep
16 that money that he had already been paid after
17 the court did not grant your motion to approve

18 that agreement?

19 A. No.
20 MR. BRESSLER: I will object to

20 sure what was going to happen if jour motion
21 was granted?

22 MR. BRESSLER: I'll obj ect to
23 the form. He has already testified as to
24 it. The documents speak for themselves

21 the form. 22 A. No, I never agreed to that.
24 money to Coram?

23 Q. Did you ask him to give back that

25 and --

25 A. I think we did, but I never agreed

Case 1:04-cv-01565-SLR

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PAGE 103
103
1 thought that my experience in the New Era 2 matter, another bankruptcy matter that was 3 resolved fairly successfullj, would be very
4 helpful; perhaps I could bring the two sides

1 Coram? 2 A. The United States Trustee called me
3 on the telephone, told me of this bankruptcj
4 proceeding in Delaware, and said that he would

5 very much appreciate my considering an

5 together,

6 appointment as trustee. I said I had never 7 heard of Coram, would you explain what it is,

6 Q. Did you have any other understanding
7 about the nature of jour assignment at Coram
8 in the general time period in which JOU

8 And in a few words he told me it was
9 an infusion companj, medical infusion company,

9 assumed the trusteeship?

10 and I said, "Whj did you call me?" He

10 MR. BRESSLER: I'll obj ect to
11 the form, but he can answer.
12 A, Well, I knew the company was
13 headquartered in Denver and it was pretty much

11 explained why. And that's the occasion.

12 Q. When was that in relationship to the
13 date you were appointed?

14 A. Two weets ahead of it, something
15 like that, 20 days.

14 a national companj.

15 Q. Did you have any understanding about

16 Q, What, if anything, did you do after
17 recei ving that phone call in order to decide

16 what your objectives would be in connection

17 with the operations of the company, its
18 revenues, protecting the company, anything

18 whether this was an assignment that was of
19 interest to you?

19 along those lines during the early period of

20 A. I don't think I did anything.
21 Q. Did you decide on the spot that you 22 would accept the appointment as trustee?
23 A. I said I wanted to look at my own
24 docket to see whether I would have an adequate

20 your trusteeship?
21 A. The trustee may have mentioned the

22 volume of sales. I'm not sure of that. I
23 know that I was under the impression that it 24 was something less than half a billion
25 dollars, roughly $400 million, something lite

25 opportunity to do -- to discharge mj duties.

PAGE 102
102

PAGE 104
104

1 I think I called him back in a day
2 or so and said I'd be honored to serve if the

2 Q. Did you form in the first several
3 weeks of the trusteeship anj general sense of

1 that.

3 court appointed me.

4 Q. And thereafter did you begin to take
5 steps to familiarize yourself with Coram?

4 objectives as Coram's bankruptcy trustee?

5 A. I did.

6 A. I think he sent me some material,
7 some pleadings, to give me an idea. Maybe he
8 sent me a brochure of what services they were 9 selling, and I spent the next few dajs reading

6 Q. What were they?
7 A. To get the company out of bankruptcy
8 as promptly as possible. That's what the
9 trustee had instructed me.

10 that material.
11 Q. And what do you recall was the

10 Q. Did you also consider it one of your
11 objectives to try and see if there was a way
12 to make peace between the shareholders and the

12 material that he sent you?

13 A. I just said it was a brochure or
14 maybe several brochures and some financial

13 note holders?

14 A. Yes; that's what he said, to resolve
15 those differences. 16 Q. And did JOU also consider it one of
17 your objectives tö make sure that the companj 18 was run as well as it could be run under the
19 circumstances?

15 data.
16 Q, What did your understanding -17 withdrawn.

18 What was your understanding of the

19 scope of your assignment --

20 MR. BRESSLER: I'll object to

20 A. Correct.
24 services?

21 the form, but he can answer.

21 Q. Now, in connection with a
22 trusteeship, when you are the bankruptcy
23 trustee, do you bill the company for your

22 Q. -- as a trustee of Coram?
23 A. Well, the United States Trustee told
24 me that the big problem was a dispute between

25 the note holders and the equity holders and he

25 A. We didn't discuss that.

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EXHIBIT C-3

Case 1:04-cv-01565-SLR

Document 141-2

Filed 05/10/2007

Page 14 of 41

L.AW OFFICES

KEKER & VAN NEST
LLP
710 SANSOME STREET SAN FRANCISCO, CA 94111-1704 TEL.EPHONE 141S) 391-5400

FAX (4t6) 397-7188
WWW.KVN.COM
R, JAMES SLAUGHTER R5L.AUGHTER(lKVN,COM

March 8, 2007

VIA EMAIL &

U.S.

MAIL

Wilbur L. Kipnes, Esq.

Bar E. Bressler, Esq.
Richard Barkasy, Esq.
Schnader Harson Segal & Lewis LLP

1600 Market Street, Suite 3600 Philadelphia, PA 19103-7286

Re: Adams v. Cro.wley
Dear Counsel:

. ..': OJ ,'.
. :':" ,:. '.;

"'

. I wrte to inform' yo'u of oUr interitions with respect to Dan Crowley's drafted but unsent
letters to Stephen Feinberg prepared between May 6 and May 9, 2002. These draft

letters ',¥ere

pnvileged, that privilege has not been waived, and it would be inappropriate for the Trustee and his lawyers, having previously conceded the document were privileged and inadvertently these drafts at the March 2003 hearng before produced, and having deIied the relevance of

Judge Walath, to rely or! them iÍ proceeding against Mr. Crowley. '
There can be no doubt that the draft letters were privileged. Mr. Crowley sent the draft letters to his lawyer Scott Schreiber for the purose of obtaining legal advice and comment with respect to ongoing banptcy proceedigs involving Mr. Crowley and potential litigation.
against Feinberg and Cerberus.

