Free Appendix - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR

Document 139-3

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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE

"

IN RE:

Case No. DO-3299

,....'. ..:~ 'L r......

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CORAM HEALTHCARE,

824 Market Street Wilmington, DE 19"8:Q1

Debtor,

March 3, 2003
9:30 A.M.
ï...:.~

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

~\or the Trustee:

Schnader Harrison Segal & Lawi , LLP

.
Audio Operator:

By: BARRY E. BRESSLER, ESQ_ WILBUR KI PNES, ESQ. RICHl\RD BARKASY, ESQ. 1600 Market Street, Suite 3600 Philadelphia, PA 19103

Wetr & l'artner.s
By; JOHN B. YORK, ESQ. 824 Ma rket Street Maii, Suite 01
P.O. Box 708

Wilmington, DE 19899
Office of the U.S. TrusLee By: RICHARD SCHEPACARTER, ESQ. J. Caleb Boggs Federal Buildin( 844 King Street, Lockbox 35

WilrninqtoTI, 08 19801
J8nniícr M. Patone

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

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J&J COURT TRASCRIBERS, INC.
268 Evergreen Avenue Hamil~on, Naw Jersey 08619

E-mail: i j oourt~ optoniin9 . n~t
(609) 596-2311
Fax No. (609) 597-3599

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f¡ tr=

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2

APPEARANCES; (continued)
For Daniel Crowley;

RICHARD H. CROSS, JR., ESQ. 1201 North Orange Street, st. ~ 10 P.O. Box 1380

Wilmington, DE 19899
Much Shelis Freed Denenberq. Arne nt

& Rubenstein i

By: SCOTT N. SCHREIBER, ESQ.
200 North LaSalle St. , Suite 2 00

Chicago, IL 60601

For Unsecured Creditors:

Richards, Layton & Flnger, P.A By; ETTA WOLFE, ESQ.

One Rodney Squa r.e P.O. Box ,151
Wilmington, DE 19B99

;.

For Equ it y Committee:

Saul, Ewing, Remick & Saul, LLf By: MARK MINUTI, ESQ. 222 Delaware Avenue, Suite 120(

Wilmington, DE 19899
Jenner & Block, LLC By: RICHARD F. LEVY1 ESQ. STEVE rOMASHEFSKY, ESQ.

One IBM PIa za
Por Senior Noteholders:

Chicago, IL 60611
Wail, Gotshal & Manges, LLP By: ALAN B. MILLER, ESQ.
767 Fi. th Avenue

New York, NY 10153
For Cerberus Partners, T,P

Klett Rooney Lieber & Schor1inç Hy: ADAM G. LANDIS, ESQ. 1000 West Street, 14th Floor Wilmington, DE 19801

Schul te Roth & Zabel LLP

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By: HOWARD O. GODNICK, ESQ. MICHAEL L. COOK, ESQ. 919 Third Avenue New York, NY 10022

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AP PEARANCES :

(continued)
Connolly Bove Lodge & Hutz, LLP By: GWEN LACY, ESQ. 1220 Market Street Wilmington, DE 19899

For Goldman Sachs;

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INDEX
WITNESSES FOR THE TRUSTEE

4

l.~
)4
b8
2

ARLlN r"l. ADAlIfS
Direct Examination by Mr. Rressler Cross Examination by Mr. Levy Cross Examination by Mr. GOdnick Redirect Examination by Mr. Bressler

b9

DANIEL CROWLEY
Direct Examination by Mr. Kipnes Cross Examination by Mr. Levy Redirect ~xamination by Mr. Klpnos Recross Examination by Mr. Levy Further Redirect Examination by Mr. Kipncs Further Recross Examination by Mr _ Godnick

/3
5

11)9
11 0 1: 3

i 4

MICHAEL SARACCO

.

Direct Examination by Mr. Barkasy Cross Examination by Mr. Tomashefsky Redirect Examination by Mr. Barkasy

i 6 1 5 1 :i3

DEBORAH MEYER
Direct 8xamination by Mr. Barkasy Cross Examination by Mr. Tomashefsky Redirect Examination by Mr. Barkasy

1ß6

l~l
114

VITO PONZIO
Direct Examination by Mr. Barkasy Cross Examinat:.on by Mr. Tomashcfsky Redirect Examination by Mr. Barkasy

h6
1 ::3

IJ8

JAY SCOTT VICTOR
Direct Examination by Mr. Kipnes Cross Examination by Mr. Tomashefsky Cross Examination by Mr. Godnick Redirect Examination by Mr. Kipnes

i )9 lb2
1 9
i 1

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ARGUMNT

BY MR. BRESSLER BY MR. LEVY BY MR. SCHREIBER

1i

1 4 1 7

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REBUTTAL ARGUT
BY HR. BY HR.

N

D Ii: X

5

BRESSLER
LEVY

194 195

DECISION
BY THE COURT

195

EXHIBITS

T-l

Proposed Termination Agreement and Extension of Bmployment ßgrecment

Ident: .
13
32 34

Eviè.
72

EC-l
EC-2

3/26/02 Letter
Letter to Coram Employees
8K Form filed wí.th

'2
72

EC-3

SEe

37
44

'2
72
2 2

.

EC-4

Group Exhibit

8C-S
EC-6
EC-7

2/18 Letter
Two

47 49

f:mails

4/10/02 Letter

2

EC-ß

5/6/02 Draft
Document Dated 11/12/99

51 58

1 7 2

EC-9
r~C- 10

Document Dated
Document Dated

5/8/02
5/8/02
63

1 5
2

Be-I1
T-2
EC-12

3/11/02 Letter
2002 Earnings Summary

n
103

1 5 1 8
1 8

EC-13
EC-14

4/1/02 Document
8/20/02 Letter 9/20/02 Letter

105
107

1 8

.

EC-1S

i
1

B

EC-16
EC- 17

2/28/03 Letter
3-page Document
from SSG

113

8

163

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6
1

THE COURT: Good morn i ng .

2

MR. YORK: Good morning, Your Honor.

My name Js Jo n
We Çl re local

3 York.

:l m with the firm of Weir & Partners.

4 counsel for Arlin Adams, the Chapter 11 Trustee in this matte

5 With Your. Honor's permission, the agenda today will
6 be presented by Barry 8resslor, Richard Bnrkasy and Wi lbur

7 Kipnes of the firm of Schnader, Harrison, Segal & Lewis.

f3 Mr. Bressler and Mr. Barkasy have bean pr.eviously
9 admitted by mot 1 on pro hac vice. ML Kipnes's mot.ion was

10 entered some time ago, but so far as we can determine thaL

11 motion has never been signod. l have an extra copy of that

e

12 motion if it would be convenient for Your Honor.

13 THE COURT; Yeah, you may hand it up, and I will

14 grant it. 15 MR. LEVY: And may I just record, Your' Honor, I'm
Hi Richard Levy. J will be pr.esenting fOT the Equity Committee
17 along \vith my partner, Mr. Stephen TO!fü.shefsky. We have here

18 Mr. Mark Minuti and of course Mr. Donald Levaturc of the Equi y
19 Committe8.

20 THE COURT; Thank you.
21 MR. YORK: Thank you, Your Honor.
22 MR. BRESSLER: Good morning, Your Bonar, Barry

.

