Free Appendix - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR

Document 139-4

Filed 05/04/2007

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J

e

Adams - Cross /Levy
1 A
I think I would have. It's hard to say.
It's a

143

2 hypothetical question, but I suspect yes. I don't know.

3 Q And you would have asked him what suspension meant.

4 A Probably.
5 Q And in ':,.our inind there is a d5.st.inction between te.rinina e
6 and suspend, isn't there?

-l A I think there is.

8 Q And that distinction iS, if you terminate it it's ended
9 period. If you suspend it, it's held kind or On abeyance,

10 correct? 11 A Ordinarily I would think that's correct. I would think I in

e

12 this instance what he's talking about, this is all
13 hypothetical, because I didn't have the document -14

MR. LEVY: Your Honor, I'm going to ask the witnes

15 confine his answer to my question.

16
17
18

THE COORT: Yeah, there's no question pending.

THE WITNESS: Right.

THE COURT: No question pending.

19 BY t-1R. LEVY:

20 Q Crowley -- t-1r. Crowley, he never told you about these
21 suspension documents during the many phone call s you had wit!
22 him between March and last week actually, did he?

.

23 A

Until you showed me these documents at the deposition,

7.4 was not ai.iarc of these documents. What they mean -- I take õ
25 di fferent meaning from Lhem than YOll do, but you clon't want 0

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Adams - Cross/Levy

1 hear that, so I won't .:.nswer that.
2 Q Well, let me ask you this, .Judge Adams. NmoJ t.hat you'v,

144

:3 seen these docwnents, ,'JOuld you agn~(o: it would have been man
4 open and candid for Mr. Crowley to havo shown you these

r-¡ documents when he met with you in Denver?

6 A Well, I don't like to be as judgmental as you about a
7 subject that I really know nothing abQut it. I nGV8r sa.w thE

8 documønts. I don't know the. people. These wer8 before I wa~

9 the Trustee. Sure, I'd like to see everythinq, just. like a
10 court does. More candid? I don't want to put a

.

11 characterization on there. He may have a good reason.

I dor' t

J 2 know. I haven't discussed them. 13 Q Do you think it would have been more open of him to shm
14 them to you.?

15 J!.

lriell, you're cha.racterizitiq it. The Court can decide trat
I don't mean to, E~ir, su let me read you ag2Ün from Pa9E

16 as well as I can.

17 Q

18 157 of your deposition, what you said about them.

19 Beginning at Line 4. I said, "Did you fee) at that poir t
20 in time, March, April i did you feel that. t-1r. Crowley was beit 9

21 completely open with you ilbout his relations and di scussions
22 wìth Cerberus?"

.

23 Answer, "Well, now that you've shown me some of these

24 documents, perhaps Lo be completely open, I guess r he should 25 ha\re sho\,,n ine copies of these & He did not 1 to my r:ecoiiectic n.

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Adams - Cro;3s/Levy

14.5

1 I don't want to char.a.cterize ,,¡hat he vias doing.

I don't. do

? that."

3 Did I ask that question, sir?
4 A. You did.
.5 Q Did you give that ans\ver?

6 A It's the same anSWOr I'm gi viog todQy.

7 Q Sir, did I ask the queslion? nid you give tha t answer?

8 A Yús r it f s the same answer that I'm 9i ving today. 9 Q Actually you would have preferred that he had made
10 everything available to you; isn't that correct?

.

11 A

You say everything. I don't know what you mean by -- you

12 mean these documents

or
'cause I need
I' ii

13 Q

Again, 'sir, leI. me pull that question,

14 another document t.o do it, and we'll get back to it.

i 5 withdraw the question. I
i. The next document, which i. Equity Co~ittee ..hiblt 5 -~
17 I'm sorry -- is a letter formerly marked Trustee Exhibit 12.
18 It's a letter that appears to be from Scott Schreiber,
.19 some\oJher.e over in that crowd, to 1',Üchael Cook, who is

20 Cerberus's lawyer, and this one is dated February 18th.

21 Now, this letter was also written before you met Mr.
22 Crowley, correct?
23 A

Correct.
And it says that Crowley was waiving his $80,000 retainß

24 Q

25 from Cerberus for the last two months and that he had not bee

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Adams - Cross/Levy 46
1 paid money from five other investments in which he assisted

2 Cerberus, con:ect.?
3 You see that?
4 A Docs this doci-merit say what you've read? The arwwe:c is
5
6
7

yes.
Q

That was my question, s' r
Now, you would agree that a waiver of a retainer for tw

8 months is not the same thing as terminating a contract or in

9 this case a contract between Cerberus and Crowley. Would yo

10 agree with that.?

.

11 A I don'L think I can ~nswer that question in a vacuum.
12 neve.r sa"i this document imtil last week when you showed it t

13 me for the first time. Haven't had it in my possession _ Yo
1~ or somebody else have had it. You're showing' it to me again
15 You're asking me for a legal opinion whether a waiver is a

16 termination?
lJ Q
Well, sir, let me respond as follows --

18.n, I can't give it t.Q you.

19 Q I got this document the day before I showed it to you, nd
20 .I'm not asking for a legal opinion. I sÜnply want your -- i
21 this a document that you wish you had seen on March 25th aft r

22 Crowley told you he had terminated -23 A
Reing the workaholic that I am, and that you know that

24 am, Sure I would want to see everything possibl8, citations nd
25 all that, but that's not what you're asking me.

I don't thii t;:

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-

Adams - Cross/Levy
i so.
2

147

You're asking me for a hypothetical answer.

I would viai t

3 to see e\rer,yth.i ng .

I'd want to see your notes, I would want to

4 SSe everything, of ~ourBe.
5
Q

1'he ne;\~t document, EquiLy Committee 6, iS a document
THE COURT:

6

Please don't walk away from the

--I

7 microphone and -- you can keep your voice up.
8

MR. LEVY:

I'm sorry.
The

9 BY MR. LEVY:

10 Q

Equity Cornrnittce 6, sir, appears to be t.wo emails.

.

11 first one, which is on the bottom, iS from Sc6tt Schreiber, l r.

1~ Crowley' 8 lawyer, to Mich~el Cook, who of course is Cerberus's

13 lawyer, and on the top is his response.
14

And in the first one, it's dated April 6, Mr. Crowley's

15 lawyer says, "Mike, I'd appreciate it if you would keep our
16 conversations re t.erminating Dan's contract between us and a r

17 clients for now. No other attorneys, nor the trustee, need 0
18 be part of those conversations until Dan and Cerberus decide

19 that's the way to go. Thanks. Scott. H

20

And Mr. Cook responds, it looks like one minute later, 'No

21 problem.
22

Has there been 'a leak? I krim.¡ of none."

Now, I guess the first question J' d ask, sir, is this

23 shows that even as late as April the contract hadn' t be~n

24 terminated, even though Mr. Crowley told you in March lL ha
25 Would you agree with that? Is that your understanding of th

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Ii II

.

Adùms - Cross/Levy
1 docuine.nt?

I

148
I

2 A This document that you've shown me, EC-6, would
3 that they were working On terminating the contract,

i

indicatd
but that I

4 had not been finalizecl.
5 Q If you had seen this document on March 25th or 26th it
6 might have -- it could have affected your views as to whethe.
7 there was a conflict; isn't that correct '?

