Free Appendix - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR
1 2 3
4

Document 139-2

Filed 05/04/2007

Page 1 of 36
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4\

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

In re

Jointly Administered
Cas e Nos. 00 - 3 299 (M FW)

5
6
7 8 9

Coram Heal thcare Corp.

and Coram, Inc.,
Debtors.

and 00-3300 (MFW)

Chapter 11

The depositi~n of L. PETER SMITH, called
for examination, taken pursuant to the Federal Rules of Civil Procedure of the United States Bankruptcy Courts pertaining to the taking of
deposi tions, taken before JULIANA F. ZAJICEK, CSR

10
11
12
..1

\.

13
14

No. 84-2604, a Notary Public within and for the

15

County of Kane, State of Illinois, and a Certified
Shorthand Reporter of said state, at Suite 4000,

16
17

10 South Wacker Drive, Chicago, Illinois, on the
2 4 t h day 0 f S e p t e mb e r, A. D . 2 0 0 1 , a t 2: 0 8 p. m .

18

19

20
21 22 23
24
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Clzicago: 312.782.8087 · 800.708.8087 . Fax 312.704.4950

Case 1:04-cv-01565-SLR

Document 139-2

Filed 05/04/2007

Page 2 of 36 38

02:57 PM

1

A.

I don't know if I know anybody named DC

02:57 PM

2 3
4

other than Dan Crowley.
Q.

02:57 PM

Okay.

Did you tell the Goldin

02:57 PM

representatives who interviewed you in words or

02:57 PM

5 6
7
8

substance what was reported here in this fourth
paragraph tha t I jus t read to you?

02:57 PM

02:57 PM
02:57 PM

MR. CUNNINGHAM:

Obj ection.

The question is

compound.

9 BY MR. LEVY:
02:57 PM
02:57 PM

10
11
12

Q.

Okay.

Did you tell Goldin or his

representatives that, "They did not know that DC
was a consultant and employee of Cerberus"?
A. Q.

02:57 PM

02:58 PM

13
14

I believe I did say they, yes.

.~ 02:58 PM
02:58 PM 02:58 PM

And they would refer to the members of

15

the board of directors, correct?
A.
Q.

16
17 18

Um-hum, yes.
Did you tell Goldin that you learned of

02:58 PM 02:58 PM 02:58 PM 02:58 PM

the Cerberus contract during the bankruptcy?
A.
Q.

19 20 21
22

Yes.
Did you tell Goldin or his

02:58 PM

representatives that you still hadn't seen it as
of the day of this interview?
A.
Q.

02:58 PM

02:58 PM

23
24

Yes.
And did you tell them that if you had

02:58 PM

.)
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Case 1:04-cv-01565-SLR

Document 139-2

Filed 05/04/2007

Page 3 of 36 81

04:28 PM

1

successful person who had options in his life to
earn certain levels of income, and I

:28 PM

2 3

think he was

04:28 PM

attempting to earn what he thought he could earn.

4 BY MR. LEVY:
04:28 PM

5
6 7
8 9

Q.

Did any of your fellow directors on the

04: 28 PM

independent committee ever tell you that they
thought Mr. Crowley was greedy?
A.
Q.

04:29 PM

04:29 PM
04:29 PM

Not tha t I can recall.

Did you ever have a face-to-face

04:29 PM
04:29 PM 04:29 PM

10 11
12

ever after December 21st or perhaps after you read
the judge's opinion just a face-to-face
conversation wi th Crowley which you expressed some

04:29 PM

13
14

concern that he hadn't told you about the

~04:29 PM
04:29 PM 04:29 PM 04:29 PM 04:30 PM

magnitude of his financial benefits from Cerberus?
A.

15

I had a conversation with him, not

16
17 18

face-to-face, but on the telephone, in which I
told him I was disappointed. I felt that he

should have made that clear to 'us at the beginning
and tha tit was un

04:30 PM 04:30 PM

19 20 21
22

fort una te tha tit had not been
Why were you disappointed?

made clear certainly.
Q.

04:30 PM

04:30 PM

A.

Well, I think, as I said at the

04:30 PM

23
24

beginning of all of our questions here, he should
have made that point clear.

04:30 PM

.4'

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Case 1:04-cv-01565-SLR

Document 139-2

Filed 05/04/2007

Page 4 of 36

86

04:33 PM

1

..

was continuing to receive payments from Cerberus?
A.
Q.

:33 PM

2 3
4

No.
Do you know today whether he is

04:34 PM

04:34 PM

continuing to receive payments from Cerberus?
A.
Q.

04:34 PM

5
6
7 8

No.
Does it interest you?

04:34 PM

04: 34 PM

A.
Q.

Not really.
Why?

04:34 PM
04:34 PM

9

A.

Well, because I believe that what's

04: 34 PM

10
11 12 13
14

important for the company is that Mr. Crowley

04: 34 PM

performs his duties as the CEO of a company in the
way in which we want him to perform his duties,

04: 34 PM

04:34 PM
,-

and having been thr~~gh all of this and seeing the
results, I believe that that's exactly what he is

04:34 PM

04: 34 PM

15

doing.
Q.

04:34 PM 04:34 PM

16
17

Did it concern you that Mr. Crowley was

violating the express terms of Coram's conflict

04:34 PM

18

policy?
MR. CUNNINGHAM:
MR. HARWOOD: BY THE WITNESS:
A.
Obj ection.

04:34 PM 04:34 PM

19

20

Object to the form.

04:34 PM

21
22

04: 34 PM

That's an issue which I think is a fair

04:34 PM

23
24

question and obviously should be considered, but I am not at this moment in the position to say that

04:34 PM

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Page 5 of 36

172

06: 41 PM
'if

1

A.
Q.

It must have been spring of 2001.