23 Bressler for Arlin l\dams, the Chapter 11 trustee. I will omi

24 the -25

THE COURT: Cont Inued ma tters.

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MR. BRESSLER: -- continued matters with one

2 exception, elnd that being the indication on number 4, which i

.3 tl18 equity committee's motion for ballot.tng agent and related
4 matters is going to be put off until May the 1st, as arc tho
5 disclosure statement hearings which were schoduled for April
6 the 3rd. We have already arranged with Your Honor' s office f r
7 the day on May the 1st for the two disclosure statements.

8 Our plan would not have been in enough time for thaiI
9 notice, so that's why we took that date.
J (J i !

THE COURT: Okay.
MR. BRESSLER: Before I start the contested matters

".

J. i

12 today, there are local counsel who have asked for permission a

J.3 present the counsel that they arc moving pro hac, so lllät thil
14 may be part, if that would be entGrtained.

15

'lHP. COURT: All right, it \-Jill be.

16

MR. CROSS: Good morning, Your Honor, Richard Cross

17 for Daniel Crowley. With mo this morning is Scott Schreiber f
18 the firm of Much Shells, and Your Honor, Mr. Schreiber is a

19 member in good standing, I can represent, of the Courts of th
20 Northern Dj strict if Illinois, Eastern Division of Wisconsin,

21 Illinois Supreme Court, and Seventh Circuit Court of Appeals,
22 ilnd I'd ask that he be admitted pro hac in order to present 0

.

7.3 behaL.( of Mr. Crowley this morning. A formal motion hasn't

/.4 been filed yet.
25 admitted pro hac.

Lt will be promptly, so I'd ask that he be

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1 THE COURT: It wHl be grant.ed, thank you.

2 UNIDENTIFIED ATTORNEY: Thank you, Judge.
3 MR. CROSS: Than k you, Your Honor. If I can, I'd
4 like to be excused for the remainder of this morning' S se5sio~.

5 THE COURT: You may. 6 MR. CROSS: Thank you. 7 THE COURT: Anyone else?

8 Okay.
9 MR. BRESSLER: YOur IIonor, on number 5, t.he
10 uncontested matters has been resolved by stipulation; it's beBn

.

11 submitted. So that takes us to the contested matters which a":e 12 related matters number 6, which would be continued until

13 confirmation. That is the Trustee's motion for authorization
14 to rej eet the execulory contract of Daniel Crowley.

15

While the status says it may be superseded and moot

16 depending on today, we'd like to continue that until

17 confirmation one way or the other.

18 THE COURT: Okay.
19 MR. BRESSLER: The contested matters on for this
20 morning, Your Honor i are number 7 and number 8. The first on 21 is the motion of thG Chapter 11 Trustee for authorization to
22 enter into a termination and employment extension agreement

.

23 with Daniel B. Crowley, and then number 8 is the Equity

24 Committee's motion foT. an order terminating Daniel Crowley's
25 employment and for other relief, including disgorgement. And

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1 they are, of course, related.
2

I should point out that even though that this is a

3 motion to continue Mr. Crowl ey' s employment for what now is

4 another only four months and for some remuneration, there hav

5 been 9,000 pages of documents produced. There have been 30
6 hours of deposition testimony, including seven-hour depositio s

7 of the Trustee, the investment bankers for the Trustee and Mr

8 Crowley again.
9

We are hopefu i that this motion can be heard today

10 and finished today, and we will try and make tho Trustee's

.

11 direct evidence of all or Our witnesses be hel.d to under two

12 hou.t"s.
13
14 15

We

would hope that Mr. Levy's cross would be complete
day so that we don't have further delay in this

within one matter.

I would a1 so ask~ if possible, that we take the lun ~

16 break at exactly noon. Judge Adams has a very short conleren e
17 call for fiftGGn minutes at that time, or that we take a brea ~

18 for fifteen minutes if we cannot do the lunch break then.

19 THE COURT: All right. don't know that I need or 1
20 argument, certainly not at the beginning. I've read the

21

papers.

Both motions are related.
Any obj ection to having the testimony relate to bot ?

22

.

23

MR. LEVY: No, and that's just the point 1 wanted t

?4 make.
25
THE COURT: All right.

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MR. LEVY: And so there won't be objections about
THE COURT: Direct, etceter.a.
MR. LEVY; -- direct or cross, and for what it's

2 exceeding the scope of -3 4

5 worth, though, Mr. Bressler mentioned the Trustee's motion is

6 number 1. In fact, the motion by the ~quity Committee to
7 terminate was filed two or three weeks before the Trustee's
8 motion.
9

THE: COURT; But do you have ùriy obj eetion to the

10 Trustee presenting first.?

.

11
12

MR. LEVY: None at all.

THE COURT: All right, I think that's the best way 0

13

proceed.
MR. BRESSLER: Thank you, YOU.(" Honor. We would cal

14

15 the Trustee, Ai:'lin M. Adams.

16

MR. LEVY: Before the Trustee takes the stand, Your

17 Honor, I would ask that we exclude from the Courtroom all
18 i..tnesses who plan to testify during

that they be excluded

19 durinq the testimony of Judge Adams.

20 THE COURT: Any objection to that?
21 MR. SCHREIBER: Your Honor, Scott Schreiber for Mr.

22 Crowley. Obviously J don't expect that Mr. Crowley will be

23 excluded from t.estimony. These two motions are cJ.early about
. 24 him, and I think he has ù right t.o be here for each and every

25 moment of the tesUmony that Your Honor's about to hear.

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Adams - Direct
1

1

MR. LEVY:

I think that's a discretionary matter i a d

2 we'd prefer -3
4

THE COURT: Well, I think ho is a party and is

ontitled to

be here, 50 I
SCHREIBER:

will allow him.
Thank you, Judge.

S

MR.

6
"j

THE COURT:

Any

other witnesses that the parties

intend to

ca 11 ?

8

MR. BRESSLER: Your Honor, yes, we intend to call

9 oLhcr witnesses, and we have no problem with they're being
10 excluded for this purpose.

.

11 THE COURT: All right. _llii right, Judge Adams, you
12 may approach. Good morning.

13 COURT CLERK~ Please state your ful i name. Spell
14 your last name.

15 THE WI'I'N8~iS; Arlin M. Adams, A-d-a-m-s.

16 ARLIN M. ADAMS, TRUSTEE'S WITNESS, SWORN
17 MR. BRESSLER: Your Honor, before we begin, the onl
18 exhibit that I intend to introduce Uirough the Trustee is

19 attached to our motion. It is the proposed termination and
20 extension of employment agreement.

7.1 THE COURT: All right, can we have that marked
22 Trustee 1?

.

23
24

MR. BRESSLER: May I approach the witness?