8 l\

It could havo.

I would have said, if he had shown me

9 this, "Now, Dan, I don't under.:;tand i.t. You've just assured ne

10 that you have no other relationship between yourself and

.

11 Cerberus except for this claim that you have. How do you

l2
13

explain this?" That's what I would h~ve done,
opportunity to explain
i L.

given him ê:ri

. .i

11 Now, SOme of the other documents indicate that he made a
15 distinction between terminating a contract ancl suspending a

16 contract.

I don't know whether that distinction iS a valid

17 distinction, but he thought so.

In other words, what he was

18 saying, I don't want to say that my contract with Cerberus is
19 completely terminated, because that will prej udice my c1 aim,

20 but we are not gettin~l anything from them, and subject to tha ,

21 that's ,,,hat I'm t.elling you. 22 Now, that's as I understoüd what he was saying.

.

23 Q

Does it trouble you at all, sir, as you sit here that M .

24 Crowley's lawyor who presumably speaks for Mr.. Crowley, wnnte

25 to keep this fact from you?

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Adams - CroBs/Levy

L

1 lì \f/(~ll, I don't know why he cLid. Sü, I don't want to jum¡

2 to a conclusion. I don't like to do t.hat.
3 Q Ililve you asked
.1"P. T' ve never tal keel to him. about th j s, and he might have ¡;

.: completely valid reason. I don't kno\,¡.

6 Q Woll, toirr yoU saw this last i.ieek. Have you m,3de any
7 effort to ask him 5i.nee then?

8 A I really don't know this gentleman at all, no, and I
9 understand he was tied up in depositions.
10 Q
It's a fact, isn't it, that up until your deposition laet

.

11 week you did not believe that there was a continuing

12 relationship betweon Cerberus and Crowley other than for
13 Crowley pursuing his claim and providing free advice?

1I A
1ti Q

Correct.
Did the next document, EC-6, formerly marked Trustee's

16 Exhibit 17 is a letter to you from Mr. Crowley dated April
17
1n 0
:i 9

10th.
A
Q

You received that --

Correct.
-- about that date, sir?

20
21

A
Q

Correct.
And on the second page Mr. Crowley expresses his desire or

7.2 t.o put it more precisely it. says, "The items on which \.¡e neec

.

/.3 direction are --" and one of the items, number 6, is the ten s

24 for termination of the Crowley/Cerberus contract_

25 A

Correct.

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.

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Adams - Cross/Levy
1
Q
lL,

I'm through with that document, Sir.

JSO
I

2

Is there a question that I __

3
4

Q
A.

No, there's not.
Oh, ol':ay.
Judge Adams, when you signed the transition agreement,

:1

l

5

Q

6 which is before the Court now, were you aware from any of you
7 conversations with Mr. Crowley that in early May of 2002 that
8 Mr. Crowl ey had -- Mr. Feinberg, rather, had invited Mr.

9 Crowley to Ne\-J York to have dinner to talk about re.'3ol vi ng

10 t.heir differences?
11 À

I ,,,as not aware.
And were you aware when you signed the transition

1)

12 Q

13 agreement that a few days, five days, after having that rneeti 9
14 with Mr. Feinberg, Mr. Crowley wrote a document consisting of
15 three pages which he ended by saying, "I just --" a document i e

16 called a draft consisting of three pages, in which he sdid, ".
17 just wùnted you to know how I'm feeling on this pa.rticular

18 day."
19

MR. SCHREIBER: Your Honor, I have to obiect.

I

20 lhj nk the letter __

21

THE COURT; You can't be heard, though, unloss you

22 speak into the m.icrophone.

.
-'V
." '..:~%':.~'l~'::~ '_ .: ~.

23

MR. SCHREIBER: Your Honor, I have to object.

The

~4
2'" ..J

letter that Mr. -- the document that Mr. Levy is referrinq to

he he~rd much testimony about is a three-page document, two

i

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1

Adams - Cross/Levy pages of which were written by Mr. Crowl ey and one page

151

that !I
2 was VJl'i t l.:en by me.
3

II II

To have it now described as a letter written by Mr.

4 Crowley is, not only contrudictory to the prior evidence, but
5 it r s rni.:::leadinq diid j List not t:rue_
i

6

MR, LEVY:

I' i 1 ùmend that.

I wiii call it -- let e

7 re-sta te the question.

8 BY MR. LEVY:

9 Q Were you aware five days after lhj s meeting with Mr.
10 F'einberg, lhat Mr. Crowley h-imse1.f typed two pages that he

11 callod a draft that he then sent his lawyer which he conclude

)

12 by saying, "I just \..anted you to know how I'm feeling ()f this

13 particular day?"

14 A

I was not aware of that -- or tha t document, whatever it

15 ls. I don't know what it is. I can't. see it.

16 Q

And were you awaro that attached to that dOCument was a

17 sheet written, as Mr. Schreiber has just said, by him, Mr.

18 Schreiber?

19 p,
20 Q
21

I Wds not awa re.
Okay. Let's mark than as Equity Committee Exhibit
THE COURT: You can't be heard, Mr. Levy.

22

MR. LEVY: Let's mark then as Equity Committee

.

23 Exhibit 8.
24
r, C /,..

exh-i.bi t

Your Honor, I have a b.1ow-up of this which \-iith your permission l' cl lJko

rema l k.¿¡b 1 e

to put

on

the

::~,"5:~t" ;'~~l, ~'" ¿"t' : ~i'- ; ~ f~ ~ . J

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Adams - Crass/Levy
1
7.

!

tripod, perhaps over there with tho witness,

and Your Hoiiar

152
1¿:Ui
I I

-- over here with the witness _
THE COURT:
MR.

') .J

You may.
I'1ay

4

LEVY;

I

CLO

that::'

5
6

THE COURT:
MR.

Yes.

LEVY;

Just put

up

the

first --

'i Does t.hat help you read it from there, Your Honor, i r
8 would you rather look at it yourself?
9

THE COURT: I've got the --

10 BY ~1R. LEVY:

,

1JQ

First question, sir, is that you'll see on the page mark d

12 CRX-63 Mr. Feinberg writes -- I'm sorry. Mr. Crowley writes 'n
13 this document, "t-1r. Bressler has told me that hG/Trustee don'

14 want to give us/me advice about ending the contract or my

15 getting paid. He ~lso said we have smart lawyers and he's 8U e
16 they can figure out how to get me paid. lIe has no objection

0

17 my being paid for work done Or for tGrmill')

" presumabl y

18 meaning terminating -- "the contracl. n 19 Now, my question, sir, is djd you authorize Mr. Bressler
20 21
22

to say that
A
Q

on your

behalf?
him as such.

I

did not

authori ze

.

23

A

sorry, I can't hear you. I did not authorize him as such.
I'm

I r.ecall he came

in to

24 See me and said, "Do you think we should get involved in this

25 subj oct '?