06: 41 PM

2 3
4

Did you ever attempt to contact him

06: 41 PM

after you learned about his payments of $80, 000 a

06: 41 PM

month to Mr. Crowley?
A.

06: 41 PM

5
6

No.
Obj ection.

06: 41 PM

MR. CUNNINGHAM:

7 BY MR. LEVY:
06:41 PM

8 9

Q.

Did you ever suggest to Crowley he

06:41 PM

ought to stop taking $80, 000 a month from Cerberus

06:41 PM 06:41 PM
06:41 PM

10
11
12'

as long as he continued as CEO?
A.
Q.

No.

Did anybody,

to your knowledge?

....,

06: 41 PM

13
14

A.
Q.

I don't know.
Did you ever ask Mr. Crowley what he

~06:42 PM
06:42 PM 06:42 PM 06:42 PM
06:42 PM

15

does for Cerberus for
A.

that

$80, 000 a

month?

16
17 18

I never asked him.

He

did explain to

the board that he evaluates companies and

investments and so on, but it was not a detailed
explanation, no.
Q.

06:42 PM
06:42 PM

19

20 21
22 23
24

When did he make that explanation to

06:42 PM 06:42 PM

you?

06:42 PM

06: 42 PM

A. Sometime in the early part of the new of the year 2001 once this all came to light.

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Page 6 of 36

173

06:42 PM
§':ò

1

Q. When he made tha t explana tion in the
early 2001, were you aware that the payments were

6: 42 PM

2
3
4

06:42 PM

continuing?

06:42 PM

A. No.
Q. When did you become aware that the

06:42 PM

5
6 7
8

06:42 PM

payments were continuing?

06:42 PM 06:42 PM 06:42 PM

A. During the discussion of ,the Goldin
report, I believe, somehow.

9

Q. Early July?
A. Yep.
Q. And who raised that during the

06:42 PM 06:42 PM 06:42 PM
06:42 PM 06:42 PM 06:43 PM

10 11
12

discussion?
A. I don't remember.
Q. Were you surprised?

13
14

15 16

A. Not completely.

06:43 PM
06:43 PM

Q. Slightly?
A.

17,
18

No.

At that point I had focused my

06:43 PM

attention on whether, you know, - the steps we had

06: 43 PM

19
2a

taken, as I've mentioned before, were the correct
ones anyway, and at that point actually I just

06:43 PM

06: 43 PM

21 22 23
24

didn't consider it a major material fact in what

06: 43 PM

we were dealing wi th.
Q. But Goldin or somebody from Goldin's
side raised it during the July meeting?

06:43 PM 06:43 PM

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Case 1:04-cv-01565-SLR

Document 139-2

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Page 7 of 36

1

1
i:
"i~

2 UNITED STATES BANKRUPTCY COURT

3 DISTRICT OF DELAWAR
4

5 In Re
6 Coram Healthcare Corp.

) )

r(Qflf
Chapter 11 Case Nos. 00-3299 (MFW) through 00-3300 (MFW)

)
)

7 and Coram, Inc.,

8 Debtors,
9

) )
)

10
11
12

) ) )

13

Deposition of
WILLIAM CASEY

~'1 ~'" '~~

14 15 16 17

Fr iday, September 28, 2001

18 19

20 21
22 23

Reported by:
CSR No. 4373

24 CARIE STOTTLEMEYER, RPR, CM, CRR

25 Job No. 79613
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ESQUIRE DEPOSITION CHICAGO, ILLINOIS SERVICES 708-8087 (800)
BIS7

Case 1:04-cv-01565-SLR
1

Document 139-2

Filed 05/04/2007

Page 8 of 36

80

written contract between Cerberus and Feinberg, he was entitled to certain other potential profits, that is to
say other than Winterland?

2

3
4

MR. HAWOOD: Object to the form.
THE WITNESS: As I said, I haven't read the

5
6
7

contract.
BY MR. LEVY:

8 9

Q And you haven i t asked about the terms of the
contract, correct?

10 11
12

MR. HAWOOD: Objection.
THE WITNESS: Well, the terms of the contract

is that he i spaid 80,000 dollars a month.
BY MR. LEVY:

13

,;

14

Q How do you know that?

'~:) r'

15 16 17 18 19

A What you i ve said, that i s what he's said, that iS
what everyone has said.

Q But other than what he said and I said and
everyone said -- strike that.

A I haven't read the contract, I admit it.
Q Are you aware of whether the contract remains
in force today?

20 21 22 23
24

A No, I don't know.
Q Do you know whether Mr. Crowley continues to
receive 80,000 dollars a month from Cerberus today?

25
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A Do I think? I just answered the question. I

ESQUIRE DEPOSITION CHICAGO, ILLINOIS SERVICES 708-8087 (800)
BISS

Case 1:04-cv-01565-SLR

Document 139-2

Filed 05/04/2007

Page 9 of 36

81

1 don i t know if the contract's still in effect.
2
Q

Answer the question the way I put it. Do you

3 know whether he i s still getting 80,000 dollars a month?

4 5 6 7

Let i S go back to your interview with Mr. Goldin 8 on May 15th. I have a set of handwritten notes -- well,

A Q A Q

I don i t know that.
Did you ever ask?

No.

9 strike that, just strike that.
10 And tell me whether you recall saying to

11 Mr. Goldin in substance "EC equals a ploy and outside
12 force rather than real, in essence, ambulance chasers. II

13 Did you say that in words or substance?
14
A

I don i t have any idea what you i re talking
I i m sorry. Can you just repeat

15 about.
16

MS. HAK:

17 that?
18 MR. LEVY: You couldn't hear me?