See DeL. R. Evid. 502(b), These drafts were never sent to or

received by Feinberg or Cerberus, a fact confirmed by Cerberus's attorneys, nor were they

shared with any other party. . ,
The production ofthese'documents was inadvertent. In response to a Request

,for the . Production ofDocument~'frohi,the EqùityCommittee, Mr. CrowleY's-theIi-coluaréviewed
thousands of documents, ultimately producing 1,635 documents on Februar 16-17, 2003 (the

CRXCXifproduction). Although Mr, Crowley's then-counel carefully reviewed the
production for priyl1egç: issues, counsel mistakenly believed that the letter had actually been sent

to Feinbérg,\vlieIi'fn-ract it had not. On Februar 17, the very day ofthe production, Mr.

Crowley an4 his:cou~seire~li~ed the error and, that day, contacted attorneys for the Equity

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Bar Bressler, Esq.
Wilbur L. Kipnes, Esq. March 8, 2007 Page 2
Commttee, the Trutee, and Cerberus to clarfy that the drafts were privileged and seeking their
retu. On behalf of the Trustee, Mr. Bressler agreed to retu the letter; Richard Levy did not.

Whle the Delaware Supreme Cour has never opined on the standard to be applied to Delaware state courts have identified factors to be applied in determining whether attorney-client privilege has been waived. See Int 'I Business Mach. Corp. v. Comdisco, Inc., 1992 WL 149502 (DeL. Super. June 22, 1992) (unpublished), at
allegedly inadvertent disclosures, a number of

* 1 (evaluating the size of the production, the presence of an "elaborate review process," the
diffculty in determinng the confdential nature of the document, and the speed with which its

retu was sought); Monsanto Co. v. Aetna Cas. & Sur. Co" 1994 WL 315238 (DeL. Super. May

work product doctrne, the reasonableness of the precautions to prevent inadvertent disclosure; time taken to rectify the error; scope of discovery and extent of disclosure; and overall fairness, judged against care or negligence with which the privilege was guarded). For example, in Comdisco, where the scope of discovery was very large and great care was taken to prevent inadvertent disclosure, the cour held the privilege was not waived even though the document at issue ''was produced 14 months before the privilege was asserted" and had been introduced and discussed at five different
31, 1994)'unpublished) (evaluating, in context ofthe waiver of depositions, including that of

the author. Comdisco, 1992 WL 149502, at *1..

-~.-

purpose of

:.J :.

This reasoned approach to inadvertently disclosed documents is consistent with both the the attomey-client privilege-"to encourage full and fran commimication between attorneys and their clients and thereby promote broader public interests in the observance of law justice," Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)-.-and the and administration of

Delaware. See Berg Electronics, Inc. v. Molex, Inc., 875 F. SUppa 261,263 (D. DeL. 1995) (holding that, so long as the client did not
law applied in the U.S. Distrct Cour for the Distrct of

intend to produce the document and the producing pary can prove that the disclosure was inadvertent and not "extreme or gross negligence," privilege is not waived).

The Trustee's behavior in the wake ofthe inadvertent disclosure confirms his understanding that the drafs were both privileged and unrelated to Crowley's performance at a phone conversation with the Coram, On Febmary 17.2003. Mr. Crowley's then-counsel had.
Trustee's counsel Mr. Bressler, in which Mr. Bressler agreed to return the letter. Durng the March 3,2003 hearng before Judge Walath on the Trustee's motion to extend Crowley's

employment at Coram, the Trustee was asked by Mr. Bressler whether Mr. Crowley had
represented that the unpaid dollar he was claimg against Cerberus ''were for Coram work or

just for Cerberus work," to which Trustee Adams responded "Just for Cerberus work. Had Hearg, March 3, 2003, at 71. Afer Richard Levy nothng to do with Coram," Transcript of showed the Trustee the draft, unsent letter from Mr. Crowley and the insert authored by Mr. Schreiber, the Trustee explicitly stated that he did not believe these draft meant that Mr.
Crowley continued to be paid by Cerberus or was working for the benefit of

the Noteholders. Id.

at 70-71.
To now suggest precisely the opposite, intimating as the Trustee did at pages 11-12 of Answers to Defendant's First Set of

his

Interrogatories that Mr. Crowley sought payment from

391184,01

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Bar Bressler, Esq.
Wilbur L. Kipnes, Esq. March 8, 2007
Page 3

Cerberus for his Coram work afer the date of confirmation, is most disingenuous. You are well aware that the "insert" to which the Trustee cited was penned by Scott Schreiber, and that the
letter was an unent draft. Indeed, it was Mr. Kipnes who elicited from Mr. Crowley that it was

Mr. Schreiber, not Mr. Crowley, who drafted the insert; that Crowley saw the insert for the first time only eight months after it was wrtten; and that the insert was factually "absolutely wrong" because Crowley never believed that the money Cerberus owed him pertained at all to his work Hearg, March 3, 2003, at 109-10. for Cora. Transcript of

the draft letters and you do not agree, we wil seek to take the deposition of acknowledge that they are privileged. If either Mr. Kipnes or Mr. Bressler with respect to the draft letters. Either way, at the deposition not to answer, on privilege to direct Mr. Schreiber of Scott Schreiber on March 21, we intend
Given these factors, we demand that you retu all copies of

grounds, any questions about the inadvertently disclosed draf letters and insert, and any related matters.