'~:-:2¥~;f:.lP-~,::-,_~-'~~-:~ -'~, -:,'~'~-:~!~f~.)~' ;-,-". ~:',:" C,;; ~:~:'.:'_,;.~

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Adams - Cross/Levy 153
1

I said, "No, that's nOne of our business _ I'm trying t(

2 run Coram. They have tho ir own 1 awye rs . n
3 That I do remember.

1 Q Okay, now I' à ask you to look at t.he second page "Jhere n
5 the first paragraph it says in this draft, at the boltom of he
6 page Mr. Crowley says how he was feeling on this particular
7 day. "I th.i nk that Friedman did a terTÌble job hanc!lin(j thi~

8 caS¡3. He mis-i'dvised me, didn't focus properly, fully prepa ed

9 me. Didn't handle most

i.lY important aspect of this ca:3e

10 cOITBctly. That's sad. I know I didn't have to hire Friedm¿n

.

11 just 'cause you recommended hirn.I did it on my own. And I
12 didn't have to recite the answers tlw.t Friedman gave me: to t3i y

13 in Gourt,"

14 Now, sir, when you entered into the transition agreemen
15 did you know that Mr. Crowley had written a draft suggesting
16 that he recited answers given to him by his attorney when he
i 7 testified before this court'?
1.8 1\

I was not aware of t.his document.

1 SJ Q

And move on, if you would, to the next paragraph.

"1

20 suppose if I had been more trusting, maybe, n paren, maybe, "
2 i would not have written Lhe memo about trying Lo get ups~de or

22 your position if I did a great job at Coram."

.

23 Now, you didn' L know then, sir, but perhaps you know nov

24 let. me interrupt that question and mark as EC-9 a copy of a
25 document marked during actually the first hearing back in 20( 0

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Adams - Cross/Levy

54

1 as EC-20.

2 Now, I'll ask tho question again, and say you dic~' t kn

3 then but perhaps you know now that the memo Mr. Fe i.l1berg __
4 that Mr. -- please forgiva me. Mr. -- that Mr. Crowley appe; £s
5 to be referring to was this EC-20, which Judge Walrath found in
6 her first opinioii to be evidence that Crowley was trying to
7 hide his relationship with Cerbel."U5. You dìdn't kno,;ý that, i id

8 :,'ou'?
9 A I never saw thi s document until the deposition.

10 Q

Now, sir, ploase turn to the last page. And I will

.

11 represent to you, actually I don't need to, Mr. Schreiber
12
1":¡ _J

himself has said that he wrote Page 65, and thal the word
"insertU is in his, Mr. Schreiber's -- Mr. Crowley's

14 handiiiri ting.
lS
MR. MILLER: Your Honor r I heard him say Mr.

1.6 Schreiber and then Mr. Crowley' s handwritinSJ.

17 18

THE COURT: You can't be heard.

MR. MILLER: I'm sorry.
'l HE COURT:

19

Mr, ('Eller,

do

you want to obj ect on th
i i i

20
21

record?
MR. MILLER: I just want a clarificati on __

22

MR. LEVY: I appreciate that, and Obviously I belle-

.
, ;: ;;i¡(. ~x'~ ~,--~: ~_,' ,;~'~ . ~

23 ask the question again.

? 4 BY t-1p.. LEVY:

25 Q

I'm going to represent to you, sir, that Mr. Crowley

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Adams - Cross /IAVY 55
i testified that Page CRX-65 was written by Mr. Schreiber, his

2 lawyer, and that the word "insert" on Page CRX-65 is in the
3 handvn:-iting of ~1r. Schreiber, Obìy?

4 Now, you did not Know, obviously ( the existence of CRX- 5
5 when you signed the transition agreement, did you?

6 A COIT8Ct.

7 Q And you certainly didn't know of it when you asked this
8 Court to approve the transition agreement.

9 A Coi:rect.
10

Q You didn't know that Mr. Crowley's lawyer had written ai
insert stating that Mr. Fej nberg had made a cownitment to pa.

.

11

12 Mr. Crowley the difference between $ 11.2 million and whatcve

13 compensation he recei vael from Coram.
14 A
1S Q
I did not know.

You didn't know that.

16 A
17 Q

No, I did not.
Now, do you recall that the figure of $11 million or

18 $11,200,000 came to your mind as the approximate amount of ~1 .
19 Crowley's claim against Coram?

20 A Vaguely remember that. T didn't knov, ,,,hat his specific
21 claim was, but somebody must have mentioned that figure.

22 Q Well, let's see -- I think that's what you said in your

.

23 deposition, but let's get it clear. On Page 214, beginning t
24 Line 7, I said, "At this time how big was -- how bi g did you
25 understand that Mr. Crowley's claim against Coram to be? U

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Adams - Cross /Levy
1

I

,56

And answer, ~For Some reason the filing of $11 million
I'm not sure of that. N

2 COTTles into iny mind.

J
4

A
Q

The filling or the figuro.

Let me finish, please, sir.
Question, "Does $11,200, 000 sound about right?"

5

6
"j

Answer, "Could be."
Now, did I as~ those questions, did you give that 8nswe ?
l'
I don't remember the \oJord "filing." That soems di.scord nt

8

9 to me.

10

THE COURT: Mr. Levy, I'm not Sure this is helpful.

11 It's not different from what he's saying here.

"

12

MR. LEVY: Okay.
THE COORT: And gi ven the 1 imited Lime we have,

1.

14 unless he says somothing drastically different
:i 5

MR. LEVY: I'll move right along.

16

THE COURT: -- from his deposition, I'd appreciate

17 you relying on his testimony here.

18

MR. LEVY: Of course.
THE COURT: You can't be hCDrd.

19

20

MR. BEATIE: T assure you I can be heard, Your Hono .

21 Can you hear me now?

22

THE WITNESS: No, you have to go to the microphone.

.

23

THE COURT; No, the tape system cannot hear you, so

24 you must speak into a microphone.

25

And identify yourself for the record, please.

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Adams - Cross/Lévy 57
1

MR. BEATIE: Your Honor, my name iS Russell Beatio

2 The Court has granted my application pro hac vico to appear
3 here, and I appreciate that.
4

I am counsel for Mr. Stephen Feinberg. I have bit my

5 tonC;Lì8 all morning long, Your I!onor, and not mado objp.ctions,

6 because I'm told that the Court wishes to proceed and not

7 engage in pedafogging Over the rules of evidence, but I take
8 this moment to tell the Court that I am confident that
9 absolutely overy document. vihich has been intencled to impeach
10 .Judge A.clams with the -- aha, I got you, has not been

.

11 inconsistent with his testimony. And I wOuld appreciate it . f
12 Mr. Levy would stop that 50 that we could all finish today a1d

13 not g.1 ve the im.pression that somehow he ìõ;, making headway i
14 against a witness whose integrity has not been touched.

15 Thank you.
i 6

THE COURT: All right.

17 BY MR. LEVY:

18 Q

And continuing to r.efer to Lhi~ dociiment, EC-8.

19 l\
20 Q

Yes, sir.

Okay. You didn't know when you signed the transition

~ 1 agreement that Mr. Crowley's lawyer had written an insert
22 stating that Mr. Feinberg h.:35 made a commitment t.o Mr. Crowl y

23 to make a five-million-düllar payment onco this case is over.