19 MS. HAKA: I couldn't hear you.
20 MR. HARWOOD: May the court reporter read it

21 back?
22 MR. LEVY: IIII ask it again. Let's just do it

23 simpler.
24 BY MR. LEVY:
25
Q

Do you recall the interview on May 15th with

ESQUIRE DEPOSITION CHICAGO, ILLINOIS SERVICES 708-8087 (800)
B189

Case 1:04-cv-01565-SLR

Document 139-2

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Page 10 of 36

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

In Re

)

)

Coram Heal thcare Corp.

)
)

CERTifiED COpy

and

Coram, Inc.,

) )

Debtors,

Chapter
00-3299 00-3300

) )
)

11 Case Nos. (MFW) through
(MFW)

)

- ¡.

Deposi tion of

SANRA R. SMOLEY
Saturday, September 29, 2001

Reported by:

'$)
B190

CARRIE STOTTLEMEYER i CSR No. 4373 Job No. 79663

RPR, CM, CRR E S QUI R E '"
DEPOSITION SERVICES
1801 I Street. First Floor. Sacramento. eA 95814

2::

916,448,0505 . Fax 916.448,8726 . 8006100505

Case 1:04-cv-01565-SLR Document 139-2 Filed 05/04/2007 1 MR. HARWOOD: Object to the form.
2

Page 11 of 36

THE WITNESS: No i I didn i t cons ider that.

3 BY MR. LEVY:
4
Q

Did you consider the fact that that i s why

5 Mr. Feinberg is paying a million dollars a year to your

6 chief executive officer?
7

MR. HARWOOD: Objection.

8 BY MR. LEVY:
9
Q

Question is did you consider it?
No i no.

10

A
Q

11

Okay. Thank you. Do you know whether Crowley

12 is still getting that 80 i 000 dollars a month?

13

A
Q

I do not.

14

You never asked?

15

A

No. It f s outside of Coram. My judgment as a

16 board member is how he i s doing wi th our company, not
17 what he i s doing outside of our company in my mind.

181 That's just my value system.

19

i

Q

Peter Smith Exhibit 10 is the Corporate

20 Compliance Handbook.
21
22 23
A
Q

Coram Compliance Handbook. Okay.

You've seen this?
I have.

A
Q

24

Do you believe your duties as a director

25 included oversight to make sure that this policy was
65
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"T"'i
;
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

In Re

) )

Coram Heal thcare Corp.

) )
)

and Coram, Inc.,
Debtors,

)
)

Chapter i i Case Nos.

)
)

00-3299 (MFW) through 00-3300 (MFW)

)

CERTIFIED COpy

,,-¡
Deposi tion of

DANIEL D. CROWLEY
Thursday, October 25, 2001

Reported by:

,'~

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CARRIE STOTTLEMEYER, RPR, CM, CRR CSR No. 4373 Job No. 80965

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1801 i Street. First Floor. Sacramento. CA 95814

916.448,0505 . Fax 916.448,8726 . 800,610,0505

B192

Caserelationship, and Document 139-2 Cerberus had no Page 13 of 36 1 1:04-cv-01565-SLR the pay from Filed 05/04/2007 impact on

2 Coram, that they were pleased with me, my conduct, and

3 the results spoke for themselves.
4 5 6

Q Did you tell them at that time that you
intended to continue receiving 80,000 dollars a month
from Cerberus, "at that time" being sometime shortly'
after December 21st, 2000?

7
8 9

A Yes.
Q You disclosed that? A Yes again.
Q And you didn't mention Mr. Smith. Did
Mr. Peter Smith, a director, have a response?

10 11
12 13 14

MR. FELDMA:. No foundation.
THE WITNESS: Am I to answer this?

15
16
17 18

MR. FELDMA: You can. It's a defective
question, but you can answer.
THE WITNESS: I don i t recall.

BY MR. LEVY:

19

Q Did the directors at that meeting take any
formal action, form of a resolution confirming their
views as you just testified to?

20

21
22 23 24
;t-', '~'''''''~
.

A I don i t recall that.
Q Did the directors, to your knowledge, ever take
any action approving your decision to continue to
receive 80,000 dollars a month from Cerberus?

25
B193

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ESQUIRE DEPOSITION REPORTERS

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MR. FELDMA: I need 1 Case 1:04-cv-01565-SLR Document 139-2
2 question, it was broken up.
~\

toFiled 05/04/2007 the hear reread Page 14 of 36

3

(Record read.)
THE WITNESS: I don't think so.

-"'"N1

4

5 BY MR. LEVY:
6
Q

Mr. Crowley, I i m going to represent to you that

7 none of the minutes, the director minutes provided to us

8 by Coram reflect any action or discussion with respect

9 to your continuing to receive 80,000 dollars a month

10 from Coram. Can you explain that omission?
11

MR. FELDMA: I don't go off representations.

12 I don't want to have you sworn as a witness.
13

MR. LEVY: No, you don't.
MR. FELDMA: You can show him documents and

)

14

15 ask him questions, but you can i t testify and then ask

16 him to react.
17

MR. LEVY: Let me be clear. By making a

18 representation, I mean that if the representation is
19 wrong, the question and the answer are stricken.
20

MR. FELDMA: It doesn't matter to me. It's

21 not a good way -- 11m not going to have a lawyer testify
22 and then him react. He i LL answer questions or read

23 documents, but he won't respond to testimony by a

.-,
)

24 lawyer.
25
MR. LEVY: Boris, there are approximately 15
19
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Page 15 of 36
1

1
~.. .-~-

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

2

('."""""" ~,¡,.