Very truly yours,

t. ~J~/..b

R. JAMS SLAUGHTER
RJS/ltm

391184.01

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-Schnader
Wilbur L. Kipnes Direct Dial 215-751-2336 Direct Fax 215-751-2205
E-mail: wkipnesêschnader.com

ATTORNEYS AT LAW

1600 MARKET STREET . rE 3600 PHILADELPHIA, PA 19103-7286

21 5,75 1 ,20 00 FAX 21 5,751 .2205 s c h n a d e r , co m

March 16, 2007

VIA EMAIL AND

U.S.

MAIL

R. James Slaughter, Esq. Keker & VanNest LLP 710 Sansome Street San Francisco, CA 94111-1704
Re: Adams v. Crowley

Dear Jamie:

This wil respond to your March 8, 2007 letter in which you demand the retu of "Dan Crowley's drafted but unsent letters to Stephen Feinberg prepared between May 6 and May 9, 2002" (the "Letters"). You contend that the Letters are privileged and were you were correct that Mr. Schreiber's "inadvertently" produced and should be retued. Even if these documents was inadvertent - which is doubtful- the privilege has been production of
waived by Mr. Schreiber's failure to file a motion seeking their retu and his failure to object to

their admission into evidence at the March 3,2003 hearing.
As you acknowledge, Mr. Crowley's counsel produced the Letters four years ago in response to the Equity Committee's Request for Production. (Although we do not thnk we need debate "inadvertence," Mr, Schreiber acknowledged to the Trustee's counsel that the the Letters was purosefuL.) Although Mr. Schreiber later requested that the production of
Letters be retured, the ;Equity Committee refused. Despite having ample time to do so, Mr.

Crowley's counsel did not fie a motion even though he stated his intention to do so. See 2/21/03letter from John H. Ward to Michael Cook (CROWLEYKVN 008470).
At the banptcy court hearing on March 3, 2003, Mr. Schreiber successfuly

argued that Mr. Crowley was a par. Tr. at 10:21-11:5. During the hearng, the Equity
Committee elicited pages of foundational and substative testimony regarding the Letters.

the . Letters, he never objected on any privilege ground. In fact, the Equity Committee moved the Letters, exhibits EC-8 and EC-10, into evidence without objection. Tr. at 115:17-22.
Although Mr. Crowley's counsel objected to the Equity Committee's characterization of

In his closing arguent, Mr. Crowley's counsel explained the motivation for and
the circumstances surounding the drafing of

the Letters. Tr. at 191 :9-194:16. Relying on the
.,
;

Letters in its ruling, the banptcy court determined that they showed "a continuation of Mr. Crowley's continued efforts to continue to get reimbursement from Cerberus for efforts
Schnader Harrison Segal & lewis LLP
NEW YORK
PENNSYLVANIA
CALI FOR N I A WAS H I N G TON, 0 C

PHDATA 1428636 NEW JERSEY -I

Case 1:04-cv-01565-SLR

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Page 18 of 41

Schnader
Page 2

ATTOii'NEYS AT LAW

R. James Slaughter, Esq.

March 16,2007

undertaken in this case," leading to the cour's conclusion that Mr. Crowley was not "an honest
person. "

Given these undisputed facts, it is clear under Delaware law that the privilege has
been waived. See, e.g., Moyer v. Moyer, 602 A.2d 68, 72 (DeL. 1992); Traute-Ugone v. Tle Estate of Albert G. Ugone, No. C.A. 099-S, 2006 WL 389944 (DeL. Ch. 2006) (privileged waived when pary testified about communcations with attorney); Giordano v. Marta, No. C,A. to
11613,1999 WL 350493 (DeL. Ch. 1999). Mr, Crowley needed to take prompt action in order preserve the claim of inadvertent waiver and despite havig ample time to do so,

he did nothng.

See In re Grand Jury (Impounded), 138 FJd 978 (3d Cir. 1998) (afnning Judge Robinson's decision finding waiver of privilege where the defendant delayed more than thee months to file
a motion to compel the retur of documents); In re Hechinger Investment Cop. Of Del., 303 B.R.
18 (D. Del. 2003) (finding waiver of of

privilege where par abandoned its demand for the retu

inadvertently produced documents); In re Circon Corp. Shareholders Litig., No. C.A. 15165,
inadvertently produced documents). Two of

WL 409166 (DeL. Ch. 1998) (finding waiver of privilege where pary waited seven month cases the
following production to demand return of

you cite, Montaso Co. v. Aetna Caus. And Surety Co. and Berg Electronics, Inc. v. Molex, Inc" concerned motions to compel retu of documents filed promptly after discovery of the inadvertent production and, therefore, are easily distinguished. (The third case, IBM Corp. v.

Comdisco,lnc., is inapplicable because ofthe court-ordered clawback agreement governg that
case. )

Accordingly, it is clear that Mr. Crowley has waived the privilege with respect to
the Letters.
the Letters themselves and to the subject-matter of

Very trly yours,

¿I
Wilbur L. Kipnes For SCHNADER HARRSON SEGAL & LEWIS LLP
cc: Bary E. Bressler, Esq.
Richard A. Barkasy, Esq.