24 A

I did not know about this document.

I didn't krìü\'¡

25 anything about Cerberus.

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Adams - Cross/Levy

i Q

And you don't know today.
158
I

2 A I don't know -- I don't know Mr. Feinberg. I've never
3 the man.

4 Q You don't know today, sir, whether that conunitment exis
5 do you?

6 Ii I don't know anything about t.his. I've never Seen it.

7 Q Now, the fact, sir, regardless of whether there is a
8 coilliÜlment Qr there 1.3 not a corrunitment, the

fact that t-1r.

9 Crowley thought that he was faeling on May 5th that he had
10 these comnii trnents, is that .something that you would Ii ke to

.

1 i have known about before you ente~ed into the transition
12 r.9reement?

13

MR. BRESSLER: I'll object to the form. There's no

14 foundation as Lo what Mr. Crowley may have thought, and I don't
15 know how actually Mr. Levy would know.

16
17
BY t"lB..
Q

THE COURT: Sustained. Sustained.
LEVY;

18
:i 9

The n(Jxt document., EC-9.
THE COURT:

Ten.

20 21
BY t"lR.

TIlE WITNESS:

Ten.

Thank you.

LEVY:

22 Q

Is a letter or a piece of paper to avoid conflict -- I'm

.

23 sorry. I have the wrong document.
24

I have the right document. Is a letter which includes a

25 redacted stand sent h/o days later -- strike that. Dated two

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1
') "-

1159

days later signed by Mr. Crowley and containing his hanijwri t~nq
i -

on the first page where he wrote, "Steve. U

3

MR. BRESSLER: I'll object to the form, since Mr.

4 Levy went to go back with the document. He's had plenty of
5 testimony that this was another unsent draft, not a letter.
6
7 ß

THE COURT: Well, overruled.
I s there a question pending?

MR. LEVY: Yes, there is, Your Honor.

9
J0

THE COURT: What is it?

MR. LEVY: The question is you haven't seen this

.

11

letter.
THE WITNESS: I !i¿.d not seen this letter, if it is a

12

13

letter.
Q A
Q
A.

I don't know what it

i. .. . ,.

14 BY ¡"JR. LEVY:

15 16
17
18

You haven't seen this -I haven't seen this document.
-- this exhibit, lhank you, sj r.

I have not seen this document, which is marked EC-10.

19

Q

And you notice in the back document that once again it s

20 suggested, whatever this document is by Mr. CrowJey, that he

21 was o\oled $5 million for non-Coram work in early terminai_ion c f
22 the agreement .,md that he had a conuui trnent for thàt amount.

.

23 1\
24

I see the second from the last paragraph which seems to

indicate that.
Q Thank you.
And you would have wanted to know if your CEO

25

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I

.

/

Adams - Cross/Levy 60
1 had êl commitment to receivC' $5 million from COL",m's princj.pa

2 creditor, wouldn't you?

3 l' I want to know all the facts 1 could know about any
4 situation I'm in. You know me well enough to know that.

5 MR. L~VY: Your Honor, I wonder if we could take a

6 five-minute recess, both because I th i nk I need it and to
7 assemble these papers.
8

THE COURT:

Any
let' 5

objection?
take
a

9

All right,
MR.

shOrt rece.3,g.

10

LEVY:

Thank you, Your Honor.
You

.

11 12

THE COURT:

should not discuss your tes L imony

with

':iour

attorney in the interim.
THE IIlITNESS: Thank you, Your Honor.

13
14

(Recess)
THE COURT: You may begin.
BY HR. LEVY:

15

16
17

Q Judge Adams, If ii try and hurry along here.

I wonder if

18 you put Trustee Exhibit 1, which is the transition agreement in
19 a place where you Celn get to it?

20?, Okay, got it.
21 Q You decided, sir, that you supported a raise for Mr.
22 Crowley from $48,000 a month to $80,000 a month.

.

23 A
24

That's correct.
MR. BRESSLER: I'm going to object to the form, Yoi r

25 Honor. The numbers are inaccurate.

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1

61

THE COURT:

Sustatned.

2 BY NR. LEVY:

3 Q I'm sorry, S54,OOO a month to $80,000 a month.

4 1ì Cor rect .
5 Q Thank you. And to gjve him a stay bonus of a millIon
6 dollars if he st.ays for six months.

7 A If ho stays, right.
8 Q Right, and get $200,000 no..1 for legal fees.

9 A Correct.
10 Q
And those were legal fees for defending himself in this

.

11 court, correct?

12 A

Well, I don't know whether he's defending himself in this

13 court. I thought it was involved in the whole documentation of
14 the retention agreement.
:15

16
i 7

heard. Can you -- ~
THE WITNESS: I don't k.nm" -- we didn't know that _ y_ 1)
about this procoeding in court when we entered into this.

TIlE COURT; E:-cuse rni., Judge Adams. You um't be

18 were going to object to it. I didn't know abou~ retention _
19

20 Q

Well, did you knoi-i -- do you know as you sit here what

I i

21 that $200,000 legal fee reimbursement is for?
I

22

A.

No, ho hils to submit bills to us and in no C;:1se -- the c~p

23 is $200,000. I don't know what the bills are going to say.

24 Q

And he gets the million dollars after six months whether a

25 plan is confirmed -- let's see, that'd be the end of June.

I

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I

.
2
3
4
,J
i:

I

Adams - Cross/Levy
A

II

¡lfî2
r

Correct.
Correct?
Coi:i:ect.
And you have not yet filed a plan.

0
1\
Q

A

No, we would have filed a plan had this proceeding not

6 unfolded. We had hoped to file a plan in January, in the
7 latter part of January. I think \013 will be filing On(3 now in

8 Apr.il, hopefully in Apri l.

9 Q And the hearing on the disclosure statement as Mr.
10 Bressler said was May. You've considered the possibility tha

,

11 the plan may not be confirmilble before the end of ,June, haven t
12 you?

13 A Possibly, sure.
14 Q
And in that case Mr. Crowley could exer -- by notice

l5 refuse to extend his agreement, correct?

16 A
17 Q

He can, and we have tho same privilege.

Of course you do. And have you taken any precautions to

1S ensure that as a condition of staying on past June 30th he
19 won't ask for an additional SLely bonus?

20 A

Have I taken any precautions to make Sure he won't? No, I
Now, you submitted the appliceltion before the Court,

21 can't control him in the future.
?2 Q

.

23 that' 5 now before the Court, on January 24th.
24 A
25 Q

Correct.
But actually, let's sGe, two and a half weeks earliór yo

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l

.

ndams - Cross/Levy 63
1 and iVJr. Crowley had entered into a document that is characloi
:?

-- that's dated January 7th, and that's çha racterized 8S a
settlement agreement.

3
4

A Correct.
MR. BRESSLER: 1'11 object to the form, Your Honor.
It says on its face it's a letter of intent. I'd also object
It. '''ou d

5
6

7 that it is not relevant to the proceoding before us, 8 be relevant to a plan_

9 THE COURT: Overruled. Is it marked?
10 BY ~lR. LEVY;

.