3

4 In Re )
)
5 CORA HEALTH

INC., ) 00-3299 (MFW) through 6 and CORA, Debtors. ) (MFW) ) 00-3300

CARE CORPORATION ) Chapter 11 Case Nos.

7 )
8

9

10 11
12

(c(Qf)f
DEPOSITION

13
. .' ~~

14

OF DON AMRA

15 16 17 18 19

Palo Alto, California
Friday, October 26, 2001

20 21
22

23

Reported by:
CSR No. 6948

24 RACHEL FERRIER
25 Job No. 28956
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Case 1:04-cv-01565-SLR

Document 139-2

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Page 16 of 36
8

1

Q You recall potential conflict of interest, or
do you recall the transcript saying actual conflict of

2
3

interest?
A I don't remember.
Q

4

5
6
7

Did you discuss

at about that time, did you

discuss with Mr. Crowley this conflict of interest?

A I don't know the exact period of time, but
we the board, which is almost all independent
directors, discussed it with Mr. Crowley, the potential

8 9

10
11

conflict of interest. Q You say, "potential." What -- let's break it
down evening further.

12

13
14

What do you understand the conflict of interest
to be, whether it was potential or actual?

(,-,

15 16
17

A That Mr. Crowley was an employee of Coram
Healthcare as our chairman/CEO, and he also was a
consultant to Cerberus or one of their subsidiaries.

18 19

Q And did you, Mr. Amaral, view that as a
conflict of interest?

20 21
22

A No.
Q When did you become aware of the amount of
money that Cerberus was paying Crowley?

23 24 25

A About five minutes before my second phase of -this is my third deposition on this -- the second one,
which was in Orlando.

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Page 17 of 36
17

1 substantially under water.
(

~,

2 3

A
Q

Yes.
Now, having read the portion of the opinion I

4 put in front of you, is that still your testimony?
5
6
A
Q

Yes.
will you find for me where she said it was

7 substantially under water?
8

A

I think under any of the numbers the company is

9 insolvent today.
10
Q

And you interpret that to mean substantially

11 under water?
12
A

Yes, sir.

13 MR. HARWOOD: And for the record, the witness was

14 pointing to page 88, lines 10 and 11.
(,,,,
15 16
BY MR. LEVY:
Q

Are you aware that a -- did anyone tell you at

17 a subsequent court hearing Judge Walrath said when she

18 denied confirmation she didn i t -- she did not deny it on 19 the basis of insolvency, but rather on the basis of lack
20 of good faith?
21
22
A
Q

I don i t recall.

Are you aware that Mr. Crowley continues to

23 receive $80,000 a month from Cerberus?
24
A
Q

I don i t know.
Never asked?

25

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Page 18 of 36 18

A Not recently.
Q Ever -- ever since -- I i m sorry.
Ever since December 21st?

A It was disclosed to us that he was receiving
that compensation in -- sometime after December 21st,

2000.

Q But since then you have never asked him whether
he continues to receive it, and you don i t know whether

he i s receiving it tOday?

A I don i t know if he i s receiving that today.
Q Is that something you would want to know as a

director? A No. Q Why? A Because 11m very pleased with the job
Mr. Crowley is doing as CEO. And when I hired him, I
knew he was doing some consulting for Cerberus or one of

those
Q

one of the subsidiaries.

Did it ever occur to you that though he is

doing a good job, he might have done even better he
might have done an even better job had there not been
this relationship?

A It occurred to me that he could not have done a
better job than what he has done, whether he was getting
$80,000 or a million dollars a month.

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Page 19 of 36
24

~

1 established.
"

2

THE WITNESS: I know I -- I don't know the exact

3 15 million that you are referring to. I know under Dan
4 Crowley's leadership the company paid back a lot of

5 debt.
6 BY MR. LEVY:
7
Q

Okay. Let's establish the fact. Goldin

8 Exhibit 10 is a letter dated July 31st, 2000 written by
9 Dan Crowley to 'the three noteholders, Feinberg of

10 Cerberus, Goldman Sachs, ,and Foothill.

11 Have you ever seen that letter before today?
12 And I do note it shows that a copy was sent to the board

13 of directors.
14
A
Q

Do I remember seeing it? Yes.
And in the last paragraph, Mr. Crowley says,

(

15

16 "Earlier this year we voluntarily repaid $15 1/2 million

17 early on the revolver. 6.3 million in interest"
18 let's just say -- let me stop there.

19 "Earlier this year we voluntarily repaid
20 $15 1/2 million early on the revolver." Does that
21 refresh your recollection so that you can now testify
22 that you were aware that during the year 2000 up to
23 July 31st the company voluntarily repaid $15 1/2 million
24

early?
A

25

Yes.

(
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25
1

Q Do you think that payment was in the interests
of the noteholders, the shareholders, or both?

2 3 4 5 6 7 8 9

A Both.
Q How was it in the interests of the
shareholders?

A Reduced interest expense, increased earnings.
Q And the -- at the time this payment was made,
the company was having cash difficulties; is that --

when these payments were made, the company was having
difficulties; is that right?

10

11
12

MR. CUNNINGHAM: Objection.

THE WITNESS: I don i t think so.
BY MR. LEVY:
Q Well, the company

13 14
¡

'had been considering, at

\

15 16
17 18 19

least discussing, filing a Chapter 11 bankruptcy at
least since the prior December, December of '99; isn 't

that correct?

A That · s correct.
Q Okay. So during the period when the company
was considering filing a bankruptcy, the., company

20 21
22 23 24 25

voluntarily repaid $15 1/2 million; correct?

A Yes.
Q Did the company or its board OL. directors
consider that if it had conserved that cash, it would
have a better

and not paid, voluntarily paid the

"..