PHDATA 1428636_1

Schnader Harrison Segal & Lewis LLP

Case 1:04-cv-01565-SLR

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EXHIBIT C-4

Case 1:04-cv-01565-SLR

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Filed 05/10/2007

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ProTEXT Transcript Condensing for Windows
SHEET i PAGE i
PAGE 3
177
1

179
2

VOLUME II

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

3 4

5
6

7

ARLIN M, ADAMS, Chapter 11 Trustee of the Post-Confirmation Bankruptcy Estates of CORA HEALTHCARE CORPORATION, a Delaware Corporation and of CORA, INC. i a Delaware Corporation,

8 9

10
11 12

13
CASE NO,
14

vs,
10
11

Plaintiff

04-1565

AMRA; WILLIAM J, CASEY;
SMOLEY,

DANIEL D, CROWLEY; DONALD J,
L. PETER SMITH; AND SANDRA L,

12 13
14

Defendants

Wednesday, March 28, 2007

15 16
17

9:33 a.m.

15 16 17 18 19 20 21 22 23 24 25

IT IS HEREBY STIPULATED AND AGREED by and among counsel for the respective parties hereto that the filing, sealing and certification of the within deposition shall be and the same are hereby waived. IT IS FURTHER STIPULATED AND AGREED that all objections, except as to the form of the question, shall be reserved to the time of the trial, IT IS FURTHER STIPULATED AND AGREED that the within deposition may be signed before any Notary Public with the same force and effect as if signed and sworn to before the Court.

18 Continued videotape deposition
of ARLIN M. ADAMS, held at the law

i 9 of fices of Schnader Harr ison Segal &

20 3600, Philadelphia, Pennsylvania, 19103,
pursuant to notice before Cynthia A.

Lewis, LLP, 1600 Market Street, Suite

21 Whyte, Registered Professional Reporter
22

and Notary Public.

23
24

25

PAGE 2
178
1

PAGE 4
180

INDEX
PAGE WITNESS: ARLIN M. ADAMS - VOLUME I I 184, 391 By Mr, Peters 390 By Mr, Bressler ADAMS EXHIBITS PAGE DESCRIPTION NO. 219 Transcript, 11/14/03 Exhibit 13 Letter, 5/16/02, to Exhibit 14

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

2 3
4

5
6 7 8

Trustee

1600 Market street Suite 3600

Philadelphia, PA 19103
(215) 751-2050

9

BY: BARRY E, BRESSLER, ESQ,
bbressler~schnader. corn

AND: RICHAD A, BARKASY, ESQ,
rbarkasy~schnader. corn

10 11 12 13 14 15 16 17
18 19

Judge Adams from Mr, Crowley
Exhibi t Exhibi t

15 16 Exhib i t 17

Form 10-Q Form 10-K Letter, 3/14/02, to Mr, Adams from Mr,

234 240 250

Liebentritt
Exhibit 18

257

KEKER & VAN NEST LLP

10 Counsel for Defendant Daniel Crowley

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

710 Sansome Street

Exhibit 19

12
BY:

Letter, 8/22/02, to Mr. Beskrone from Mr. Adams Letter, 4/11/02, to Mr, Levy from Mr.

258

ELLIOT R. PETERS, ESQ,
epeters~kvn. corn

13
14
AND:

Bressler
Exhibit 20

261

Letter, 5/1/02 to

WARREN A. BRAUNIG, ESQ,

wbraunig~kvn. corn

15 16
17

20 21 22 23 24

Judge Adams from Mr. Levy
Exhibit 21

267

Letter, 9/17/02, to

Judge Adams from Mr.
ALSO PRESENT:
VINCENZO PETULLA,

Ze11
Exhibit 22

272

Letter, 9/18/02, to

18

Videographer

Judge Adams from Mr, Levy

278

19

25

20
21

22

23
24

25

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~ SHEET 33 PAGE 129
305
1 the United States involving Enron as making it

_ PAGE 131
307
1 a subset of the claims that Mr, Levy was 2 proposing that you bring?

2 easier to bring a case even if it didn't have
3 actual merit against executives because jurors 4 would be prejudice against them?

3 MR. BRESSLER: I'll object to
4 the form, but he can answer. 5 A, I think they are different because
6 my attitude was greatly shaped by the 7 documents that were produced a little later,

5 MR. BRESSLER: I'll object to 6 the form.
7 A. Yes, he did,
8 Q, And did you think that was an

8 Q, Those documents that were produced
9 in February of '03?

10 A, I thought I should consider it. I
13 Q, Continuing on Page 35, Line 11,

9 appropriate thing for you to be considering?

10 A, Whenever, I don't know the date.

11 didn't know how valid the observation was, but 12 it was a factor.

11 Q. This testimony is being given in
12 January of '04, Do you see that?

13 A. I can't give you the sequence,

14 question of you by Mr, Levy:
15 "QUESTION: Did you consider after

14 Q, Did you -16 17 18 19

is A. Let me say now that in my testimony
yesterday I may have missed the sequence somewhat, and what I want to do is go back and read the transcript of my testimony and correct it if I did miss it. I don't know

16 September 25th the effect on a jury of the 17 currents climate of Enron, conflicts of
18 interest, and corporate misbehavior?

19 "ANSWER: I did,
20 "QUESTION: What conclusions did you

20 that I did,
23 sequence?

21 come to after considering that?

21 Q, Since yesterday have you had any

22 "ANSWER: I think that that is the
23 factor.
24 "QUESTION: Which way does that

22 discussions with your lawyers about that

25 factor go?