11 Q

I've put. in front of you -- and this Equity Committee

12 Exhj bit 11 w¿is signed by you and \Ú18 signed by ~4r. Ci'owl.ey or

13 or about January 7th; i s that correct?
14 A
i 5

That' oS correct.

MR. LEVY: I think we can stipulate to that, Mr.

16 Bressler?
17

MR. BRESSL~R: I agree.

i 8 BY MR. LEVY:
19

Q And 'lOll never characterized this supplemental agreement as
a letter of intent, did you')
A
Q

20
21 22

Did I?

Yes, I did.

If

you look

at --

.

23

A

read you then from Page -- I'm sorry? -- Paragraph 2, "This letter will serve to reflect that
Let
me
I do.

24 intent." You see tha t?

25 Q

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I
i

Adams - Cross/Levy

6$ 'I

~

1 Q

Now, this supplGmental agreement that you have in front 0

2 you contemplates that Mr. Crowley will get a complaint release
3 from all claims for damages to the company resulting from his
4 conflict of interest if il plan is confirmed, correct?
5

HR, BRE:SSLE:R: Your Honor, I'd like a continuing

6 obj action Lo the roference to it as supplemental agreement.

7 The witness just said he viewed it as a letter of intent.
8 9

THE COURT: Overruled.
THE WITNESS: What's the question, please?

10 BY MR. LEVY:

11 Q

The supplemental agroement contemplates that l-1r. CrO\..lay

)

12
1".)

wiii get a complete release from all cJ aims for damages to the

company resulting from his conflict of interest, correct?

14 A 15 Q

Only i£ the Court upproves it. I f the Court approves j t .
Eight.
But you agreed to it, subject to Judge Walrath's approval
Subj ect to thc Court' 3 approval.
I

16 A 17 Q
18 A 19 Q

And you don't know the value of the estate's cluims

20 i.guinst Mr. Croviley, the damages caiised by the failure of the

21 first and second plans, do you?

22 lI

I think I do.

.

23 Q
24 A

What do you think that is?

Well, I think we'vs been over this. We have an expert

25 witness on this question. When you'rc trying to evaluate the

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6

1 A

That's why we described it as a letter of intent.

2 Q
3 A

But you never charactcrized it as a letter of intent.
You say I nevcr did.

4 Q

Well --

5 A I think I did.
6 Q Let me see if I can refresh your recollection for, I hope
7 the last time during this session, on Page 258 of your

8 deposition beginning at. Line 16.
9 "And Mr. Adams, let me refer for. a moment again to the

10 supplemental agreement executed by you on January 7 th. n

.,

11 Answer, "Correct. n 12 "You called it a suppJ.emental agreement. Did you conside
13 it a leLter of intent or a supplemental agreement?"

14 The witness, "I didn't characterize it.n 15 Did I ask that question -16 MR. BRESSL~R: Your Honor, I object. Mr. Levy in
17

reading the transcript has skipped Mr. Kipnes' 5 objection to
the form of the question.
MR. LEVY:

18 19

r didn't know I needed to indicate that.

20

THE COURT: Well, that's fine. Overruled.

21 BY t-1R. l,£VY:
22 Q
I asked that ques tion; you gave that answer.

.

23 24

A You asked that question; I gave that answer, and it
doesn't change my testimony. That's up to the Court, of

25 course.

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Adams - Cross/Levy 6
1 va lue of a piece of litigation, Your Honor, there's no fixed

2 Iigurc. This is a mater being negotia.ted among the parties.

3 really don't think this has anything to do with Mr. Crowley's

4 contract. And to let Mr. Levy get the benefit of that thlnkin
5 I think is unfair.

6 If you direct me to answer it, I'll answer it.
7
8

THE COURT: You should answer.
TH8 WITNESS: Well, I don't know the precise value.

9 BY l-1P. LEVY:
10 Q
11
Thank you, sir.

And in the second paragraph of the January 7th letter you

)

12 did say in the letter you signed the settlement agreement is
13 being negotiated and finalized in connection with the

14 transition agreement; correct?

15 A

In connection

16 Q In connection it's in the second paragraph of the
17 letter that's in front of you.

18 l~
19 Q

Correct.
Now, you're pretty unhappy about the money thut you seek

20 to have the Court award to Mr. Crowley as a stay bonus, aren't

21 you?

22 A Same as I'm unhappy about the fees that the Court has

.

23 nw~rded to you. Sa.me unhappiness. I think that the fees in
24 these proceedings go beyond any reasonable bounds. Everyone
25 who knows me knows my strong feeling about that.

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Adams - Cross/Levy

6,

i Q

It is a lot of money you're paying him, isn't it?

2 -r. 1 t s a lot of money. Of course it is.

3 Q And one of the reasons yrm want t.o pay him that Inoney i c, l
4 because he makes an awful lot of important decisions ahout

t:i

5 company; isn' L tha t right?

6 A That's not the basic reason. 7 Q What i.s the basic reason? 8 A The basic reason is that r thought that my responsibility
9 \Vas to get Coram out of bankrupt.cy, to stabili:!c the company

10 for the benefi t of the creditors, and I have tried as earnestl
11 as I can to do t.hat..

I've had a lot of road blocks. Th~t is

.~

12

s t i. 1. my goa 1 .

If I can't achieve it, I've said it in my

13 deposition, I will say it in this Court, I vJi.ll tender my

14 resignation.

I mean that most seriously.

15 I'm not here at my -- thi s stage in my Career to he
16 pÜ,ying tricks. You know that.

17 Q
18

Thank you vcry much, Judge. I have no more questions.

1'1R.. 1.,r.~VY: And, Your Honor, may I mOve;' exhibits --

19 Equity Coimnittee Exhibits 1 through lJ?
20
THE COURT: Well, let's wait 'til the conclusion of
71 the testimony.

22

MR. GODNICK; Good morning, Your Honor i Howard

.

2" Godnick on behalf of Cerberus. J

J.' ve previously been admitted

24 pro hac vice by the Court, and I thank the Court.

25

CROSS EXAMINATION

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Adams - Cross!Godnick

6

1 BY MR. GODNICK:

2 Q Judr;¡e Adams, I'd Ij.ke to refer you to Equity CorrmÜttee

3 Exhibit 6.
4

MR. GODNICK: I put that before Your Honor.

5 BY MR. GODNICK:

6 Q Those are the Ssries of emails between Messrs _ Schreiber

7 and

8 A I got it. I go tit.
9

Q Thank you. And specifically I'd like to di rect your
attention to Mr. Schreiber's email to Mr. Cook dated Apri 1 5th

10
11

2002 in which he says, among other things, no other attorney i
to know the Trustee needs to be part of those conversations.

~

12 13
14

Do you see that'?

A I do.
Q Now, Judge Adams, as of April 5th am I correct it. \va s you
understanding that Mr. Crowley believed that Cerberus owed him money under the contract that had existed betwoen Cerberus and

15 16
17
18

Mr. Crowley, correct?

19 l\

That's correct.

2ü Q And it was your view, am I right, that that was a matter
21 between Cerberus and Mr. Crowley, correct?
22 A

Thùt was my viet.¡, yes.
And in fact, I think you testi fied earlier the resolution

.