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Page 21 of 36
26

1

noteholders, it would have been in a better negotiating position with the noteholders?

2

3

A That, again, is in the eyes of the -- you know,
of the negotiator. But you need to remember all the

4 5 6
7 8

f acts here.
As part of the hiring of our CEO, when I was

the interim CEO post Rick Smith, Richard Smith, is I got Haven interest free for I believe four months and maybe
six months where no interest was paid whatsoever.

9

10
11
12

So during that period of time, the cash flows

of the company were substantially improved. So while
the company was considering bankruptcy because of this

13

enormous $300 million of debt on our shoulders, we still
had

14
i' ,".'''-

'interest -- I mean, excuse me, cash flow to pay our

15

bills, pay our salaries, increase inventories, do all

16
17 18 19

those business things. We were just under water since
the day I came over because of the amount of debt on the

company.

Q Was this something that was considered and
decided by the board of directors?

20 21
22 23 24 25

MR. CUNNINGHAM: Objection.
MR. HARWOOD: Object to the form. What. s the

"this"?
THE WITNESS: Please clarify the question.
BY MR. LEVY:

(
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Page 22 of 36 27

i
I

Q

The decision to voluntarily pay

\

2 3
4

$15 1/2

million,

voluntarily over the period f rom the

beginning of the year to July 31st, was that a decision

of the board, or
A

was that a

decision

of Dan

Crowley?

5
6
7

I don't

remember.

However, when I was CEO and

I had
Q

sufficient cash, I

just paid the debt down.

During this period between the beginning of

8 2000 and July 31st, 2000, did you as a airector ever
9 discuss the possibility of not making voluntary payments 10 in order to improve your negotiating position with the

11 noteholders?
12
A

I don't think there was any way by not paying

13 our debt down that we could have improved our position

14 with our debtholders.
(', :,'

15
16 17

Q

The question was, did you consider it?
I personally?
You personally.
I don't remember.

A
Q

18 19

A
Q

Do you recall it ever being considered by any

20 directors?
21 22
A
Q

You would have to ask them.

You don't recall?
I don't recall.

23 24

A
Q

Let's go back to December of 2000. You

25 described a telephone call where you learned about the

(

'\'.,

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Page 23 of 36

60
1
.'~',(Vt.

A

Yes.

2 MR. HARWOOD: Can you tell me where you are reading

3 from.

4 MR. LEVY: 9019.
5 MR. HARWOOD: Thank you.

6 MR. LEVY: At the top.
7
Q

Did you tell Goldin that you thought Crowley

8 was greedy?
9
A

I don i t remember saying that, but I think he

10 is.
11
12
Q

Do you think Crowley is greedy?

A
Q

Yes.
Do you recall a discussion -- you touched on

13

'J

14

this earlier -- with Crowléy and perhaps with Feinberg
in November of 1999 -- strike that.

15
16

I i m going to just bring you

November of 1999

17 is when Crowley became the CEO of Coram and signed a

18 contract. Do you recall that?

19 A Yes.
20
Q

Okay. Now, do you recall at about that time a '

21 discussion with Crowley and perhaps Feinberg concerning

22 Crowley i s request to be compensated by Cerberus or
23 winterland based on his success at Coram?

24 MR. HARWOOD: Objection; this goes before

25 December 21st and was covered at the last deposition.

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61
1

MR. LEVY: I understand, but there was new
information about it in here.

2
3 4

THE WITNESS: Yes.
MR. HARWOOD: If you are just trying to bring him to
the time period, that. s fine, but let. s not cover that

5 6
7

same territory again. Thank you.

MR. LEVY: Okay.

8 9

Q And do you recall telling Goldin that you said
at that -- telling Goldin in the spring that you had
said the prior November that it would be wrong for

10
11 12

Crowley to receive compensation for Cerberus or
Winter

land for his work at Coram and that the CEO should

13
""

only receive compensation from the company?

14

A Based upon work that he' s doing at the company,
yes.

15 16
17 18 19

Q And do you recall -- and was that because you
thought there would be a conflict?

A I don' t think that -- I want my CEO to be
compensated in my companies for the work that he does
for my company, not by a third party.

20
21 22

Q Because that would be a conflict?
A Based upon the performances of the company,
yes.

23
24

Q You said, "based upon the performances of the
company. " Which company?

25

-i""''ßm

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Case 1:04-cv-01565-SLR

Document 139-2

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Page 25 of 36 62

1

A
Q

Coram.
So to put it together, you believed -- you

2

3 believe that if Crowley was paid for -- by someone else

4 based upon the performance of Coram, that would be a

5 conflict?
6
A

Dan Crowley should only be paid by Coram for

7 his activities on Coram.

8 MR. CUNNINGHAM: Could we possibly -9

(Recess taken.)

10 MR. LEVY: I think we are going to mark this -- do
11 we have copies?

12 MS. MINOR: Yeah.
13 MR. LEVY: We are going to mark as Amaral
14 Exhibit 102, pages with Bates Nos. G 9009 through 9037.

15 (Equity Committee Exhibit 102 was marked for

16 identification by the court reporter.)
17 BY MR. LEVY:
18
Q

And Mr. Amaral, these were furnished to us by

19 Goldin & Associates. And as you can see from the first 20 page, they appear to be the notes of a meeting with you

21 and all the people you described earlier.
22 23
A
Q

What pages, please?