THE COURT: You may.
DIRECT ~XAMINATION

25

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Adams - Diroct
i By MR. BEE::ÌSLER:

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2 Q Judge Adams, before we geL to the document, t.he Courl is 3 generally familiar vii th your legal ~x~~ri~nç~ .an~ ~our _~:d:Ciri
4 experience, but in connection with ._hi.:o mi:LLuL, dnd siIL/.. tlr. ¡
5 Levy asked about. it at your deposition, I would ask you to

6 briefly describe for the Court your health care experience.

7 I\

Well, very early in my career the Court

Or.phan's Coul'

8 of Pennsylvania asked me to become a trustee of Home for
9 Incurables.
I agreed, of course, and after spending about a

10 year in that job I decided we ought to convert Lha t home from

11 incurables into a home for rehabilitation, and that has now

,)

12 become one of the great rehabilitation hospitals in the

13
14

country, Moss Rehabilitation.

i I

Probably based on that performance Governor Scranton,
elected, as ked me to be Socretary of Health and Welfare of

whL-n
ì I I !

15

16 Pennsylvania. One of

the duties in that office was to

17 supervise all of the hospitals in Pennsylvania.

18

I Look that serious) y and decided to visit all of those i
I

19 hospitals, well over 100, over the weekends of my t.enure, andl
?0

my 900d vJifc accomp¿inied me so I was able to do that. I
When I returned to Phi ladelphia the mayor appointed me tl

21

n
L. .J

the Hospital Study Commission which was a group created I!
pursuant to federal law to approve or disapprove the bUildingl
or additions to hospitals throughout the Delaware v~ 11 ey

') .)

/~ 4

25 ragian.

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Adams - Direct
1

l" _..

At about that time I became very active in a

2 hospital, a profit hospital known as the Oxford Hospital. An
3 that was a very successful hospital and it eventually sold to
4 Medi care a large conglomerate. I then went on the board of t e

5 Albert 8instej n Hospital, which at that time was the la rgest
6 non-profit hospital in the State of lennsylvania and eventual y

7 became chairman of Einstein.
8 Whi Ie I wa s there we crea ted a sories of profit centers;
9 although, Einstein was a non-profit institution. And I have
10 remained fairly active at the University of Pennsylvania wher ~

.

11 I'm a trustee with their medical affairs. So, all in all I'v
12 had a very extensive experience in hospital work.

13 Q

You have before you what's been marked as Truslee i.
I do.

14 A
15 Q

I will ask you if you recoqnize that as the proposed

16 termination aqrsAment and eztension of employmórit agreement

17 that we'ro here today about?

18 A
19 Q

It is.

And did you execute that?
I did.

20 A
21 Q

And Mr. Crowley executed it?

22 A
23 Q

He did.
Let me start with your analysis of Mr. Crowley as it

24 relatss to Coram. When you first were appointed in this
25 matter, when was the first time that you met Mr. Crowley?

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Adams - D).. rect.

4

1 7\ Oh, maybe a week or so eifter I wa:;. appointed. The firs J
2 thing I did after I was appointed was to read carefully the
3 opinions written by Her Honor relating to this matter, and th.n
4 I cal led Mr. Crowley and arranged to go to Denvor, told him I

5 wanted to meet with him and his entire staff, and he set that
6 meeting up. I forget Lhe dûte, but it v/aS some time in t.he
7 latter part of Harch. And I wonl out to Denver and talked wit i

8 Mr. Crowley for, J don't know, two hours, maybe Lhree hours,

9 and then met wiLh tho entire staff, first collectively, but
10 then I asked that I be given the opportunity to meet with eac i

.

11 of ihe executive staff individual and on a private basis.

12 Q It is accurate that of the -- approximately the 2,100
13 employees that Coram has, about 100 are in Denver.
11 "p,
1.5 Q

.~hout that.

But members of the senior executive were brought in from

16 elSewhere around the country to meet with you?

17 A

They were, and there were approximately fifteen. I can' .

18 lell you precisely the numJer.

19 Q

when you first mGl with Mr. Crowley was there any

20 discussion of Her' Honor's opinion or of his then current.
21 relationship with Cerberus?

?2 A

There was. Almost lhG first thing I did with Mr. Crowle!

23 WdS to ~sk him about the conflicts and that had been referred
24 to in the op inion5 that I've just averted to, and he a 5 5 ured ie

25 Lhat he had no further contractual relationship with Cerberus

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l\dams - Direct
1

I ItS

except for the remaining claim under the contract for work th - t
h. had don. prior tD my appointment that had nothing to do ., h

2

3 Coram, and I made it clear to him that he could not ta ke any

4 compensation from Cerberus for anything except that claim and
5 that he could not spend any time that he would ordinarily be

6 devoting to Coram in order to dea J wi th any of the remaining
7 Cerberus matters.

8 He gave me that assurance.

9 Q Did he also discuss wi th you that that he still had some
10 talking relationship with Cerberus?

.

1JA

He did. He said from time to time Cerberus 3sked him to

12 give his comments or opinions about matters t.hat came to thei

13 attention, an I said, "Well, you could do that, but you have 0
14 make sure that those matters could have nothing to do with
15 Coram, couldn't be a competitive situation or anything of the
16 sort," and the reason why I g3ve them -- him that opportunity,

17 although I was mindful of the judge's concerns, was I knew he IB had a substantial claim against Cerberus, and I didn't want t
19 do anything t.o prejudice that claiin. I didn't think thel twas

20 fair on my part.

21 And I knew that if 1 was goj.ng t.o succeed as a Trustee i_
22 was important to have a good rolationshlp, not only with Mr.

23 Crowley, but all of his people. And that's the style that I

24 use i,n handling t.hese matters. Somo people don't use that
25 style. Mr. Levy, for example, uses a very confrontational

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Adams - Direct

6

1 style. That is not the way I handle these things.
2

THE COURT; Overruled.

3 BY HR. BRESE~LER:

4 Q Judge Adams, j LIst to correct oné th ing that I heard ut
S your deposi tiQn.
Did you understand at that time where Mr.

6 Crowley resided and how he split his time between Sacramonto
7 and Denver'?

8 A Yes, I understood that he resided in Sacramento, used th
9 Coram office in Sacramento primarily for his site of operatio , 10 but would frequently come to Denver.

-

11 Q

Has he always been available to you when you tried to

12 contact hi m?

13 A

Always.
And usually that's by telephone?
Yes, and that's with some frequency.

1-Q
15 A 16 Q

The executive you were referring to is mostly in Denver

17 and sometimes in Sacramento, who would that be?
i 8 .A.

That is the second in co~nand, Mr. Marabito.

19 Q

What else did you do besides meeLing with the senior

20 executives in Denver to immerse youn;81f in Coram' 5 busi.ness

21 and become familiar with it"?
22 A
I read a lot of their documents.

I

They had a whol.e

, seriei

23 of documents that they let me go over. They had a video
24 demonstration that showed the progress of Coram from before t e

25 time Mr. Crowley took over until the time of my appointment

-

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Adams - Direct

.7

1 what their plans were, what areas they were interested in,
2

where their various locations throughout the country were

3
4

situated

and

vJha t

they were doing, what they \..ere trying to

d .1.