23 0

24 of that, in terms of hmi much, if anything, Cerberus aqreed to
25 pay Mr. Crowley was none of your business; is that right?

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Adams - Red.ì i:ect

6

1 A

Well, something to that effect. I don't think I ever usa l

2 that expression, but something to that effect.

3 Q Okay, and therefore, would you aqree, Judge Adams, that
4 those conversations between counsel for Mr. Crowley and counae
5 for Cerborus were mat tors thut you needed not be a party to?

6 A Correct. .
7

MR. GODNICK: No further questions. Thank you, ¥oiirl
i

8 Honor.
9

THE COURT: Anybody else?
MR. BRESSLER: Some brio f rúdl rect, Your Honor.
kE;DTRF.CT EXAM T NAT ION

10
11

)

12 BY MR. BRESSLER:

13 Q
14

Judge Adams, in response to one of Mr. Levy's questions I i

Lhink you indicated thut you wished your counsel to stay out 0(1,
the negotiations regarding the dollars that Mr. Godnick was

15

16 just talking to that Crowley was claiming from Cerberus; is

17 that correct?

18 A
19 Q

Tha tis corroct.

You did not, however, instruct your counselor anyone els

20 to stay out of inquiring continuously as to the possibj lity of

21 any conflict or Mr. Crowley getting at any dollars in 2002 fro

22 Cerberus for any h'or.k. To the cont.rary, your instructions and

.

23 your own pursuit was t.o inquire as to t.hat.
24 A
25

Correct.
MR. L8VY: That's a leading question.

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II ,i

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I

Adams - Redirect

7l

i

THE COURT: Sustained.

2 BY r"jR ~ BHESSLEH:

3 Q What were your views as to the inquiry into the continued
4 possible conflict?

5 A I instructed you and your colleagues to be very a LLcntive
6 to -chat issue. I knew of Lhe judge's position f and I had ever

7 intention to adhere very closely to that. And if I couldn' t
8 take carB of the details, I expected you and your associates t
9 do so.

10 Q

Have you seen anything in the documents and unsent drafts

11 that Mr. Levy has shown you that is not consistent with Mr.

~

12 Crowley's representation to you that he' 5 no longer getting
13 paid by Cerberus?

14 A

I have seen nothing. If 1 did, I would be upset about it

15 and probclbly take steps.
16 0
What is the current level of auLhority that any of the

17 officers of Coram have to write checks or spend money without

1n your approval?

19 II

I think the levol is $~O, 000. I approve everything above

20 from 50,000 up.

21 Q You don't have to know what services Mr. Crowley may have
22 been cJ ai ming monies from Cerberus to1." La know that he told yo 1

.

23 they were not for Coram work; is that correct?
7. 4

MR. LEVY: Objection, leading.
THE COURT: Overruled, but it could be clari fied.

25

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Ii i i

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I .!

Adams - Redir'èct
1
2 BY MR. BRESS

'Ii
'I i

MR. BRESSLER: I'll ~ephra5e.
LEE ;

3 Q What was the representation Mr. Crowley made to you as to
4 whether any of the dollars he was claiming from Cerberus were ,
5 for Coram work or just for Cerberus work'?

6 A Just for Cerberus work. Had nothing to do with Coram.
i Q Given tha L you and your advisors arc essentially running
8 Coram, is there anything that Mr. Crowl.ey did or could do to

9 curry favor wilh any of the noteholdcrs that you know of?

10

MR. LEVY: Objection, assumes facts.
THE COURT: Sustained.

11

1

12 BY MR. BRESSLER:

13 Q Do you know of anything that Mr. Crowley has done to curr1'

14 favor wi lh the noteholdels?
15 A
16
17

I know of nothing.

If I did, I would have taken steps.

I i

MR. BRESSLER: No thing further.

THE COURT: All right, thank you.

18 19

THE WITNESS: Thank you ver:y much.
MR. BRESSLER: Your Honor, we would move for the

20 admission of Trustee's 1.
?1
22
THE WITNES::3 :

Novl,

does somebody want to take over'?

THE COURT:
THE WITNESS:

Yes.
Thank you.
Any

.

23
24

THE COURT:
lVR.

objection?
don't, and I've
move

25

LEVY:

No, I

Equity

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.

7

i

1 Corrunittee 1 through 11, ple~se.
2

1'1R. BRESSLER: Your Honor, we would make the SilITè

3 obj ection regarding the draft documents by Mr. Crowley sent to'

4 his lawyers that were never sent.
:J
r..

THE COURT: What same objection?
MR. BRESSLER:

6

The objection would be that these are:

i

7 apparently documents with no foundation that this witness said
8 he'd never seen before, which were apparently drafts sent to
9 counsel by Mr _ Crowley.
10

MR. LEVY: Let me suggesL Lhat I'll fix it with Mr.

11 Crowley if there's a probl em, wh i ch L don't think there is.

.)

:12

THE COURT: All righL1 I won't admit those a.t this

13 time, and they are Exhibits EC-8 and EC-IO? Eight and ten, a.m
14 I right.?

15

MR. BRESSLER: EC-8 and EC-10 is correct, Your lIonor

16

THE COURT: All right, any objection to the remainde-

17 of t.he E:quity Committee docurnents?

18

MR. BRESSLER: No objection, Your Honor.
THE COUH'l: All righti they will be admitted, as wil

19

20 T-L.
21

MR. BRESSLER: Your Honor, Lhe Trustee's next witnes

22 is Mr. Crowley, and Mr. Kipnes will handle that witness.

.

23
24

THE COURT: ßll right.
COURT CLERK: Please place your hand on the Bible.

25 Please state your full name and spell your last name for t.he

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CrOl.¡ley - Direct

7

1 Court.
2
3
4

THE WITNESS: Daniel D. Crowley, C-r-o-w-l-e-y.
DAN IEL D. CROWLEY, TRUSTEE'S WITNESS, S\iVORN

COURT CLERK: Plûdse be seated.
MR. KIPNES: Thank you for granting my admission pro

5

6 hac vice, Your Honor.

7 DIRECT EXAMINATION
8 BY MR. KIPNES:

9 Q Mr. Crowley, Judge Adarnstestified ~bout your meeting in
10 Donvor., March 25th or 26th, 2002. Would you describe what
11 discussions you had at that meeU.nq regardinç¡ the operations 0

)

12 Coralo.?

1.3 A

Yes. Judge Adams asked me to go over in detail how the

14 company was running, how it was operating, how it had operated

15 what issues there were, problems, and began to inquire and
16 crcate an awareness for himself and understanding of the
i 7 business that is Coram.

18

I discussed the sales and the strateqies.

( discussedt.h.

19 costs and the drivers. I discussed Lhc gross profitability,

7.0 the administration. I discussed tho EBITDA, the çash flow. I
21 discussed the staffing and I had -- I'd been asked Lo go over

22 what the trends were, and I discussed those in great deta ~l.

.

23 Q At some point did Judge Adams ask you Lo submit a weekly

24 report?
25 A
Judge Adams directed me to submi t a weekly report and a

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Crmiley - Direct
1 me1nthly report.