Okay. Now, please look at page 9021. In what

24 I suppose you call the second paragraph it says on the
25 left, "JG," which I am interpreting to be Jay Goldin.

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Page 26 of 36

74
1
Q

And are you aware that as a result of the

2 change made back then, that he now claims some

3 $13 1/2 million?
4

A

I don' t think he claims to think the

5 companies -- based upon the signed contract the company

6 owes him that money.
7
Q

Now, did you tell Goldin that you were not even

8 aware of the second negotiation? And I' m looking at the

9 top line on 9026.
10
A

The negotiation of Dan Crowley' s second -- the

11 renegotiation of Dan Crowley' s contract was mentioned at

12 a board meeting by Peter Smith, that he would be getting

13 back to Dan about some issue regarding his contract.

14 And I said, what the fuck is this all about.
15 16 17 18 19
Q

That
Yes.

means you were

surprised?

A
Q

Annoyed?

A
Q

Surprised.
Annoyed?

20
21 22

A
Q

Surprised.
And not annoyed?

A

Surprised.

23 MR. HARWOOD: Objection.
24 BY MR. LEVY:
25
Q

Why were you surprised?

;1

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Case 1:04-cv-01565-SLR

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Filed 05/04/2007

Page 27 of 36

76
1
,,~"".'': '~",l;;:J

Q

Well, who was the compensationcommi ttee at

2

that time?
A
Q

3
4

Should have been Feinberg, Fink, and Smith.
I think F ink was gone.

5 6
7

A
Q

Then it would have been Smith and Feinberg.

Isn i t it a fact that the deal to change
to an amount

Crowley i S compensation to what now you

8 that you now believe to be S 13 1/2 million is made

9 between Crowley and Feinberg?

10 MR. HARWOOD: This is pre~December 21st, 2000?

11 MR. LEVY: Just hold on a minute and I i 11 make you
12 happy.
13 THE WITNESS: I don i t know that.

14 MR. LEVY: Okay. Let me mark as Amaral Exhibit 103
15 a document dated April 12th, 2000 bearing Bates NoS.

16 D&T 4407.

17 And Mr. Harwood, or Michael, I will tell you
18 that this letter was never furnished to us until we

19 received it from Goldin who had -- we received it from
20 Deloitte & Touche, who had received it from Goldin, and
2 i that i s why I i m going back on this.

22 For some reason Coram saw fit -- or didn i t
23 produce this, and they should have.

24 MS. MINOR: And just to clarify, because it is
25 marked "D&T, II Coram did produce it in the last two

B207

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Case 1:04-cv-01565-SLR

Document 139-2

Filed 05/04/2007

Page 28 of 36

\
.~

\
,,

" ' Healthcare

Solutions W' '. .'Dynamic
Invoice
. November I, 200 1

Mr.

Stephen Feinberg

General 'Parer

Cerberus Pafers

450 Par A venue, 28th Floor

New York NY 10022

, Professional Consultig Servces for November, 2001

$80,000.00

Expenses:

· Dan Crowley - Centerial In Atlanta
· Dan Crowley - Winterland meetig

· Kur Davis.: Centennal in Atlanta · Darena Blay - Centennal In Atlanta
Total Expenses

$3,34434 $ 2735 $3,21052
$1,690.00
$8,272.21

TOTAL AMOUNT DUE

$88272 21

Please wie fuds to Dyamc Heathcare Solutions
Bat of America Sacraento, ABNRouting #1210-00358

Account No. 01485~7867

~

Dyc Healtca Soliion
FederlD.//94-3V977

REOtr LO L. MARCfUm RPR. eRR. CS NO. /0$21

EXHIBIT: :5
Witness: . ,"Davis
Date: 1/5l 07 # of pages:

?2

CROWLEYKVN 002204
400 Capitol Mall. Suite 1250. Sacrmento. CA 95814 '916.449.6056. 916.449,6059 fa:~

CXR 01010

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Case 1:04-cv-01565-SLR
t,! -l ~;

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,Volume III

403
!

(

.;;

IN THE UNITED STATES FOR THE DISTRICT BANKRUPTCY CO~T ~~

OF DELAWARE~:Cn ."

IN RE: )
CORA, INC., )
Debtors. )
)

CORA HEALTHCARE CORP. and ))

Chapter

::~ k -n ~~C; ;; c-.... ~E¡- r.. ¡¡ ':-l"T, ... fZnx _ ;i~ :J ¡ ì i 11 ~ê w __

-fo) '"

Case Nos. 00-329§iMFW)
through 00-3300 (MFW)

'~,O a f'"' .i
::;; "

o~:: ~

Jointly Administered

United States Bankruptcy

Courtroom No. 2A Court 844 North King ~treet Wilmington, Delaware 19801
, ./

December 13, 20fr 9:00 a.m.

BEFORE: THE HONORABLE MARY F. WALRATH l
Uni ted States Bankruptcy JUdge

Transcript of Proceedings

1330 King Street ~ Wilmington. Delaware 19801
(302) 655-0477

WILCOX & FETZER, LTD.

B209

WILCOX & FETZER LTD.
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ft

a RIG 11\1 A I

1~11

Case 1:04-cv-01565-SLR

Document 139-2

Filed 05/04/2007

Page 30 of 36

Dan Crowley - Cross (Levy)

419

1

Q.

More than once?

2
3
4

A.
Q.

Yes.

Did you cooper a te wi th him?

A.
Q.

Fully.
Dtd you give him open access and total

5

6 inform~tion?
7
8

A.
Q.

Whatever I had.

I'il sorry?
Everything I had.

9

A.
Q.

10
11

But you don't recall ever telling Mr _ Golden

that you were continuing tó receive 80,000 a month from
Cerberus, do you?
A.
Q.

12

13
14

I don't remember that I told him, no.

And you are aware, aren't you, that the updated

15 Golden report doesn i t discuss at all the issue of
16 payments received by you from Cerberus after December of

17 2000, .right?
18
A.

I'm not conversant with whether it does or

19 doesn't at this point.
20
21 22
Q.