It
Q

was a very

!:

intensive discussion and a very good one. Besides the main offi.ce, have you visited b.ianches of

6
7
fJ

Coram?

A I have.
Q And where would those have been?

9 A Well, there's one on Pennsylvania, Malvern, and T vi

site

lQ one in Denvei: as a matter of fact.

.

11
12

Q Have you or your advisors done reviews and investigation
of the financial performance and -- of Coram and the con duct

f

1:3 the business?
14 A
Yes, as a matter of fact, I receive each a week a

15 statement of sales, gross profit, expenses, cash flow and
16 things of that sort. That generally is on my desk ori Monday

17 morning, done over the weokend. I of course go over the
18 filings with the S~:C. i go over the accountant i S statements

19 and I have inLorviewed the accountants on a number of

20 occasions.
2 i The accounts a re Ernst & Young, by the way.

22 Q

Have you also interacted with investment bankers und -I have --

?3 A
24 Q

-- rehabilitation advisors in this case?
I have:.

25 A

I!

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Adams - Direct i 8
1
Q

il !I

And that would be SSG and the Ewing Menorabemus (Phoneti~)
I

firm?
3 A
4 Q

Yes. I' ve met with them end I' ve tel ked wj th the.. I

And what have you discussed regarding the operation of t 18

5 company wi t.h them?
6 A Well, one of the things that was always on my mind was
7 whether I should continue Mr. Crowley. I was very concerned
8 about the opinion of the court and conflicts issue. So, I

9 approached Uwt decision \-Jith a
10

with a ceratin amount of

skepticism, and since my £~mily

is f:!:oir Missouri anyway, T kifl d

11

of took an approach, you' ue got to show me.

--

12

And that has been my approach with Mr. Crowley and his
ent ire staff. You tiave to demonstrate to me that you are the i

13

14 best people to be operating this what I thought was a VB ry

15 valuable company.

16 And I never made a final decision. I think Mr. Crowley
17 unders lood

I hope ho did, that it was kind of a situation

1 B where if they did not produce I would feel frao to make other

i 9 cleci:ÜQlls.
20 Q
What häv(,? y()U been advised regarding the earnin9." of thei

21 company, or what have you observed yourself regarding the 22 earnings and profitability 01 Lhe company over the last nine

23 months and since Mr. Crowley has been in control?
24 A
It's been on an upward trend during that entire period i
25 the sales, i,n profits, in cash flow, In ~hat they call EBITDA

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r¡ i I

l'idams - 1)1 "tect
1 ¿¡IL during that period.

19
i

2 A!ld I think that's been true all during the period Mr.
3 Crowley has been there, but that has not been my concern. My
4 concern was primarily while I was in charge.

5 Q Have you formed a view as to what the consequences of Mr
6 Crowley no longer being with the -- Coram might be?

7 A I have.
8 Q And what 1S thdt view'?
9 A I think it would de-stabilize the business, it would cau e
10 the executives to begin worrying about thúir situation and '

.

i i maybe depar' fDr other ~ro ..c.r. situations. I' would caus ~
12 the suppliers to begin worrying about having their bills pai.d

13 it would causs some of the important customers to feel a good
14 deal of uncertainty.

15

When you make a change at the very top of the corporatiOf' ,

i

16 it has a tendoncy to do-stabilize unless thoro is a very, ~er i
1.7 good reason, such as heart attack. or another job or promotion,

18 But if you suddenly remOve the CEO it causes a lot of

19 can sterna t ion.
20 Q
Have you consulted with processionals in developing that

21 opinion?

22 l~
í' 3 Q
2/1 A
2,'.)

I have.
And who have you talked to or

consulted with?
to gent lemen whose names you ha-8

Well, I talked to the

just mentioned on a number of occasions.

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.

Adarns - Dlrûct
1
L
,"\

o

¡vIR. LEVY:

EXCLlse me --

THE COURT; Well, I can't -- you can't be heard

3 unless you're speaking into the mìcrophone., Mr. Levy.
4

MR. LEVY: Excuse me, the response the gentleman JU t
i just would 1 t ke to hear the

5 mentioned Lt. a little vague.

6 names again so vie're clear.
7

THE WITNESS: The one was Scott, and I think the

ß other was Barra.
9BY MR. BRE:SSLER:

10 Q

Bemus.
Bemus. As I told Mr. Levy on -- last week, I talked to
I'm still t e

.

11 A
12

some of my former colleagues at Albert Einstein.

13

honorary presidcnt, so maybe I shou1dn' t say former colleague

14 One in parti.cular that I did not mention to him, I thought

15 about attar the deposition, was Mark Levi tan. Mark Levitan h d 16 run the University of Pennsylvania Hospital system and had
17 created a conglomerate known as Medicorps, and he was my

18 executive assistant -- or actually Lhe president of 8instein

19 when I was tÌl(= chairman. And he pretty much confirmed what t e
20 other gent) emen had said. You have to worry about de21 stabilizing an organization unless you have a very good reaso .

22 And then I'm on the board of a --

.

23

MR. LEVY: I apologize. That's clear hearsay, Your

24 Honor, vihat he :'r.id

25 THE COURT: Overruled. It's not being offered for

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.

Adams - Direct

)1

1 the truth of it but what he did to reach his decision.
2
-,

THE WITNESS:

i a 1 so tal ked to Jeffrey Perman who' s

the CEO of a corporation in which I served on the board which
does a great deal of business in the dental industry, and he
gave me the same advice.
BY MR. BRESSLER:

4

5
6 7

Q How many times have you visited Denver?

a A Oh, four or five. I cêir'i/t tell you for SUl.-e. See, 1 weit
9 there twlco in connection with a matter that brought me to 10 Denve~, and T thought I would use that as an opportunity to

.

11 stop by and see how thing2, viere going.
12 Q
And I presume in connection with your determination

as t J

13 Mr. Crowley you also consulted with your counsel?

14 A
15 Q
16 1:"

With Mr. Crowloy's Counsel?

Noi with your counsel. Ohi sure, every day, twoi t.hree t.irnes a dayi yeah.

You' .Fe

17 become one of my closest friends.

18 Q

Thank you. Looking at Trustee's

that' 5 in front of yo i,

1. 9 did you believe that the terms provided in the B9reement. were

20 fdir Qnd reasonable under the çj rcumstances?

21 A

Yes, but I have to in all frankness and openness say I'm
i ha Te

22 prelty tough when it comes to salaries. You know that.

23 a reputation for that. I donI t like to see big salaries, and I
24 thi nk I pressed you pretty hard on it. Subject to t.hat, T

25 thought that you had done a very, very good job in han~ering

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.

¡ I i

Adams - Direct
lout this cont.ract..

ly)

2 Q Would it be fair to say that it was your understanding

r"

3 that ~.1r. Crowley, through his couTlsel, was looking fO.t" a lot
/1 more?
5 A
Well, I knew it.

It. wasn't only my understanding, 1 kne

6 that thoy were asking for a lot more, but thoy waren' t going 0

7 get it from me. And he Knew it. He know that the~e was a hijh
8 water mark, and he knew that if they could not come to terms
9 was prepared reluctant.ly to go out to Denver myself.