7j

2 Q And have you done t.hat."?

3 A Yes, I prepared the weekly report in accordance with his
4 instructions.
5 0 At. your i.n:it:iaJ. meeting wit.h .Judge A.dams, what.

6 conversations, if any, did you have rogarding Cerberus?

~ A Judge Adams discussed Judge Walrath's opini on with me. H
8 asked me directly about my relationship with Cerberus. He
9 asked me if I was receiving any compensation from Cerberus in

10 2002. He asked me what work I was doing for Cerberus. We
11 discussed the current activities that I had with Cerberus, and

.l

12 he instructed me as to what circumstances and conditions in

13 which he would grant permission for me to do those pro-j Bets fo.'
14 Cerberus.

15 Q

What instructions were those?

16 A

Judge Adams was very specific in that he said I'm not to

17 be paid anything by Cerberus for work done in 2002. I agreed t

18 that. Judge Adams was very specific in saying that any work
19 that I did for Cerberus in 2002 could not be involved in any
20 way with the business or relationships of Coram.
1 said

21 öbsolutely, I bad no problem with that.

22 Judge Adams was very specific that the work, if any, that

.

23
24 25

I would do for Cerberus could not detract

from the activi ti.es I

and focus that I had to provide to Coram, and I agreed to that

MR. KIPNES: Your Elonor, may I hand the Itiitness

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.

Crowl.ey - D1 rect 1 ~
1 what's been marked as Trustee's Exhibit 2, which is a letter
2 without attachments from Mr _ Crowley to Judge Adams dated Marc
3 11, 7.002?

4 THE COURT: Yes. Any oblectJon to my havin(J ó1 copy'?
5 MR. KIPNES: My

apologies.
THE COURT: Thank you.

6

7 BY 1-1R. K O'NES:

8 Q Do you have Trustee' 5 Exhibit /. J.n front of you, Mr.
9 Crowley?

10 II
11 Q

Yes, sir.
Did you wri te this letter?

)

12 A

Yes.

13 Q This letter was written before your in-person meeting wit
14 Judge Adams, correct?

15 A Yes.
16 Q In the last paragraph of Trustee i s Exhibit number 2 17 there's a number of entities listed. You see that?

is A On Page

19 Q Page 1, last paragraph of Trustee' B Exhibit 2.

7.0 A Yes, sir.
21 Q What are those entities?
22 A Yes.

.

23 Q

Generally.
In 1999, 2000 and 2001 my work for Cerberus involved many

24 A

25 aspects, one for which I would be entitled to receive upside i

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Crowley - Direct 7.
1 any were earned by Cerberus related to deals in which I had

2 placed some 20 or sa portfolio managers for Cerberus. The
3 listing here are some of the deals, not all of the de¿:is, that

4 included 8everly Nursing Homes of Florida. I did a lot of wor
5 for Cerberus as it related to nursing homes, Texas Nursing
6 Homes, Beverly Nursing Homes, Kindred Nursing Homes, Care
7 l1atric Nursing Homes, Assisted Living, Sun Nursing Homes, and

8 other work, a worker's conw company, MCA PHP, which was an HMO
9 Winter

land which was a T-shirt company, Curative Health Care

10 which became produced Willen Care (phonetic) i Hangar
11 Orthopedics (phonetic) that did artificial limbs and many 12 others, and it lists some of the other work, health care

.)

13 research, locating board members, fund-raising, management tea
14 recruiting, all work that related to Cerberus, none that
15 related to Coram, some of which I had an up::Üde.

16 Q

What did you tell Judge Adams about the claim you thought

17 you had against Cerberus at your March 25th or 26th meeting? l

18 A J: told ,Judge Adams that T t.hought. t.here was a mounta tn of
19 evidence that could and should have been presented to the Cour 20 here in Delaware, but it for whatever reason hadn't, but that
21 there was a substantive and provable mountain of work that I
22 did for Cerberus, had nothing to do with Coram, in which I was
23 owed money, upside, substantia 1 money, and that I hadn't been

It

24 paid, and I wished to pursue that.
'.'r. /, :)

Judge Adams said that has nothing to do with this

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1

77
non-Coram

i

bankruptcy.

That's your cluiin aqainst Cerberus for

,i

? work. Pursue it.
3 Q At the time of your meeting with Judge Adams, hud you
4 received any money Or any compensation of any kind from

5 Cerberus in the year 2002?

6 A I have not received any money for anything from Cerberus
7 since December üf 2001, not a penny.

8 Q

Do you have the

are the exhibits before you that have

9 previously been --

10 A
11 Q

No.
-- intLoduccd?
No, sir.

)

12 A
13
14

THE CüURT: I have it.

MR. KIPNES: Thank you, Your Honor.

15 BY r-1R. KIPNES:
16 Q
Would you turn to Equity Committee 7, which is a let tsr 0

17 Ap r 11 i 0, 2002.
18 A
19 Q

Yes, sir.
Please turn to the second page, Mr. Crowley.

20 A
7.'1 Q

Yes"
Now, this letter follows your mccLlng with Judge Adams,

22 your first meeting with Judgo Adams.

.

23 A 24 Q

Yes, it does.

And on the second page there's a 1 i st of items on which

25 you say, quote, "We need direction." See that?

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1 A
Yes, I do.

71

2 Q

Then there's a series of items, and one of which is,

3 quote, "The terms for termination of the Crowley/Cerberus

4 contract."

5 See that?

6 A Yes, I do.
7 Q Why di.d you include that on a list of items that -- to
8 Judge Adams on which you said you needed direction? 9 Jli I obviously re2ld Judge Wa.lrath's opinion. Tho contract

10 was dead in DeccmbßL I had d:i.scl.ssed it with the Trus tee in 11 March. I'm in the middle of trying to negotiate a termination

)

12 and I have upside dUe me from Cerberus. I wi.sh to know what
13 role the office of the Trustee or the Chapter 11 Trustee ,Judge

14 Adams wished to pl2l,/, beca.use I feel some sense of urgency l:o

15 terminate this contr,lct.
16 And by that I mean I'm negotiating the amounts of money
17 that a~e due me for work I did for Cerberus that were unre1ate

18 to Coram. I want to get paid for what I did three yenrs ago/
19 two years ago, one year ago, and I want to know what does Judg'
20 Adams wish to participate in what way, what role, what

21 oversight, what does he ,.,ant. t.o know?
22 Q
What response did you get, if any?
That that contract was between Cerberus and myself,

.

23 A

24 writing it had nothing to do with Coram. 1'hat he did not wish

25 to weight in. He did wish to be informed if and when we came

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1 to an agreement as to what payment and for what. And I said w
2 would absolutely do that i submit it to him, and it would be
3 submit.ted to this Court.

4 Q Have you reached any agreement relating to that contract
S with Cerberus?

6 A No. And in the end having talked to them, met with them,
7 wrote them, asked my counsel to talk with them, meet wi th them
8 wr.ite them, I ended up terminatinq them for a material breach

9 for not paying the amounts of monoy that were due fOT 1999,
.10 2000 and 2001.

11 Q About ~.¡hen was that?

)

12 A Soptember of 2002.
13 Q What's the status of that claim, your cla im against
14 Cerberus, today?

15 A

They haven' t paid me a penny, and I'm left to my

16 altern~tives, which I have noL rulcd out litigating.