You read it?

A.
Q.

I read it when it came out.

Ernst & Young are the auditors for Coram, right?

23
/

A.
Q.

Yes.
And you were required to sign a representation

24

B210

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~

)

Case 1:04-cv-01565-SLR

Document 139-2
Dan

Filed 05/04/2007

Page 31 of 36

Crowley -Cross (Levy)

425

'.~.. ~ ~-.

r ~:t
\ ..~.

1

Â.

I believe that -- what I said was that the Board

.2 was informed of it and that the Board had assented to my
'3 employment agreement arid. individually, in front of

4 counsel, the Board gave accolades and spoke highly of my
5 peiformarice and t~at they did not believe that the

6 conflict had m~ni~esteditself in any way that's
1 derogatory to the performance of my duties as

CEO for

8 Coram.
9 Q. "L~t' s get some timi~g dn ,that. YOQ first said
10 the Board

approved your employment agreement. That would

11 have been back ln November of 1999?
12

A.
Q.

Approximately.
At that time the Board did not kno~ that you

)

13

14 were receiving $80,000 a month from Cerberus, is that
,15 ,correct?

16
17

A.
Q.

That is correct.

Okay. Now, the next event that I think you were

18 speaking about was January of this year, is that right?
19
A.
Q.

Right.
When was the next time?
The end

20
2,1

A.

of December of 2000. As early as I

22 could get them together in January.
23
Q.

Fine. That's the meeting where you claim that

24 you told the directors that you were going to continue to

WILCOX & FETZER LTD.

"l

..

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Case 1:04-cv-01565-SLR

Document 139-2

Filed 05/04/2007

Page 32 of 36

Ec-ç
Reld, Cynthl.

S~ To:

Frò:

S ubJ-

RE Cn

Fri, Ap ~. 20 2:36 PM 'Sc Scmijl)

Co M~

No problem. H,Ù'there been" l.ale? I knów ot no,ne. '
H.Chiio. L. Coo'le,

Schulte Roth, Zab4l .LLP 919 Th~rd Avenue New York, HYi0022

., t~mail:michaëi.cooleØ.r~.com

FAX:: (212) 593-5955 ,

(212) 756-2150

----~riqinal He's"qe----_ r~oa: Scott Schreiber r~ilto:'3chr.ib.remuchlaw.coml

To: Coole, lUcha.l . Subj tict: crowley
m. le

Sent: Friday, April 05, 2002 2:-35 PH'

contract between U3 and our çlient3 tOr now.', no other 'atty's nor the
'tlia t . 3 the way to, '10.

I'd appreciAte it if you ,woUld ke.p 'our conver,ation, re; termnatlnq dan',

tru,te. need to b. part .ot th03. conver,atlon3 until dan and Cerbecu3 decide

thank,

"cott

EXI~~ "
,~;,;¡.~~,~ ;¿:Z~~.s-o~,

CERB

20092

B212

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Case 1:04-cv-01565-SLRFR 'Document 139-2 "ly Ø6 20 15: 45

;1...-e£-202 17:35 l' Sr..ÉUST FD

Filed 05/04/2007

Page 33 of 36
::';1:21 ?22,'n

9164496Ø9 TO SCHl~

p . Ø2/Ø3

"

May 6. 2002

Stee Feinbe
, Dea

~'
. .

EC~?' ',~
REDA,GTED.'

'Steve;

I have b~ ~i ~hoti our.,~ l~ wek., hi. retr~s~ it a.J~t unöJd as y~u 's~id

. , 'JS. .

~c;~.-you ind tl I haiho c~me to New, Y: or~ i ~L -l. '~.' .

Wel ~ pa 3Q ,fnth ha¥è ~ be ~i¡': Wbi.lam i: cl..lhl\ .

suer &ay. I am ina job th r would . . . ~dICS Ch i 1 iOolas., I 3m th oiiý pen at Còrå tht ha 1?n paid'M/hing ..
. on th ipoo MI or the 'KERP(s)"òr the 2001 MI orJinytg.. ~o~. No ~ouig.: .

, . have not done anyt,~n¡n. I su have

DcvC. eyer have iied. at a rate of pay.tb.J ea ~9 .yea ågo. I am cJUeshed in .' .

' ..,. '. JuS be a"'ooSõldic:.. ' , '. '. , '.
At fl, s3ne,tie. I have ha my o~ Copiany (D~~) totåy upnded. ,I have had , my móiithy retaei with Cer 'ened niingmý ta ~ow. ,1, ~ ,~ccú iolà 4n ..'.
' _aij~ Jl~tl8 uidi: the C.r~ Agrecmc.' I have ha to p~Y'sigmc~t:Jég~l bjJ~. I,'..
'. reuttion ha ben tred, to. But ~ )'oi once s3tL I'm 'worlgwith you 'aid
.cerberu So lt doe't matt . ...",; th my

.. . .

,hav.e,~tÚlDål?lc ic'parclp: inañY'DeW-busess ae.. All ths;:and my pr()f~ona,

~.

. ::.,

I 81 al -recallihg when you sàid onci tl i should'thirk' aoouJ it ~ 33 'havIn¡. ; : "ki~sed

,~e wrng ~in". I owe it to myselr to tell you. Steve, ~ I glss I d~n ~~' opeethe
,sae waY~

"numbe ,ard probal w,

. .... I .'

...' : lWo~d.hav:e:~èagöftj~tG~hoWyouwei~~ JW9uJdnot,haVcbe '.,' :_ ' ." badtr ~u to regn ove Chow Y ~ 'I ~ould not bac, be chain you.. ,'.
. to ge yo bc You .Ine(th,TIu tö ,get your regnon dOne. If , Some wr........ YO shuld have sipl fi me.' If-not, why have I bee

, , , , .. .
~ me. .

repuon ba be hUr Right'? .

a 'ü the she we on the other foOt;' and, it'
-.