10 I don't think I could do as good a job as Mr. Crowley,

.

11 nowhero near a ~i ob like he has done.

12 Q What has your role with the -- Coram been as opposed to
13 Mr. Crowley's role since March of 2002?

14 A
1:l Q

What has my role been?

Yes.
Like supervise the operation.

I i I

16 A

1 didn't teii him OIl e. d.:~r¡

17 to-day basis what to do, but I made ceratin that I reviewed
18 every major decision, every contract for over $50, 000, any

19 changes that he wanted to make in the executive branch, any
20 financial arrangements that Coram wanted to do, purchase of

21 sofb,¡are which \.¡as an especially bÜ,J contract, caused me to
22 come out and interview the people for several hours to make

.

23 sure we were getting our money's worth.
? A

I kept on top of

it.

I

called

25

called people like

l"lr. l"larabi ta .

frequently and I supervised the c i a irn

him very

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Adams - Direct

23

1 against Price Waterhouse, which I think is a fairly substantial
2 claim.
I got involved in the negot iations wi th the IRS whicW

3 involved approximately $18 million. I watch very carefully t 18
4 negotiations regarding Arnet, which i ~ a stumbling block, and I
5 spent a great deal of time with claimants who would call ion

6 and wri to in and things of that sort.

"Q Do you have any reason to believe that Mr. Crowley has 8 done anything that would be a finGIlcial impropriety during yo r
9 term as Trustee?
10 A.

I have no such reason.

.

11 Q

Have you formed any view as to Mr. Crowley's

12 forthrightness in advising you of the operation of the compan 13 during the nine months?

14 A
15

I have --

MR. LEVY: Can I hear the question again?
MR. BRESSLER: I asked him if he has formed any vie

16

) 7 as to the forthrightness of Mr. Crowley's information to him
1fJ regarding .the operation of the company 8inco tJJarch 7, 2D02.

19

THE WllNES~:;: I have formed a view, and my view is
If h:.

20 that he has been completely forthright. and forthcoming.

21 wasn't, I would not be sitting here today.
22 BY l-1R. BRESSLER:

23 Q

During your dcpositiOll, tn response to SOme quest:Lons fr m

24 Mr. Levy, I think at one point you stated that in your 55 yea-s
25 of practice you don't recaii another occasion when your

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f: 'i

Adams - Cross/Levy

l,

1 integrity had been questioned prior to this. Would that be
2 generally accurate?

.3 l~ That's absolutely accurate.

4 Q And I believe you also stated, and I'll paraphrase
5 somewhat, ttiat if the COtirt had allY question al./out youY.

6 integrity or the job you'va dons that you would be happy to
7 tender your resignation as Chapter 11 Trustee?

D A 1 repeat that to the Court. If there's any question at
9 all, I Vlould much prefer to step down. In my C8L'GC.i tlìe.io's -10

10 occasion for serving if there's any serious question about my

11 inteqrity.
12

I have no desire to serve.

MR. LEVY: Your Honor, since Mr. Bresslor quoLed frim

13 the deposi t.ion, I think he should indicate that when Judge

14 Adams said that, I said to him, as plainly and as clearly as
is could and as plainly and clearly as I do now, Judge Adams, I

i 6 have never ques lioned your integrity.
1. And -18

I have no reason to.

THE COURT: All right.

19

MR. LEVY: Thank you.
MR, BRESSi.¡;:R: I accept l-1r. Levy' 8 representation. I

20

21 hi.ve no further quest ions.

22

THE COURT: Tlii-ik you. Anybody else?
All right, cross? CROSS EXAMINATION
BY 1'1R. LEVY:

23
2/1
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~

i
i

Adams - cross/Levy

ls
i .i

1 Q ,Judge l\dams, would it be fair to sa:i t.hat durinc;i U-iis
2 engagement your principal focus has been to find a consensua~
3 resolution of the di sputes between the parties and get the

4 company out of bankruptcy?

5 A I think that would be £¡Ür.
6 Q And it's also correct, isn't it, that if it was determin.d
7 that Mr. Crowley did have a continuing conflict of inter8st i
8 would not have been your judgment to keep him on?

9 A That is correct.
10 Q
No matter how good a job he was doing?
That is correct.

.

11 A 12 Q

And, sir, Y01I also recognize that the ultimate legal
this case are to be determined by tho Court?

13 issues in
14 A
15 Q

Yes, that's true.
And notwithstandinq "That I t.nily believe your

16 extraordinary legal abilities, you've not tried to adjudicate
17 the legal ability -- the legal. issue, rather, of whether Mr.

18 Crowley has a continuing conflict.
19 A
Not the sense of a judge deciding something, but on tho
20 factual basis I did attempt Lo ascertain that, yes.

21 Q

Well, would it be fair to say, sjr, that you've not made

22 it a principal focus of your efforts as Trustee to investigat.
23 the conflict issues that have boen raised?

24 A

Well, I don't think it's the principal focus.

J thought J

25 did that right at the begÜlninq, and it was continuing. I

L

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1

I

,¿ 6

continually watched to see if there wus any infraction of tha_

2 understanding. I could not represent that I've spen L an
3 enormoos amount of time checking on it.. I reler;ated Lhat to Jiy

4 counsel.

If t.here lilere any documents or anythin~i like that I

5 expected counsel to unearth them. I did not set myself up as a
6 sleuth or something of that sort. YOU'Le quite right.

7 Q And right, sir, that you did not, just so we're clear,
8 make it a principal focus to investigate the conflict issues.

9 A From my standpoint, that. j.s correct. I would -- I limited
10 that to my discussions with Mr. Crowley and Cerberus's

.

11 attorneys. I talked to them about it. They knew where I
12 ,;tood. I think he knew "ihere I stood. And my counsel

13 particularly knew where I stood, and I asked them to exercise
14 all due caution in that regard, yes.

15 Q

I L would be fair to say you didn't view your role here

as
i

16 a prosecutor with respect to this conflict issue?

17 A l8 Q

Correct. I .did not view my role as a prosecutor.

And it wasn't your principal job as a trustee to be a

19 detective or an inve~tigator. You agree with that, sir?

20 A
21 Q

It Was not my pri ncipal job to be a detective, yes.

nnd. the reason for that, Judge Adams, is because you

22 believe that the various constituencies, everybody here, had an

.

23 Obligation to deal with you in the utmost good faith. Would

24 you ùgree with that?
25 A

Correct.

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Adams - Cross/Levy
1

27

n i-,

2 A
3 Q
4

Correct. I
To be forthright?
And is it fair to Si:y there are a number of questions Y(~f
i

did not ask because you expected that Mr. Crowley, for exampl~,

5 would deal with you openly, candidly, forthrightly?

6 A I tllì.nk t.hat' oS fair.
7 Q And the results, sir, was that you pretty much took Mr.
8 Crowley's statements concerning a cönflict at face value.

9 A Well, certainly to start with that's true, but then of
10 course 1 checked with Cerberus and had my counsel check as

.

11 well.
12 Q
You didn't rely on your counsel for a determination

as to

13 1.¡hether there was a continuing conflict, did you?
14 .Dl.