17 Q In your -- has Cerberus committed to pay you anything?

18 A No. I f they had, I would have written it to Judge Adams.
19 I would have presented it through Judge Adams, if he wished, t
20 this Court.
We would be tal king abou L in publ ic. I haven't

21 any agreement or co~~i tment with Cerberus.

22 Q Why are you stiii at Coram?

.

23 A Judge Adams asked me to stay at Coram. My contract was
24 expiring at the end of November. At thc boginning of October
75 wrote the judge a note saying my contract's coming to an end.

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1 For the good of the enterprise and everything around i~, here'

2 60 days. What would you wish to do? We negotiated, we ended
3
4

up with a month's extehsion, there was bargaining back and

forth. The judge asked me to stay. The judge asked me to sta

5

for an additional six months. I

so that's one reason.

6
7 8

Another is, you know, 1 had given three years of my life

to this thing. I made corri tments to the blood factor supplie

to Bax -- the pump company, to ßaxtor, to providers, to

9 customers. I -- people in -- 61 people in manaqemcn L coi.mt on

10 me. I want t.o see the process through.
11 I feel that had evidence been provided I

believe other

~

12 decisions could be made. It wasn't. Okay, that's my fau It.
13 Was there to present -- my pride, my self-respect, my
14 reputation, I want Lo see it through.

I'd like to ses this

15 process come to a successful conclusion. And I don't -- I 16 mean, I will. Judge walrath, if you wish me to leave, I'll

17 just leave. I don't want to.

18 I understand that it may noL be possible for me to stay.

19 1'd like to. 20 Q Up until the execution of the agreement that's been marke i
21 as Trustee's Exhibit 1, had Judge ActilllS given you any

22 commitment regarding continued employment aL COL"arn?

.

23 A

Judge Adams made it clear from the beginnin~ that every

24 day was a day in which he was re-deciding whether T was going

25 to be at Coram another düy. He never made a commitment to me.

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J.

q
J i i

ii

Q

What's your view, Mr. Crowley, of the current financial

2 situation at Coram?

3 A

Coram has nineLc8Il months, almost -- eighteen months,

4 sorry, of increased sales.

It's the longest string of same

5 store, no big one accounL, one patient ut a time, sales

6 j ner.eases si nee t.he company was formed in 1994. Coram inixes
7 the best mix of therapies of patients we'vB taken ever.

8 Coram's gross margins are the best it's been in five
9 years. Each year's better. Coram's cash flow in January was
10 130 percent of the prior year's January. We went into 2002

11 with $28 million. We came out here j n the last month -- there

)

12 are many days where we havc $40 million in cash.

13 The EBITDA from this company, \\ie \\'ere just told by Ernst.

14 Young, we passed a field audit, fourth one under my watch I
15 without Gn adjustment, and' no material weaknesses in manageffeni

16 controls, fourth year.
17

But turnover in Coram

L' " ~

-- iL's tho best it's been sincc
and still we're almos t 1,000

18 before I came there.

It's

19 employees less. We've grown $45 million over the prior year,
20 albeit because some companies failed.

21 The morale is good. We have had virtually no turnover in
22 senior management other than the initial turnover that I

.

23 directed.

The leam has stuck together.

I think we also have

24 340 or fifty million dollar worth of debt, I mean, we can't pa

25 it back, we can't service it. We're under a mound of debt, bu

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1

o

a1 1 of that preceded me. I never put a penny of debt on t.his
" 11 i

2 company. So, that all came before me.

3 This -- the company's in -- it's operdting -- I mean, it'
4 a handful every day of stuff to deal with. It's -- but it's

5 stabil.ized.
6 Q You said something in your answer about companies failing
7 What

8 A Well, any number of home infusion companies have failed i
9 the 1a st year. Dr. Kook dot com (phonetic) was a big infusion

10 company. Genteva (phonetic) sold themselves to Acredo
11 (phonetic). Acredo ran around trying to sell the non-

)

12 hemophilia portion of their business to anyone else. They war
13 unable to sell it at all,

In the end they -- Credo made the

14 decision and closed infusion businesses allover the United
15 States and gave the business away.

16 We benefitted by that. There were any number of 10CB 1,
17 small regional infusion companies because of the low margins i
18 infusion, and the fact that the sellers of the drug to us

19 require we pay up front in cash. And the payers, customers of

20 Coram, pay so slow. Any company that had much debt couldn't

21 service it. A lot of them failed. And that's what I'm t~lkin
22 about. It's boen a watershed t~o, three, four, five years for

.

23 home infusion.
24 Q

\ilhat was yOUL' salary when you first became employed by

25 COL'am?

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J
He said

i A

Yes, Don Einerol (phonetic) made the offer to ine.

2 ~You' re going to get the same salary I had. n

3 I said, "When was that?"
4

"1998."

5 That's the salary I got in '99, 650.
6 Q What was your salary in 2000?
7 A 650.
8 Q What was your salary in ?OOJ?

9 A
10 Q

650.
What was your salary in 2002?

11 A

650.

)

12

Q In the years 2000, 20002 have you received any bonuses
under the inanagement incBnti ve plan or the key employee

13

14 retention program?

15 A

I have not received one penny under ahy incentive plan,

16 whether it be management incentive, key employee r:etention in

17 2000, success fee in 2000, rione of it. I didn't receive
18 management incentivo plan or key employee plan in 2001.
I cUd

19 not. receive management. incentive plan or key employee retentio

20 plan in 2002. And my expectation is I will earn a bonus for

21 2002. With the negotiations with Judge Adams I expect not to
22 receive thÇlt either.

.

23 Q

Is thero any other management person at Coram who has not

24 received entitled bonuses in those years?

25 A

Of the 2,200 people that work üt Coram and the rough ly 10

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1 that work in inanagement and have for the last thrce yeQrs,

2 everyone o£ them in the same plan that I am, avery one of the
3 wore paid. The only person that has not been paid a penny is
4 me.

5 Q What is your best view, Mr. Crowley, of what happens to
6 Coram in the next four months if Judge Walrath grants the

7 Equity Corrittee motion and you are terminated from further
8 empl.oyment?

9 A I think that the management and lhe employees will be

10 completely disaffected. I think for them to see their leadei:
11 thrown out in court when they don't belteve that the strategy

)

12 was wrong, that tho company has prospered, t.hat. the company ha 13 flourished, that we're viable ilnd vibrant and doing well, I
14 think they would not know what Lo do with it.

15 Because of the nature of the business l' m glue in so many
16 areas, so I'm meeting with Baxa (phonetic) and meeting with FF
17

and I'm meeting with head of medical relations for Anthem. I'
in the middle of our largest customer, nearly $40 million in a
rebid. I -- I'm central to .'30 much that goes On. I think it'
a calamity.

18

19

20 21 22

I bel leve it's morc Lhan just casual entropy. I

worry for the company.

MR. KIPNES: That's all I have, Your Honor. Thank

.

23
2'1

you.
THE COURT: Do we need to take a break then?
MR. LEVY: I would like to do that, Your Honor.

25

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