24 A. No, I haven't,
25 Q. Have you looked at any documents

PAGE 130
306

PAGE 13 2
308
1 since yesterday about that sequence?

1 "ANSWER: I did consider that
2 3 4 5 factor, but you don't reach that type of a climate unless the court will permit you to go to the jury, and I didn't know in this case, what I knew about the claim, whether the

2 A, No, not a single document, I
3 4 5 6 7 haven't paid any attention to this deposition overnight except that one thing, When I thought about it last night, I wondered whether I may have given JOu an answer that not twisted the sequence; had the sequence out

6 plaintiffs will get that far,

7 "I agree with Mr. Shestack. There
8 is a very serious damage question, There is a 9 serious causation question, but I concluded 10 that the case had some value,"

11 Do you recall that testimony?

8 of order, 9 Q. Well, I suggest if you want to help 10 with the sequence, look at the exhibits you
14 25,

12 A. I do.

11 were shown as reflected in the record in your 12 February 25, . 03 deposition because that will
13 show that you saw those documents on February

13 Q. SO by January 21 of 2004 you were
14 familiar with Mr, Shes

15 evaluating this claim? 16 MR, BRESSLER: Obj ect to the

tack 's conclusions about

15 A. That's what I thought last night.

16 When I went back and thought about it, I began
17 recalling that the first time that I saw those 18 explosive documents was while my deposition

17 form, but he may answer, 18 A, I was familiar with them, I knew
19 what he was thinking. I don't know that he

19 was being taken but that Mr, Levy had obtained
20 those documents in connection with Crowley's

20 had reached a final conclusion, but I was

21 familiar with his trend,

22 Q. SO you thought that this case that
24 you: Were these breach of fiduciary duty

21 testimony, although he had not yet testified,
22 but Mr, Levy showed me those documents during

23 Mr, Levy was proposing to bring -- let me ask
25 claims against Mr, Crowley that you've brought

23 my deposition I guess before the hearing and
24 that I was taken aback, but I didn't fully 25 realize the implication of those documents

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311
1 2 3 4 review the documents and discuss them wi th your lawyers, was there anything preventing you from asking Mr, Kipnes on prior to March what's Crowley saying about these documents?

SHEET 34 PAGE 133
1 2 3 4 5 until I dwelled on them, And then when Mr. Crowley at the hearing that came a few days later began trying to explain them, I realized how discordant his answers were and that I had been misled.

6 And I'm not sure that I said that in
8 Q. But you testified at deposition on

5 MR, BRESSLER: Object to the

7 sequential form yesterdaj.

7 You may answer,
8 A, I think that Mr, Kipnes was quite
9 surprised and he told me that he was upset.

6 form.

9 February 25 of '03 and you reviewed the 10 documents at the deposition; you were shown

10 MR, BRESSLER: Please don't

11 them?

12 A, I don't recall it, but if you say, 13 Q, I thought you just said that a
14 minute ago, that you were first shown those

11 testify as to what counsel said to you or

12 you said to counsel.

13 Q. The question is whether there was

16 A, That's right,
20 correct?

15 documents at your deposition.

14 anything preventing you from having Mr, Kipnes 15 question Crowley and report back to you?
16 A, Was there anything preventing me?

17 Q. And then after the deposition you
18 had six or so days to review them with your 19 lawyers, reflect on them, discuss them,

17 Q, Yes, 18 A. Well, I wanted to be very, very
19 careful about that,

21 A, I did say that. 22 Q, And you did that? 23 A, And I did that,
24 Q, And do you know whether your lawyers

20 Q. Was there anything preventing you

21 from questioning Mr, Crowley yourself prior to
22 March 3 after you had reviewed the documents?

23 A. After I saw the documents I didn't
25 was fruitfuL.

24 think any further discussion with Mr. Crowley

25 prepared Mr, Crowley for his testimony on

~ PAGE 134
310

6 7 8 9 10

PAGE 13 6
312

1 March 3?

1 Q, SO you -2 A, I had lost complete confidence, 3 Q. SO prior to March 3 you lost
4 complete confidence in Crowley?

2 A, don't know that,

3 MR, BRESSLER: Object to the

4 form.

5 A. I don't know that.
6 Q. Do you know who called Mr, Crowley
7 as a witness on March 3?

5 A, I'm not sure of those dates; after
having seen those documents and dwelling on them, but the real conclusion occurred, in my mind, after Mr, Crowley tried to explain in the courtroom five, six days later the import of those documents. I was completely

8 A, I think we, We had previously
9 called him as a witness as one of our

10 executi ves,
11 Q, Did you know that Mr. Kipnes met

12 wi th Mr, Crowley to prepare him for his 13 testimony on March 3 prior to March 3?

14 A. I'm not surprised to hear that. I
16 to learn it,
18 it was that Mr, Crowley was saying in

11 convinced that he had deceived me, that his 12 explanation did not hold water, and, well, I 13 was pretty discouraged,
14 Q. You saw those documents and dwelled

15 don't think I know it, but I'm not surprised
17 Q, Did you learn from Mr, Kipnes what

15 on them prior to March 3, right?

16 MR. BRESSLER: Object to the 17 form, That's not what he said.

19 preparation for that hearing? 20 MR. BRESSLER: Object to the 21 form and direct him not to answer 22 anything Mr, Kipnes told him,

19 not sure about the sequence. I don't 20 believe n

18 A. Prior to March 3 I can't say. I'm

21 Q. Was there anything preventing you

23 A, I don't know, no.

22 from withdrawing your motion prior to March 3?