No, I ascertained thüt myself based on any facts

that t+y
!

15 could bring to my attention.

16 Q

Okay, and you did testify, sir, during your deposition,

1'/ and at Page 167, "If I took. his, Crowleyls, statements at fac'~

18 value, T d:Ldn't. see a conflict."
1 9 And then J sa id, "You did takG his statements at. face

7.0 value."

21 And you said, "1 did. n

22 That's correct, isn't it?

.

23 A 24 Q

That is correct, yes.

Okay. For example, when he Lold you in March, first tim_

25 you met him, that he had terminated his relationship with

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Adams - Cross/Levy

28

1 Cerberus you didn't ask him Lo sea any written evidence of the
2

termination,

did you?
i I

3 A
4

Well, he didn't say that he had terminated.

He .said thdt
I

except for the claim

he had against Cerberus he te~minated it,

5 his relzitionship.

6 Q Okay. I accept that., aiL', and -- but you didn't ask for
7 any written evidence that he had terminated subj eet to that.
8 A No, I didn't, but whon I cam0 back to Philadelphia I
9 lalked lo counsel êlbout that, and I assume that they did.

10

Q

And
,14ncl

what,

sir?
did, because -Did

.

11

A
(:;

I assume t.hat they

12

What

is tho basis of th¡:t as sumption, sir?

they

tell
I

13 you that?
14 A
I think they said that they had checked it as well.

15 think they did. I'm not absolutely sure at the time.

16 Q 17 A 18 Q

And who would they be?

Mr. Bressler from -Did Mr. Bressler Loll you at that time that he had .seen

19 written evidence of termination?

20
7.l
') ..1 ~L
,", 0) ¿J

A
Q

No, I don' t believe he ell d.
Okay, now you became trustee about March 7th.

A
Q

That's correct.
And you met with Mr. Crowley, I think your testimony was,

74 for the first time in Denver. I think you weren't clear
25 whether it was March 25th or 26th, right?

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29

1 A One of those t\..o days.

2 Q Riqht.
3 A i think I arrived there on the 25th and we had our first

4 nicotine;) on the 26th, £.:omethlng like: Ui.:'ll..

5 Ç¡ And it was at that llceLinr; thaL he told you that he had
6 terminated a1 I contractual arrangements with Cerberus. that e
7 only thing Lhat remained was his cluim against them for 1arg.

8 sums of money, correct?

9 A In substance, LhaL's what -- I don't know that they were
10 his exact wo£ds, but in substance that's what he was saying.

.

11 Q
12

Now, when he told you that on March 25th or 26th he did

not tell you whethc.c ho v'âs still getting $80,000 a month frori

13

Cerberus.
I did not.

14 A

15 c:

And that':3 becau.'3e he said it was termina Led, and j/ou Look

16 him ¿¡t face value, rii;ht?
17 A 18 Q
19

Probably that was so.
Now, at that point, March 25th -to.R. LEVY;
l' m going to mark first as Exhibi t ECX,

20 and I'm (;¡oing Lo use an X, Your Honor, 'cause we've had a lot
~l of EC exhibits in this case, even in prior hearings; 15 that

22 satisfactory?
23
24

THE COURT: Why X?
MR. LEVY: Because I suspect if I'd mark it EC-l -- T

25 don't really care, but we've had that twice before. No

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.

I I

Ad~ms - Cross/Levy

i30

1 problem, T -'J ..

THE COURT:

I prefer numbers.

3 BY I'm. LEVY:

4 Q Ok~y, EC-l, a document previously identified, ,Judge Adarrs,

5 d\lrìn'~J your deposition as Trustee Exhibit 5. It'.s ,=3 .let_ ter -6

MR. LEVY: Would you hand mo, Judge

7 BY MR. LEVY:
8 Q It's a let,ter dated ~1arch 26th, 2002 to you, .Judge Adams,
9 signed by Dan Crowley.
J0

THE COURT:

Gi. ve

the original to the wi tness, pleas e.
should go
copy,
La

.

11

HR. LEVY:
THE COURT:
THE:

I'm sorry"?
The o.ci~¡..nal

12

the ;-liLness.

13
14
15

WITNESS;

Thank you.

THE COURT; THE \tHTNES~3 :

1'11 take
T

a

:i f

you have

it.

have

it.

16 BY'MR. LEVY:

17 Q

Now, in -- do you recall receiving this letter, Judge

18 Adams? We did look at it durinq the deposition.

19 l\
.10 Q

I recall receiving this let tel', yes.
And you recall that in that letter and following your

21 meeting Hr. Crm-iley said to you, and I'm looking at the thin:

22 paragraph

23 l\

One, two, three --

II

24 Q

"As 1 have directed, it is my understanding

/I I'm

25 sorry. "As you have directed, Judge, Adams, it is my

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.

Adams - Cr.oss/Levy 31
1 understanding that I am to continue operating Coram on a day-

2 to-day basis, except that you are now to be considered the

3 board. As such we will now seek your approval for those
4 matters that were formerly taken Lo the Coram Health Care

5 Corporation Board of Directors. U

6 A I see that.
7 Q And was that an accurate statement in that letter? B A It's generally accurato except for the first one, two,
9 three, four words, because I don't remember giving any

10 direction. But aside from that, I think it's correct.
11 Ç2

I accept that, and so it was your undcrst~nding.

-

12 A
13 Q

I t was my understanding.
Okay, that -- okay, and going on, it was also your

14 understanding -- read it all. There's a discussion about check
15 signing authority, and then there's attached to this letter a 16 check signing approval authority sheet that gives the Coram
17 president and CEO up to a million dollars authority to sign
18 checks without any approval needed beyond his own; is that

19 dqht"?

20 A
21 Q

That's what it says.

And you approved that procedure at least implicitly wher

22 you received this letter.

.
L

?" ,'. .)

MR. BRESSLER: J would object, Your Honor, because it

24 mis-states a Iact. As Mr. J,evy knows, subsequently t.he Trustee

75 filed a motion and the Court granted a motion which lowered the

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Adams - CraB s ¡Levy

132
I

1 authority of anyone else at Coram to $50,000.
2

THE COURT: Well, overruled. You can raise that 01

3 redirect.
4

¡vlR. LEVY: Thank you, Your Honor.
THE WITNESS: You're just asking me whether this was

s
6 attached?

"I BY r.m. LEVY:

8 Q Yeah, at the time of your receipt of the latter.

9 A IL vias attached.
10 Q
And do you recollect, sir -- I'm through with that exhib't

.

11 if you like.

12

I say I'm through with this --

13 A
14 Q

Okay.
-- with that exhibit.

15 A
16 Q

Okay.
Do you recall that the next day Mr. Crowley or one of hi.

17 people asked your permission to send a letter to the employee'

18 or Coram describing the visit and what you had said to him
19 about the continuation of the operation of the company?

20 A

T thought he did that by mail, Maybe he said it orally.

21 i recaii receiving a letter.

