H. Jeffrey Schwartz

Throughout his career, Jeffrey has led successful engagements on behalf of debtors such as the Bayou Funds LLC and PTC Steel Alliance, Inc., as well as official creditors’ committees, including those formed in the bankruptcies of Dow Corning Corporation, Corinthian Colleges, Inc., Digital Domain Media Group, Inc., Coda Automotive, Inc., and Constar International, LLC.

In the structured finance space, Jeffrey has represented MBIA, Inc. as the holder of the largest claim in the Chapter 11 reorganization case of FGIC Corporation as well as various private equity and hedge funds in other major Chapter 11 cases. He also served as lead counsel to Jay Alix as Examiner of a $450 million fraud in In re Phar Mor, Inc. and led the successful Chapter 11 case for International Total Services, Inc., the preboard aviation security screening company, which undertook most of the nation’s aviation checkpoints after Sept. 11, 2001, until the Transportation Security Administration assumed control over and responsibility for preboard aviation screening.

Most recently, Jeffrey served as lead bankruptcy counsel for the Chapter 7 trustee for ITT Education, Inc. in the prosecution of D&O claims, fraudulent transfer claims and professional liability claims relating to in excess of $1 billion in catastrophic damages and for the Official General Unsecured Creditors Committee of Corinthian Colleges, Inc., the largest for-profit postsecondary education provider to file for Chapter 11 reorganization.

Jeffrey has served as a board member for Lexford Residential Properties Trust (NYSE: LFT), Insignia Financial Group (NYSE: IFS) and International Total Services (NASDAQ: ITSW).

Honors & Recognitions

• The Best Lawyers in America^®, Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law, New York (2006-2025)

• Ohio/New York Super Lawyers, Bankruptcy: Business (2004-2017)

Education

J.D., Cleveland State University College of Law, 1979

B.A., Cleveland State University, 1976

Experience

Official Committee of Unsecured Creditors, Plan Sponsors, Fiduciaries, and Major Creditors