23 A. Yes, there was.
24 Q. What was that?

24 Q, Was there anything preventing you
25 from asking, having now had the chance to

25 A, I gave that some thought.

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315

1 We had agreed in writing as part of
2 3 4 5 6 7 8 9 10 11 the settlement with Crowley to use our best efforts to implement the settlement, the proposed settlement, So that I was then in the position that if I withdrew the settlement it would lead to more litigation from Crowley against me as the trustee, and I thought that it was wiser to let the court decide the issue because then Crowley couldn't say, well, you reneged on your agreement. You owe me $17 million or whatever he was talking about,

1 A, No,
2 Q, SO your obj ecti ve then on March 3 in
3 court was that your application be approved by

4 the court?

5 A, That the court would make the
6 7 8 9 10 decision, I can't make the decision for the court, And a lot of that decision depends on credibility, and I'm not so sure that I was the proper person to determine credibility, since I was part of the plan that was being

12 And, fortunately, I was right
14 decided that Crowley's explanation was

11 submitted to the court,
12 Q. Had your views about Mr, Crowley
13 changed prior to the March 3, 2003 hearing?

13 because what happened is that the court
15 incredible, unbelievable, or whatever the

14 A, Prior to? No. Up until the time I
15 saw the documents, I was in support of the

16 words she used, That relieved me as the
17 trustee of any legal obligation to implement 18 the proposed deal with Crowley,

16 plan, 17 Q, You just told us you saw the
18 documents on February 25.

19 Q. SO you went to court on March 3

19 A, Well, whatever the date was. I made
20 it clear I can't remember the dates. I don't

20 pursuing a motion for approval of the
21 agreement you had entered into with Crowley 22 but secretly hoping that the court would deny

21 propose to.

22 Q. Fine, but my question is: Assuming

23 that motion?

24 A, Oh, no, no --

25 MR. BRESSLER: Object to the

23 you saw the documents for the first time on 24 February 25, looked at them thereafter, talked 25 about them with counsel, had your view of

_ PAGE 138 ~ PAGE 140
2 A. no, no, no. You misunderstood said, 3
4 what I said. I did not say that, 5 Q. Did you also enter into a written
6 agreement with Mr, Crowley to give him a 7 release from litigation?

1 form of the question, That's not what he

314 316
1 Mr, Crowley changed prior to the beginning of 2 that hearing on March 3, 2003?

3 MR, BRESSLER: Obj ect to the
4 form. Asked and answered.
6 7 8 9

5 A, It didn't change definitively.
said that it was going to depend on his explanation of the documents. He was explaining I guess to Kipnes, I don't know that, his interpretation. He didn't see the

8 A, I didn't enter into a written

9 agreement, It was part of the proposal as I
10 recall it, but I'm not sure, Whatever it says

10 documents, et cetera.

11 it says,

11 By the time of the hearing the judge
12 heard under oath and said, in effect,
13 Mr. Crowley, I just don't believe you. When 14 she said that, that reenforced my suspicion 15 that he had not been frank with us,

12 Q. And when you went into court on
13 March 3, had you also signed a document by

14 which Mr, Crowley was going to get $2 million

15 and a release from litigation?

16 MR, BRESSLER: Object to the

17 form, but he can answer,
19 approved,

16 Q, And when did you first form that
17 suspicion?

18 A, Would get it if the plan was
20 Q, And when you went into court on

18 A. When I saw the documents.
20 to the March 3 hearing?

19 Q. So you formed that suspicion prior

21 March 3, was it your unexpressed hope that the
22 court would deny your application?

23 A. No,

21 A. We're going to go through this 22 again. 23 Q, I wasn't asking you about this, sir,
24 but you raised it all on your own. You 25 started telling us what you were thinking

24 MR, BRESSLER: Object to the

25 form,

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EXHIBIT C-5

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IN THE UNITED STATES DISTRICT COURT

FOR TH DISTRCT OF DELAWAR
ARLIN M. ADAMS, as Chapter 11 Truee of
the Banptcy Estates of Coram Healthcare

Case No. 04-1565(SLR) (Jointly Adminstered)

Corp., a Delaware Corporation, and Coram, Inc., a Delaware Corporation,

Plaintiff,
v.

DANIEL D. CROWLEY,
Defendant.

THE CHER 11 TRUSTEE'S ANSWERS TO DEFENDAN DANIEL D. CROWLEY'S FIRST SET OF INTERROGATORIS TO PLAITIFF ARIN M. ADAMS

Plaintiff ArHn M. Adam, the Chapter 11 Trustee (the "Trutee") of

the

Banptcy Estates of Coram Healthcare Corp. and Coram, Inc. (collectively, "Coram"), hereby
L :

responds to Defendat Danel D. Crowley's ("Crowley") Firt Set ofInterogatories to Plaintiff
Arlin M. Adams, as follows:

i.' ! .'.

GENERA OBJECTIONS
The Trustee aserts the followig general objecons, all or which are incorporated

in his specific responses:

1. The Trutee objects to each interrogatory, definition and instrction, to the
extent that it seeks to impose an obligation or burden beyond that required by the Federa Rules
i : ! .

of Civil Procedure.