22 Q
') -: ~ -'

We'll mark as EquiLy Committee Exhibit 2 now a document

previously marked as Crowley Exhibit 409.
'J'HE COURT:

2 tl

Is somebody marking this as EC-2?

25

All rii;hl.

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Adams - Cross/Levy
1.

33

THE WITNESS: Yes, I see it.

2 BY ¡vlP-. LEVY:

3 Q And generally speaking, you approved the sending of thi
4 let.ter to the employees.

~\ A Generally speaking, yes, thùt's correct. 6 Q And if you look at the bottom, the first page of this
7 letter, which went to what, abou't 2,200 employees was it, Ju ge

8 Adams?

9 A
10 Q

I'm lookj ng at the last pùragraph.

Yeah.
"Monday we had our first meetingn?

11 A

I)

12 A.

Well, I was pùrticularly

direct your attontion, sir, to

13 t.he last :3entence. "Judge; Adams 't¡as campJ i.mentary of the YJOrk

14 all of you have been doing to stabilize and strengthen Coram. n
1':,

I take it that's true.

16 A
17
Q

That's true.

I ! i

"And ho has c:sked me t.o continue operating the company i1n

18 my present. role reporting to him in essentially the same manrcr
'J :J

as

.1

reported to Coram's board of directors. n
Did you authorize Mr-. Crowley to tell t.he employees that?

20

21

.-A

Well, I did authorize that in So many warda, but that was

22 the substance. I said, "Let' a let this thing go now, and you

.

23 contillJe to run it under Ily supervision, of course, êlnd we'11

24 see how it gOGs." Y8S.
2~) Q

Well, when you say, "under my supervision, U the way Mr.

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.

Adam~ - Cross/Levy ~4
1 Crowley expressed it was reporting to him in essentially the
2 same manner as I reported to Coram's board of directors.

:1 A I see that.
4 Q Does that capture the essence of what you told Mr.
5 Cro~¡ley';

6 A Well, that doesn't capture the eSSence of what I told hi
7 no, bocause I don't know how of

ton he reported to the board of

8 directors, and he was going to rGport to me almost on a daily

9 basis. 10 But I visualj ZGd this IGtter -- some people call it a
11 puffing peace or something like that. He was trying to say to

~

12 his executives and employees nod suppliers things tire going to

13 continue as they always have. And I understood that. And
i~ although I disagreed with the precise language, I didn't want

15 to make cl fuss about it.
16 Q
Wall, did you agree, as it says on the next page, did you

1'7 tell ~- I'm sorry, did you tell Hr. C.r.oi-iley, as it says OIl the
18 next page, nJudge Adams told Us that our job iS to do what we

J 9 kIlOv!, opei:at.ing the company as well as we oan, while he __"
~o that's you, cTudge Adams, -- "works on resolving the bankr.uptcy

21 iSSUGs.h Did you tall him that?
22 A
Essentially that's what I told him.

. .~

2:3 this.

I said, You keep at I want to see the sales tncreùse. I want to see the

24 profits increase. And 1 want to 8Ge the morale kept high.

25 I'll take care substantiaJ ly of the legal problems and the

~; ~';;;:~~S( ::~--':,:; rf.- ~-;_' ;..~::~~~....~

I

-

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_J~l

C

J. bankruptcy problems."
2 Q Okay, sir, now the next document that we'1'o going La mar:
.3 as Equity Comm.i ttefJ 3 is a foi:m 8K fiJ ed vii th the Securities

4. and Exchange ConmÜssion as of December 9th, 2002.

5 And I take it, sir, that you reviewed at least all forms
6 filed with the SEC beforo they were filed.

l

7 A Correct.
8 Q And under Item 5 it says, "Arlin M. Adams, Esquire, the
9 Chapter 11 Trustee for the bankruptcy estate of Coram Health

10 Ca 1'e Corporation, Coram maven Dan Crowley, who served as
11 Coram's chairman of the board of directors, chief execut~ve

)

12 officer. and president t.hrough November 29th, 2002 have furthe
13 extended Mr. Crowl ey' s employment through December 31st. u

14 A

That's correct.
And that's a correct statement.
That's corroct, yes.

15 Q

16 A

I'll continu., "In order to contin e

17 their discussions and negotiati ons rogarding what Mr. Crowley's
18 role with Coram, if

any, wi 11 be foJ lowing December 31st."

19 contract thc:t we had was scheduled to expire on November the

20 29th, 50 we had to do something about the one month. And
21 that's what this is saying.

22 Q

It's saying, ian't it, to the investing public that Mr.

.
i-

23 Crowl.ey who was chairman, president and CEO beforo you becarne

24 the Trustee is continuing in the same role.

25 ;8,

For that month, yes.

I

1

I~._.

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.

Adams - Cross /Levy
1.

l6

(?

No, through the

year, through December -- through Decemb_r

2 9th, 2002.

3 A No, this document is dated December t.he 11th, 2002, the
4 document that you've handed to me, and it refers to his

5 coiitract \\ltÜch viould have e;':pjred on November the 29th, 2002.
6 And t.:hen it says it's goinc: to continue until DecembGr the

7 31st, 2002. That's a month. Maybe I'm misunderstanding the
8 question or this document.

9 Q Is j.t clear to you, E;ir, that UÜs document infonned the
10 investing public that Mr. Crowley who had been chairman,
11 president and CEO of Corarn Health Care prior to your becoming

~

12 truB Leo had continued and would continue at least through the
13 date of the public filing to be chainn¿iIl, president and CEO?

14 li
15

Yeah, that's what --

MR. BRESSLER: I object to the form, Your Honor.

16
17

THE COURT: Overruled.
THE WITNESS: ThaL's what Lho -- that's what the

18 contract said, and it would have expired November Lhe 30 th or
19 one of the lilst days in November., and all we did -- NOlJember

20 the 29th -- and all we did is to say we'll let it go for one

21 more month until we see what we're going to do.
22 BY l.m. LEVY:

.

23 Q

Thank you.

24 A

Otherwise, I don't -- am I answering your question? I'm

25 trying to.

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1137

1 Q Yes, indeed. You have, sir, thank you.
2 Now, you testified on the direct examinatlon when you m t
3 Mr. Crowley in March he told you that from time to time

4 Cerberus would ask him to evaluate situations, but that he 5 and t.his is during 2002.

li A Correct. .

7 Q But that he received no compensation, that he had -- th
8 those situatioIls would ha'7e nothing to do with Co.n:im, and th

9 it would not take time d\-iay from his ,\lork on Cerberus, co.cre
10 A

Correct.
MR. BRESSLER: Work on Coram.

.

11

l? BY MR. LEVY:

13 Q

On Coram.

I'm sorry. On Coram.

14 A
15 Q

Is that a question?
Yes, it is.

16 lI
17 Q

Co.crecL.
That's correct. Now, Crowley told you at that time that

18 the reason he did this work for free for Corberus is that he

19 thO\.ight it was important for him to continue his relationshi
20 with Cerberus because of the large claim he had against him --

21 them, didn't he?

