SUCCESS STORIES
Van Conway & Partners professionals have decades of collective experience providing high-level and effective turnaround and financial advisory services to clients across the country. The best representation of the quality of our work is the concrete results we have achieved on behalf of our clients.
From successful restructurings and turnarounds as consultants, to favorable outcomes at trial resulting from expert witness testimony, we help clients when the stakes are high and excellence is required.
VCP acted as Receiver in the case of Comerica Bank v. Wellington Industries, Inc., et al, and was able through its zealous efforts to successfully negotiate and execute an Asset Purchase Agreement, preventing the alternate and less favorable outcome of liquidation. The positive results achieved by VCP were attributable, in part, to VCP functioning not only as the Financial Advisor and Receiver, but also as the Investment Banker. As a result of VCP's tireless efforts, they were able to successfully negotiate an extremely complicated sale that the Court ultimately approved. The effect of the consummated sale yielded a far greater result for the lender than a liquidation, a difference estimated to be between $7M to $9M with a shortfall to lender in the $5M range.
VCP was engaged by counsel for Comerica Bank in connection with a $50 million lender liability claim brought against it by a commercial customer. In 2006, Comerica Bank loaned $10 million to a start-up company in the office supply business. The loan was secured by securities pledged by a third party. When the loan matured in 2008, during the height of the Great Recession, Comerica Bank advised the company that it was not going to renew its loan and that the company should find a replacement lender. The company was unable to find a replacement lender during the agreed upon time period. As a result, Comerica Bank called its loan and seized the pledged collateral. Shortly thereafter, the company ceased business operations. The company then sued Comerica Bank stating that Comerica Bank breached its contract with the company which then caused the company to go out of business. The company claimed damages of approximately $50 million. The case was tried in Montana District Court. We are awaiting the decision by the Trial Court Judge, however, Mr. Conway effectively rebutted the damages testimony of the Plaintiff’s expert.
VCP was engaged by counsel for the Chapter 7 Bankruptcy Liquidating Trustee in connection with the bankruptcy estate of a $1 billion retailer. Our role involved pursuing third-party claims on behalf of the Trustee. One claim involved pursuing a professional malpractice claim against a Big 4 accounting firm. After extensive discovery efforts and successful expert deposition testimony, we were able to recover approximately $200 million for the Trustee for distributions to parties in interest.
VCP was engaged by counsel for the Michigan Insurance Commissioner effectively functioning as the liquidating Trustee of assets residing in the United States, in connection with the largest life insurance company failure in Canada. The company had systematically and fraudulently removed over $250 million in assets from its U.S. trust leaving the company with insufficient capital to cover U.S. policy losses. Our role involved assisting the commissioner to rehabilitate the company’s U.S. operations including recoveries from third parties. We uncovered the fraud and valued the underlying assets related to billions of real estate investments. Our analysis assisted the Commissioner in settling all of the claims.
VCP served as an expert witness for the litigation trustee of Global Technovations, an automobile supplier, in connection with its $25 million fraudulent conveyance claim against Onkyo. We performed forensic analysis, prepared an expert report opining on the fraudulent transfer and provided deposition and trial testimony. The court’s opinion reviewed the basis for Van Conway’s opinion in detail and ruled for Van Conway’s client, on the basis of finding Van Conway’s testimony to be credible and that the opposing expert’s testimony was not.
VCP was engaged by counsel for Toyobo, one of Japan’s top makers of fibers and textiles, in its dispute with the United States. The United States claims that Toyobo contracted with certain manufacturers to sell them defective Zylon fiber for use in bullet proof vests which the manufacturers then sold to the United States. The United States claims damages totaling approximately $250 million. Expert reports have been exchanged and expert depositions have been taken. A trial date has not yet been set.
VCP was engaged by counsel for a private equity firm in connection with fraud claims it asserted related to an acquisition it made in late 2010. During the due diligence period in the summer and fall 2010, the target company skillfully hid its actual operating performance from the acquiring private equity firm by “cooking its books.” While the target company was showing profits to the private equity firm, it was, in reality, losing money. As a result, the private equity firm significantly over-paid for the target company by almost $80 million. The errors and irregularities revealed themselves postclosing. We were initially engaged to assist the private equity firm in identifying all of the irregularities and then later, as experts, to testify as to the irregularities. Two actions commenced; the first was a D&O claim against the insurance carrier, and the second was a fraud claim against the target company and its officers and directors. Based in large measure on the forensic analysis we performed, both cases settled to the satisfaction of our client.
VCP was were engaged by counsel for Kmart in connection with its dispute with another anchor tenant in a strip shopping center in St. Croix, Virgin Islands. In its lease agreement with the strip shopping center, Kmart agreed not to compete with the other anchor tenant (a grocery store) and refrain from selling food. Shortly after Kmart executed the lease, Kmart came out with their “Big K” concept where a few aisles in the Big K stores were dedicated to selling food. Kmart converted the Kmart store in the strip shopping center to a Big K and were promptly sued by the grocery store. The case was bifurcated and Kmart lost on liability. We were then engaged by Kmart’s counsel to rebut the Plaintiff’s $50 million damage claim. After a jury trial of almost two weeks, the jury came back with an award of $300K, precisely our number. Needless to say, our client was pleased with our performance.