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2, The Trutee objects to each interrogatory to the extent that it seeks
information subject to the attorney client privilege, or the work product doctre, or any other
privil,ege or doctrne which precludes discover.
3. The Trustee objects to each interogatory to the extent that respondig

would impose an undue burden on the Trutee,
4. The Trustee objects to each interrogatory to the extent that the information

requested is equally available to Crowley.
5. The Trutee objects to each interrogatory to the extent it seeks information

not relevant to ths litigation and not reasonably calculated to lead to the discover of admissible
evidence.

PRESERVATION OF RIGHTS
The Trustee's resonses do not waive and do not intend to waive but, on the
contrary, presere and intend to preserve:

1. All objections as to competency, relevancy, materiality, privilege and

admissibilty for any purose in any subsequent proceeding or the tral of ths or any other
actions;
2. The right to object on any ground to the use of any of these responses, or

the subject matter thereof, in any subsequent proceeding or tral of

this or any other actions;

3. The right to object at any tie to a demand for fuer responses to these

or any other discovery requests involving or relating to the subject matter of

these

interrogatories; and
4. The right at any tie to revise, correct, supplement, clarfy or amend the
, ;

anwers and responses set fort herein.

2

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RESPONSES TO INERROGATORIES
1. Identify and descrbe each act or omission by Crowley that forms the basis

for your allegations that Crowley had a conflct of interest with Coram.

SPECIFIC OBJECTIONS: The Trustee objects to Interrogatory No. 1
on the grounds that it contains undefined terms, is overly broad, vague and ambiguous, and it is

overly burdensome to identify and descrbe every act Crowley underook or failed to undertake
over a several-year period that underlies the Trustee's allegations that he had a conflict of

interest. Subject to these objections, the Trutee wil provide a combined response to
Interrogatories 1 though 4.

2. Identify and describe each act or omission by Crowley that forms the bass

for your allegations that Crowley breached his duty to Coram to act in good faith,

SPECIFIC OBJECTIONS: The Trustee objects to Interogatory No.2
on the grounds that it is overly broad, vague and ambiguous, and it is overly burdensome to

identify and describe every act Crowley undertook or failed to undertake over a several-year
perod that underlies the Trustee's allegations that he breached his duty to Coram to act in good
faith. Subjec to these objections, the Trustee will provide a combined response to

Interrogatories 1 though 4.

3, Identify and describe each act or omission by Crowley that forms the basis

for your alegations tht Crowley breached his duty to Cora to act with due cae.

SPECIFIC OBJECTIONS: The Trustee objects to Interrogatory No.3
on the grounds that it is overly broad, vague and ambiguous, and it is overly burdensome to
3
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identify and descrbe every act Crowley undertook or failed to underake over a several-year
period that underlies the Trustee's allegations that he breached his duty to Coram to act with due
care. Subject to these objections, the Trustee will provide a combined response to Interrogatories

1 though 4.

4. Identify and descrbe each act or omission by Crowley that forms the basis

for your alegations that Crowley breached IDS duty ofloyalty to Coram.

SPECIFIC OBJECTIONS: The Trustee objects to Interrogatory No.4
on the grounds that it is overly broad, vague and ambiguous, and it is overly burdenome to
identify and descrbe ever act Crowley undertook or failed to undertake over a several-year

period that underlies the Trustee's allegations that he had a breached his duty ofloyalty to Coram. Subject to these objections, the Trustee will provide a combined response to
Interrogatories 1 through 4.

COMBINED RESPONSE TO INTERROGATORIS 1 THROUGH 4:
Subject to and without waiving the foregoing objectons, the Trustee resonds to
acts, which form the basis of Interrogatories I though 4 by setting fort ils sumar off

his

allegations that Crowley had a conflct of interest and breached the trad of fiduciary duties that
he owed to Cora as an offcer and director:

From approximately 1997 on, Cerberus Parers, L.P. ("Cerberu"), together with

Goldman Sachs Credit Parers L.P., and Wells Fargo Fooilll (collectively, the ''Noteholders''),

owned substantially all of Coram's debt. Cerbers is a major investor in the debt of numerous
distressed companies; it alone held approximately 36% of

Coram's debt. The chairman of

¡ ;

i,
4
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Cerberus, Stephen Feinberg ("Feinberg"), sat on Coram's Board from 1998 until July 2000,

shortly before Coram fied for banptcy. Cerberus maintaied a "bench" of CEO consultants,
who were avaiable to work for Cerberus with troubled companies on a project-by-project basis.

In early 1999, Cerberus retained Crowley as a tuaround constant. In July

1999, Crowley and Cerbers entered into an oral agreement under which Crowley agreed to
work exclusively for Cerberus for thee yeas at a salar of $80,000 per month plus expenes,

with the possibilty of substantial bonuses.
In August 1999, after Crowley and Cerberu had entered into their oral agreement
Feinberg recommended to Coram's Board of

Directors (the "Board") that it hie Crowley as a

consultant to work with Coram's newly-elevated CEO, Richard Smith ("Smith"). Feinberg
disclosed to the directors that Crowley had a relationship with Cerberus, but provided no
information about that relationship.
After Smith left Coram in October 1999, Crowley wrote to Cora Chairman

Donald Amaral ("Amaral"), on October 26, 1999. il that letter, Crowley stated that he and
Smith had a "six(6) month crisis management contract in place," and that he "would like to help
you (Amaral) with this project and begi the restrcturing process." Crowley and Amaral began
negotiations on an employment agreeent no later than early November 1999.