22 A

Not quite that. He -- what he said to me, I' m try~ng t

. L

23 recollect. Ho said, "You know, I do have this claim aqainst
)4 Cerberus, and I doni t want to do anything to upset them or 9

75 them angry with me. After all, I have to protect my claim,

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Adams - Cross /Levy 38
1 which i~3 fairly large."

2 That' oS as I remember it. And that sounded reasonable t
3 me.
I wasn't there to hurt this man. I was there to run th' s

4 company and to make it .as successful as possible.

5 ¡Vly charçre, as I undoL'stood it, was to ç.et thi:3 company

6 of bankruptcy as quickly as possible, not to de-stabt Ii ze it~
7 to maximize the ass(~t:s and to mi nimi7-e the liabilitÙ:s. Tha

ß was the Polestar as far as I was concerned.

9 Q Would it be fair to Say that during this conversation M . 10 Crowley said to you or -- I'm sorry, that during t.his

.

11 conversation you got the impression that Mr. Crowley didn't
12 13
14

wa~t. to do anything to disturb his relationship with Cerberu,

if it jeopardized this big claim that he had, this ~oney cla'm?

A I think I' vo tried to answer that. What he was saying

15 "Look, you know, I've known these people.
16 ir.t:itate them.

1 don't \'iant to

I don't want to get myself in a position that

17 Ifm going to jeopardize my claim. If you don't mind, I --"

18 And my answer was, "Look, you can't get any compensatio
19 You can't do anything that conflicts with Coram. And you cai
20 do anything that's going to ta ke any amount of your time tha I

21 expect you to devote to Coram. Asi de from that I'm not gain
22 to interfere with that, U

23 That's real1y what I recall of our conversation. 24 Q Judge Adams, perhaps I can refresh your recoIlGctiün.
25
I'm now going to, if I may, read to you just a couple of

nd

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,

I I

Adams - Cross/Levy

b9

i questions and answers from the deposition of last week, and
? this appears on Page

156, beginning at Line 6.

3 I asked you, I said, "When he told you that he was not
4 being compensated for this work did you aSK him why he v.¡as

5 doing free work from Cerberus'?"

6 .luid 'y'ou said, "I didn't ask him. He told me wh.;t he
7 thought, that. it was important for him to continue his
8 rela tionship because of the large claim he had. n

9 And I said, "His relationship with Cerberus?"

10 And you said, "Yes, I got the impression -- I don't. knovl

.

11 whether he said it or not -- that he didn't want to do anythi i9

12 to disturb that relationship if it jeopardized this big claim
13 that he had, this money claim."

14 And L said, "How much was the claim?"

15 You said, "I don't know what it was. I know it was a
16 substantial amount of money."

17 Now, sir, did I ask those questions? Did you give those
18 ans1¡Jers?

19 A

Yüu did, but I think you're putting a littJ e bit of a sp' n

20 on my answer

/l Q 22 A

Sir --- to your questions. You did ask those questions, and

.

23 gave that answer, and I'm explaining what I meant somowhat
') ?LI .

differontly than you're trying to get jt across, but thaL's f r

2l: the Court to decidr~. I'rn not the jl.dç¡e.

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J
Adams - Cross/Levy
40

i Q Sir, you don't know how many transactions he worked on or
2 Cerberus in 2002, do you?

3 A

n number. No, I don't know precisely the number.

1

4 didn't want to get involved in that siibject.
5 Q You never asked him.
6 A Did I ask him? I can't recall ever asking hoiy many
7 transactions he would advise them about, no, I do not recall

8 that.
9 Q And you don't know the names of the companies he worked

10 for?

.

11 A
12 13

No, he did. He gave me the names of the companies, and I

didn't recogni ze any of them.

Q Or how much time he spent with those companies?
Yes, he told me that the time he spent was negligible a1 d

14 A

15 not on company time.

16 Q

Now, at some point you talked to Cerberus on this ~ssue of

17 the relationship and Cerberus told you that there was 50me
18 obligation to pay Crowley for past services, correct?
J.9 A

Something to that effect. I didn't tal k to Cerberus, I

20 talked to their counsel.

21 Q

Okay, but you didn't know then, and you don't know now

22 lot's j uststick with -- you didn't know then that if those

.

23 servj.ces were past services rendered for Coram or rendered f r

24 the benefit of other Cerberus investments, correct?

25 A

I don't think I can answer that question. No, I don't

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Adams - Cross /L~vy
1 kno,-!.
".", J

41

r,

Q

Let'~. see if I car: .cefresh YOLlr recollection again, Si1'l

On Page 50 of last week's deposi tiotl, beginning at Line I
1 0,

4

"For past services renderod by Mr. Crowley to Cerberus in

5 connection with Coram."
6
7

The witness, "I didn't know what the past services - - i, Were.!
Did I ask that question,

, .. sil',

Did you give that answer?

8 A

I th ink that's right.

I thought lhis recent que~tion wa

9 what were the current services.
10 services viere, no.
11
Q

I don't know what the past

And you
(No

don't

know

whether they

wl~re

for Coram.

~

12

A
çl

vr~rbal response)

13

The money he was

tryinq to colJect or is tryinç¡ to
Do I know iL? No, I

11 COllect, you have no knowledge about whether that is for Cora

15 A

I understand it W~S not for Coram.

16 don't kno¡,i it.
17 Q

Well, sir, YOLl said, "I di.dn't krio'tl what the past servic s
Th~t's what I'm saYJng now.
Than k you.

J8 were," and you still don't know; isn't that correct?
i 9 ÌI

20 Q
21

Now, let's get back to March 25th when he told you he had

22 terminated his relationship with Cerberus other than for this I 23 elain-i. You recall that?
24 1\
25 Q
I do.

Okay.

When he said that, he did not tell yOU 2bout

three I
i

I

~.RII. _.i-iill.Jil

.i.~
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Adams - Cross /Levy 142
1 documents he hud already oxecutecl that showed that hr=i had no
2 terminated his relationship with Cerberus but had only

3 suspended it r is that cori.'ect?
4 A
He did not show me any documents.

r don't know what th

5 documents say that you have.

I didn't see any documents.

6 Q Equi ty Cammi ttec ExhibH. 4 is a group exhibit -- a grour
7 exhibi L consisting of a document elated December 27th, 2001

8 signed by both Mr. Crowley and Steven Feinberg of Cerberus,

9 another exhibit formerly marked Trustee Exhibit 11 dated

10 January 29th, 2002, also signed by Crowley and leinberg, and

.

11 finally a document formerly marked Trustee Exhibit 14 signed

12 only by l"lr. Crowley.

13 These documents were not -- I'm Barry, February 28th,
11 2002. These documents, Judge Adams, are identical with the
15 excepti on thaL the first one suspends or purports to suspend
16 his contact, Crowley's contract, with Cerberus for January, t 1e

17 second for February and the third for March.

18 l\
19 Q

Correct.
YOll never saw these docurncnts actua lly prior to t.he time

20 that I showed them to you at your deposition last week.

21 A Th¿¡t is correct.
22 Q And if you had seen them, you would have asked for a
23 cIa rif -- if you had soen them before March 25th, when you me

e

24 with him you would have asked for a clarification of these 25 documents.

B257