• Lead Counsel in the Bayou Entities Chapter 11 reorganization cases commencing successful Chapter 11 case for a $450 million hedge fund that systematically defrauded its investors, in which they brought an excess of 200 “clawback” adversary proceedings achieving significant recoveries for defrauded investor creditors and establishing significant legal precedents subsequently followed in the Madoff bankruptcy liquidation cases in Bankr. SDNY. In a landmark decision, Bayou Accredited Fund, LLC v. Redwood Growth Partners, motion was granted for summary judgment on behalf of the Bayou Hedge Funds against 18 redeeming investors to recover payments of invested principal and fictitious profits. The decision contained the then most comprehensive statement and application to date of the rules of decision applicable to the good faith defense under section 548 (c) of the Bankruptcy Code. Bayou Superfund, LLC v. WAM Long/Short Fund II, L.P. (In re Bayou Group, LLC), 362 B.R. 624 (Bankr. S.D.N.Y. 2007) (denial of motions to dismiss). In re Bayou Group, LLC, 372 B.R. 661 (Bankr. S.D.N.Y. 2007) (denial of motions to dismiss). Bayou Accredited Fund, LLC v. Redwood Growth Partners, L.P. (In re Bayou Group, LLC), 396 B.R. 810 (Bankr. S.D.N.Y. 2008) (memorandum decision on cross-motions for summary judgment).
• Lead Counsel Bass Pro, Inc. (General Outside Restructuring Counsel to Bass Pro; represented it in Hanjin Shipping Co., Ltd. global bankruptcy matters in a case pending in Seoul, South Korea).
• Lead Counsel to the Official Committee of unsecured creditors in the reorganization cases of Cardinal Industries, Inc., with a consolidated debt of $1.8 billion at the time of the Chapter 11 filing, Bankr. S.D. Ohio. Pursuant to the confirmed plan of reorganization for Cardinal, Jeffrey joined the reorganized Cardinal's board of directors and became its General Outside Counsel. Over a period of years, he superintended the transformation of the $1 billion distressed NASDAQ small-cap real estate and controlled management C corporation into an NYSE-listed apartment REIT and, subsequently, its merger into Equity Residential Properties, Inc., achieving a 30%+ compounded annual rate of return for creditors taking exchange securities for their debt pursuant to the confirmed POR.
• Lead Counsel to the Official Committee of Unsecured Creditors of CODA Automotive, Inc., failed major manufacturer of battery-powered electric vehicles, aggregate debt of $500 million, Bankr. D. Del.
• Lead Counsel of Court Square LLC and CVC Venture Capital as majority shareholders in the successful Remy International, Inc. prepackaged Chapter 11 reorganization case resolving in excess of $1 billion of indebtedness, Bankr. D. Del.
• Lead Outside Bankruptcy Counsel to Developers Diversified Realty Corp., then the largest publicly held shopping center REIT in various of its major tenant Chapter 11 cases including those of Kmart and Service Merchandise.
• Lead Outside Bankruptcy Counsel to, and a Director of, Insignia Financial Group, Inc., which, together with its affiliates, acquired approximately $13 billion in distressed assets.
• Lead Special Counsel to Chapter 7 trustee for ITT Educational Services, Inc., the largest for-profit postsecondary education provider to commence bankruptcy proceedings under Chapter 7 of the Bankruptcy Code; Lead Bankruptcy Counsel in the successful resolution of claims against auditor Deloitte and private student loan funders led by a global bank; led investigation of D&O claims and certain income tax claims, Bankr. S.D. Ind.
• Lead Counsel to MBIA, Inc. in the FGIC, Inc. Chapter 11 case. MBIA was the largest creditor in FGIC, Inc.; successful reorganization tied to the FGIC Operating Company Monoline Insurance Rehabilitation Proceeding, Bankr. S.D.N.Y.
• Lead Counsel to the Official Committee of Physician Creditors of Dow Corning Corporation in a landmark mass tort healthcare Chapter 11 case involving $5 billion of asserted personal injury and other claims.
• Lead Counsel to the Official Committee of Unsecured Creditors of Corinthian Colleges, Inc., in the largest for-profit postsecondary education company in the United States and Canada to file Chapter 11 cases, which operated on over 100 campuses, had a student enrollment of 74,000 and revenues of $1.2 billion, Bankr. D. Del.
• Corinthian Colleges Bankruptcy Distribution Trust, successful resolution of significant, key asset D&O claims, Bankr. D. Del.
• Lead Counsel to Official Committee of Unsecured Creditors of Constar International Holdings, LLC, a global manufacturer of plastic containers for food and beverage companies; Chapter 11 case precipitated by PepsiCo’s terminating Constar as the sole domestic supplier of plastic bottles; obtained order requiring DIP funding of Sec 503(b)(1) and (b)(9) administrative claims; successful business asset sale, discovered and successfully resolved misrepresentations made by Debtors’ Counsel to, among others, the Court, Bankr. D. Del.
• Lead Counsel to Official Committee of Unsecured Creditors of Digital Domain Media Group, Inc., a publicly held provider of visual effects and digital production founded by James Cameron and winner of many Academy Awards, successfully confirmed POR, Bankr. D. Del.
• Lead Counsel to Jay Alix as examiner of a $450 million fraud in In re Phar Mor, Inc., Bankr. N.D. Ohio.
• Lead Counsel to Plainfield Asset Management, LLC as plan sponsor and DIP lender in the successful reorganization of Kara Homes, Inc., a major residential real estate developer in the mid-Atlantic area, Bankr. D.N.J.
• Lead Outside Counsel on legal strategist for Port Link, Ltd., in successfully obtaining the release of the $500 million frozen by a Dubai-based bank at the behest of the Kingdoms of Kuwait and the United Arab Emirates (as reported by Forbes).
• Lead Counsel to the Senior Lender Group in APW Ltd. et al. (including Greenwich Street Capital Partners, Candlewood Capital Partners LLC and the Royal Bank of Scotland). This entailed the initiation or participation in global insolvency proceedings in the United States (Bankr. D. Del.), United Kingdom, Poland, Germany, Italy and France and implicating substantial operating assets in China and India.
• Lead Counsel to the Acquiror Sponsoring Plan of Reorganization for Southern Industrial Banking Corp., reversed triangular merger plan converting the debtor into an FDIC-insured bank confirmed, Bankr. E.D. Tenn.
• Lead Counsel to one of the largest vendors (Hong Kong-based) of Sears Holdings, led a group of large foreign vendors in vigorous litigation over the administrative priority of claims under Sections 503(b)(1) and (b)(9) of the Bankruptcy Code, achieved virtually full recovery pending appeal, Bankr. S.D.N.Y.
• Lead Counsel to the Agent for the Committee of Secured Lenders to the former Rustic Pathways LLC in the litigation relating to and the workout of the secured loans and liquidation of the associated substantial real estate collateral situated in the United States, Costa Rica, Australia, Thailand, and Laos.