',-t ,,~
, .'

CJ .

,-n'. ,c:' . " m.,

c= . :z'

:.... i-, .

' ~'to inNotg. .
Would hae fOU¡hf to the en on th frnt sid~ I would nevci have

I ba'-doDc , "

put " ',anlen? Th rety:.s th'l h8vc ,dOne a Jo ngl Noihg, to dcSé wht ha . at

'If tl Sh we on tbeoth fqo your legal bils would have be prmptlY,paid'! . (,_, . ,

st back and . , '.' " 'see you Ia..lct's se ho it tu oui Mr. BrCler ha told me th lÌniee don'tsad'" , '
, - ' ' wD to give use advice :ah\Í ëndia the contr'Òt ~y geÍtg ~cL. iI~ also'sad. we ' ..
' håvesnJawyeran he's su thtbey'e; fi8uoUl hawto getm~ pad. 'He lu~ no objection to Diy bég pad forwQrdoDc or for ~ th cóiil

, CRX 00063,
B213

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.

my Ø6 2Ø- !.S: 46 Document 139-2 Case 1:04-cv-01565-SLR FR _'

~'~ -":"C': i " , :. ,L' . ~ r 5T FDA

Filed 05/04/2007

Ql6496ØS~ TO SO:'13ER,

-.
'"

, , th l am Dot ~' åt anyone. '.
1 th tJt:Fried did a' teble job hag th ca. He miadse me, didn't

It wi bt yout na ieon to st to say "Dan's mad". Wel4 I 'ca hone.y tell you .

, 00

Page 34 of 36 " ;:.~ ~ 3õ:':~i. . ~.2YØ3-

~ coiiy;. . . . . " , . J ' .",'

focu pro~ly) porly prCp me; and didi~t ,~dle m~~ any import aSt of th. . _,

remmened 'him .i did it on m . own, . ., , c aner. tht' .

- f1 Loke w . ~' , . .
' abouuiyÎlg to, get upside on yQur,potio~ ifl-did a ¡r jo.b. ai Cora I didn't ha-.t "to
' ta the asgnèn at COr-In respct i should ~~,sipiy told.

rrîed ¡ave". in our And, r- dido't haVt to hi"Cbån siply because you,

. I s.POSe ifl,~ad be.mofC tra:måybe (riybc) I would not ~ve wr,the memo.

. If I hä be m~ie trï ~Yb (maYbe)-1 woiid, DOt hav.c'ased tor å foÎi cOntrct"
" outg thngs lie lcga

- ....-. .
untig,QD.someone to ,do wh 'tbysay they will do.

you, "no..., '. '

bills being pad, ~dc béï;g sb i ~CSIJas 'çl~ 't : .'.

. Jcow you tlt weIl when we" eiic'tl reIaonsn¡p. 'Hiry ha taugt.

'fesns abut "ames" When it conies ,to monéy. To.th 'day~'you'ar stllme had me telling
th I ca count EBITA w:i,S37 Milion'w/o.CPS ~ $54 . "

. th the 200 Af was basc(fupn the gå OD the CPS.sae even'thnu¡l I have toi~'you' '
'-.it didh't niore tUes

~\
""

di~'i . , . " , . , . w

Milion wi ,it' I Would have "eared .nnother $4..25 Miion if! inCi~ed the gai. L

Jo~g eduction. An yes I st like 'and'ad yo~ a Jot AdiJie. S¿' ,

bUlli Adm youdDtCUect'~'yolUfai' "tmcnl I,ai lie m~ a.lot, when it . " == "
comes:to bein'back to.b' . . ~eonè in good and ~ad timeS.. I ~y like m~ a lot . ..' F: .
No question

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: Thi'~.il 'Ilm B-et.k~~g~' ~~1 of tt., ~tt. .Yá\l'~ 'tooo y~iJ. '1 jÙ$ want~d you to...

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CRX '0006" ' "
B214

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Case 1:04-cv-01565-SLR

Document 139-2

Filed 05/04/2007

Page 35 of 36

r. . \t'" (, . . . . -. ,'. ' . . .' '. , ", . .
J.'" /f~ce i expc uil you'll ho the com"eii th you ii~ to me over diicr .lr

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C9ra;s pi~ is ~onfCd or: its assets

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,sold; rn be ~ted with Cereru -and receive

SS.OO,OO frm Cerer. Also, C~en' wilJ indemjfy me for all of my legal fee,
. .. . plus .pay me the difference b'etwee ~what l'Ultimattiy.~eceiYe. frm Corai by way of
bonuses, 'and S 1.1.200,00.- 'If ths'ís nof our dèai. pleae.jus send tbis Jetter 'back to mc.

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C~00065 ,
B215

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Case 1:04-cv-01565-SLR
.

Document 139-2

Filed 05/04/2007

Page 36 of 36

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lERNAL AN ÇONFIDEN1.

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Rc: sm'plo~cnt~em,ent

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teoo ot'th èIploYmen agteienbctwieen p-namicHtil Solutoiu an

Withut respe to de activity, ( tlin we rean3ly ag lt under the ~ment thr I åm :eiigible, to recive payIent for a',ltÌioD without caue ihnnderlhWQuJd ÏDclude payment Cor the moiitt th i have' go wipaid in 200 plus for one (1)

, a,di!Ìona ye~ tor icvera~. , '

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i ~~ 3iriy appreciat hadling th extilUly il amcaly brgi closur to

CRX 00816

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B216