At the same time as he was negotiating with Amaral to be Coram's CEO,

Crowley sent a "Personal & Confdential" letter dated November 12, 1999 to Feinberg stating
that "(y)ou (Feinberg)have asked me to take over the Coram operations" and requestng

additional compensation from Cerberus to induce hi to become CEO of Coram.

I,
5
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The Noteholders offered Coram a six-month interest accral holiday if Crowley

was hired as CEO, On November 15,1999, Amaral and the Noteholders agreed on the terms of
the interest forbearance agreement.
On November 17, 1999, the Board approved a thee-year employment agreement

with Crowley, which he signed the next day (the "Crowley/Coram Employment Agreement").
The Crowley/Coram Employment Agreement provided for a base salar of $650,000, benefits,
potential bonuses of

between $390,000 and $1,950,000 depending on Coram's EBITDA, a

mium 24-month severance period, options to purchase one million shares of Coram stock at
then market rates, and an acquisition bonus upon change in control.

The day after he signed the Crowley/Coram Employment Agreement, Crowley

executed a written employment agreement with Cerberu, effective Augut 1, 1999, which
memorialized the terms oftheir July oral agreement (the "Crowley/Cerberus Employment
Agreement"). The Crowley/Cerberus Employment Agreement required Crowley to devote "his
entie business time, attention, skill and energy exclusively to the business of (Cerberus)" by

performing duties to be assigned by Feinberg, The Crowley/Cerberus Employment Agreement
also provided that Cerbers could terminate Crowley for cause if Crowley did not follow

Cerberus' reasonable instrctions. Neither Crowley nor Feinberg disclosed to the Board the

existence or ters of the Crowley/Cerberus Employment Agreement.

Coram's corporate policy provided that actual conflicts of interest must be

avoided and that any action creatig a potential confct of interest must be disclosed and
approved in advance. Crowley faied to seek Board approval of

his employment contract with

! ' i

Cerberus.

6

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Crowley signed the management letter to Coram's outside auditors for the year

endig December 31, 1999, in which he stated that "(t)here are no instances where any offcer or
employee of

(Coram) has an interest in a company, with which (Coram) does business that

would be considered a 'conflict of

interest,' that has not been disclosed or waived. Such an

interest would be contrar to (Coram) policy,"
Coram retained Crowley's wholly-owned consultig company, Dynamc

("Dynamc") Health Care Solutions, L.L.C. ("Dynamc"), to act as a consultant to Coram, which
paid fees to Dynamic in excess of $ 1 milion.
On Februar 28, 2000, Crowley wrote to the Board and demanded additional

compensation from Coram, claiming that he was workig 19-hour days, and that "Coram will
take longer, involve more, and will need me to stay 'on task' for much longer than we envisioned
when I said 'Yes.''' Crowley did not disclose

to the Board that while he was allegedly working

19-hour days for Coram, Cerberu was paying him $80,000 per month.

In response to Crowley's demand for additional compensation from Coram,

Feinberg and Crowley negotiated an amendment to the Crowley/Coram Employment Agreement

with Coram, which was executed as of April 6, 2000, The amendment provided a new bonus
strctue that was far greater than the maximum $1.9 milion bonus for which Crowley was

eligible under the employment agreeent that he had signed just four months earlier. Under the
up to 25% of new arangement, Crowley could claim a bonus of

the amount by which Coram's

EBITDA for 2000 exceeded $14 milion and an additional $5 millon bonus ifEBITDA
exceeded $35 milion.

7

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At the tie Crowley and Feinberg were negotiating the amendment to the

Crowley/Coram Employment Agreement, Crowley anticipated that Coram would be restrcted
by filing a banptcy petition under Chapter 11 with a proposed plan of reorganzation that

would eliminate the public shareholders without any payment to them. Neverteless, between

November 30, 1999 and July 31, 2000, Crowley caused Coram to pay the Noteholders
approximately $60 millon, These payments included: (a) much of

the proceeds from Coram's

July 2000 sale of

its specialty pharacy division, Coram Prescription Serces ("CPS") (nearly

$40 millon); and (b) an additional $6.3 milion payment that Crowley made to the Noteholders

just thee weeks before Coram declared banptcy.
money, it had excellent
Although the CPS division was losing a small amount of

long-term profit potential, CPS had been valued in excess of$100 millon by Coram's
investment baners, but was sold for approximately $40 milion.

On August 8, 2000, Coram filed a Chapter 11 petition in the U ,S. Banptcy
Court for the District of

Delaware, together with a proposed plan ofreorgaijzation (the "First

the shaeholders' interests and for
Plan"), The First Plan provided for the cancellation of all of all of

the issuance of

the new Coram stock to the Noteholders. Coram's other unecued

creditors would receive $2 millon and Coram's shareholders would receive nothing.

On October 18, 2000, the United States Trustee appointed an Offcial Committee
of

Equity Securty Holders (the "Equity Committee") to represent the interests of Coram's

common shareholders. The Equity Commttee obtained the Crowley/Cerberus Employment

Agreement and other documents in discover in connection with the First Plan, which the Equity
Committee opposed.

8

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Durg the confinnation hearing, Crowley testified that the Crowley/Cerberus
Employment Agreement -- which provided for payments signficatly greater than did his

agreement with Cora -- had nothng to do with Coram. The Cour did not fid Crowley's

position credible. Rather, on December 21, 2000, the Banptcy Cour denied confiation,
holding that Coram had not proposed its reorganzation plan in good faith as required under the

Banptcy Code. In its oral ruling, the Banptcy Cour explained that it could not conf the