Significant Debtors

• Lead Restructuring Counsel to a major New York-based art gallery (restructuring included the distressed disposition of a masterwork recently resold for $450 million).
• Lead Counsel to the B. Dick Company as Chapter 11 debtor (successful reorganization; debtor’s funds, Thomas Alva Edison and A.B. Dick invented the mimeograph machine, Bankr. D. Del.).
• Lead Counsel to AlphaStar Digital Television in its Chapter 11 case (successful reorganization addressing satellite broadcast arrangements, Bankr. D. Del.).
• Lead Counsel to Industrial General Corp. Chapter 11 debtor controlled by industrialist and former owner of the Baltimore Orioles professional baseball team; successful reorganization case, Bankr. D. Del.
• Lead Counsel to International Total Services, Inc. (ITSW) (Bankr. E.D.N.Y.), a publicly held provider of pre-board aviation screening services with 14,000 employees in Europe, North America, and Pacific Rim nations. On September 11, 2001, no ITSW-managed security checkpoints were breached by terrorists; the company, then deeply insolvent, filed its Chapter 11 case on September 13, 2001. ITSW responded to the national emergency by fully satisfying the request of the U.S. Department of Transportation to provide an expanded national level of pre-board aviation screening services under an unprecedented transitional contract with the Transportation Security Administration, under which the ITS DIP loan was funded by US Department of Transportation as it became its preferred provider; all creditors paid in full, Bankr. E.D.N.Y. Provided debtor in possession financing to ITSW. There is no historical precedent in the annals of American bankruptcy practice for this outcome. Jeffrey superintended a debtor in possession as it helped reestablish nationwide aviation security in the aftermath of direct attacks on the U.S.
• Lead Counsel to Level Propane, Inc., in Chapter 11 case, 40,000 propane gas customers for home heating and other household needs; the operating business successfully transitioned to national master limited partnership propane gas provider, Bankr. N.D. Ohio.
• Lead Counsel to NCS HealthCare, Inc. in its successful out-of-court restructuring of a public company. NCS HealthCare, Inc. had an enterprise value initially estimated at $175 million facing a resolution of $206 million of defaulted senior debt, $103 million in defaulted publicly held notes, and approximately $55 million in defaulted trade debt. Spearheaded by Jeffrey, the outcome of the restructuring was that no bankruptcy case for the company was commenced, all creditors were paid in full including accrued interest, and the public equity holders received approximately $140 million. Jeffrey’s representation of NCS HealthCare, Inc. in its restructuring is reflected in a landmark decision rendered by the Supreme Court of Delaware, Omnicare v. NCS Healthcare, Inc.
• Lead Counsel to PTC Alliance Steel, Inc. in its Chapter 11 case; successful reorganization converting senior debt into equity in the hotly contested proceeding and confirmation hearing, Bankr. D. Del.
• Lead Counsel to Revco, D.S., Inc., first failed major leveraged buyout to file Chapter 11 case; total consolidated debt of $1.4 billion; successful reorganization resolving three competing plans of reorganization and LBO related fraudulent transfer claims, Bankr. N.D. Ohio.

Professional & Community

• American Bankruptcy Law Institute, Member
• New York City Bar Association, Member

Publications

• "Filing a Proof of Claim: Pitfalls and Precautions," Thomson Reuters (December 1, 2016)
• "Sponsor Directed Secured Claim § 363(k) Cram Down Credit Bidding: The New Thermonuclear Bankruptcy M&A Strategic Weapon," Bloomberg Law Reports – Bankruptcy Law, Vol. 5, No. 3 (January 2011)
• "Retention and Transfer of Avoidance Claims: Practice Tips and Pitfalls," Norton Annual Survey of Bankruptcy Law (2009)
• "Protection of Net Operating Losses Through Trading Injunctions and Forbearance Agreements," Norton Journal of Bankruptcy Law and Practice (December 2008)
• "Purchasing Distressed Companies: How To Use the U.S. Bankruptcy System to Your Advantage," The Americas Restructuring and Insolvency Guide (2008/2009)
• "Forbearance Agreements," New York Law Journal (September 8, 2008)
• "Protection of Net Operating Losses Through Trading Injunctions and Forbearance Agreements," Norton Journal of Bankruptcy Law and Practice (September 2008)
• "Delaware Bankruptcy Court Decision Illustrates That a Sound Decision-Making Process Is Critical to Protect Directors," Delaware Court Reporter (July 14, 2008)
• "Directors’ Fiduciary Duties to Creditors in Insolvency: Equity Is the Board’s Favorite Child," Bloomberg Corporate Law Journal (2006)
• "Current Loan-to-Own Strategies," Dechert LLP Restructuring and Reorganization Report (Spring 2008), co-author
• "Developments in Fraudulent Transfer Law in the Context of a Fraudulent Investment Scheme," Dechert LLP Restructuring and Reorganization Report (Spring 2008), co-author