VCP was engaged by a bank to conduct forensic accounting analyses related to two of its borrowers. Both borrowers perpetrated a fraud involving fictitious inventory and accounts receivable causing losses of approximately $20 million within a short period of time. Both borrowers presented financial statements showing profitable companies with growth potential when, in reality, the bank’s funds were utilized to cover the losses. Van Conway investigated the flow of the funds provided by the bank for recovery purposes. Based on the analysis of original documents such as checks, check registers, bank statements and invoices, Van Conway determined that part of the bank’s funds were absorbed in the operations and a portion was diverted by the shareholders for personal expenditures. Van Conway also reconstructed the financial statements going back several years in order to determine the true financial condition of the borrower for litigation purposes. Van Conway analyzed the financial records of the second borrower as well as the audit work papers for purposes of determining whether litigation should be filed against the auditors for failure to discover the fraud. Van Conway analyzed the fraud characteristics of the company as well as the related audit work papers and determined that sufficient evidence existed for the auditors to uncover the fraud.
Van Conway was inducted into the M&A Advisor Hall of Fame in 2014.
Van Conway was received formal recognition from the Turnaround Management Association for his restructuring work in connection with the high stakes City of Detroit Chapter 9 Bankruptcy.
Van Conway was recognized by the M&A Advisor in 2015 for the most successful restructuring of the year. The $18 billion Chapter 9 bankruptcy by the City of Detroit was the largest in the history of the United States.
Van Conway was engaged by the lender to investigate the disposition of funds borrowed by the company to determine potential recoveries as well as to prepare a forensic analysis in order to restate previously issued historical financial statements. The company defrauded its lender by obtaining loans secured by fictitious accounts receivable and inventory. Van Conway worked with a computer forensic specialist to clone the information on computer hard drives, extract information from deleted files and search the recovered data based on select criteria. Van Conway was able to gather the requisite evidence that assisted in the ultimate settlement of the claims against the estate of the shareholder of the company.
Van Conway represented a number of Independent Business Owners (“IBOs”) in connection with their disputes with Quixtar (formerly known as Amway), a multi-level marketing organization. Quixtar claimed that certain major IBOs encouraged thousands of individuals to terminate their contracts with Quixtar and partner up with other multi-level marketing companies to compete against Quixtar. Quixtar’s claims also included violations of the Lanham Act, trade secret misappropriation, tortious interference with existing contracts and tortious interference with advantageous business relations. Quixtar claimed damages totaling more than $250 million. Conway’s clients claimed that Quixtar was engaged in a classic pyramid scheme, as defined by the FTC, because its products could not be sold at retail prices. Altogether, four lawsuits were filed around the country. After significant discovery and depositions, the cases were all settled confidentially.
Van Conway was engaged to perform forensic accounting and other service on behalf of a lender in connection with a $25 million mortgage loan secured by office building in downtown Detroit and $10 million mortgage loan secured by parking garage in downtown Detroit. Both companies filed Chapter 11 and sought to confirm cram-down plans on the lender. Van Conway determined that the companies had engaged in fraudulent conveyances for the benefit of insiders. As a result, the debtors and lender entered into a settlement whereby lender took possession of the real estate.
Van Conway was engaged to perform forensic accounting and other services on behalf of a lender in connection with a $20 million mortgage loan secured by office building in suburban Washington, DC (Maryland). The company filed Chapter 11 and sought to confirm cram-down plan on the lender. Van Conway determined that the company had engaged in fraudulent conveyances for the benefit of insiders and also had made misrepresentations to the lender during the initial workout negotiations. As a result, the debtor and lender entered into a settlement whereby the debt was restructured on terms which were significantly more favorable to the lender than those which had been proposed by the debtor.
Van Conway was engaged by a mortgage lender to negotiate for increases in the company’s mortgage warehouse lines. During the course of the engagement, Van Conway discovered that the company had parked duplicate and fictitious loans on its existing warehouse lines. Additionally, the company raised private capital for the purpose of establishing investor owned land contract pools. The represented value of the underlying real estate was based on inflated property appraisals, as if major renovations to the properties occurred; such renovations, in fact, did not occur. In addition to the discovery of the overstatement of the value of the land contract pool assets and diversion of the related proceeds, Van Conway further discovered the company had overstated the value of its assets and profits in its financial statements.
Van Conway was engaged by a bank to investigate one of its borrowers who was in the business of providing construction loans in connection with modular homes. Van Conway discovered that although the bank funded the construction loans, the mortgage broker never recorded mortgage assignments assigning the individual construction loans to the bank. When the individual construction loans were refinanced into permanent loans, the proceeds were never paid over to the bank. As the title searches never reflected the assignment of the mortgages, the closing proceeds were paid over to the mortgage broker. Upon further investigation it was revealed that management of the mortgage broker diverted such funds for personal use. Van Conway’s work resulted in a full recovery by the bank.
Van Conway was engaged by a hedge fund with multi-billion dollar assets under management to perform a forensic analysis of its clients’ books and records, including valuing certain assets and diminutions of asset values; transactions by and between the clients’ funds and other parties; and waterfall analyses of various transactions and investments. Van Conway was also engaged to participate in the review and analyses of several lawsuits in which the hedge fund was either the plaintiff, defendant, or both. Van Conway successfully made presentations to investors that had not received quantitative information regarding their investments in over 16 months. Prior to the presentations, the client had been threatened with numerous lawsuits; no additional litigation occurred. In one case, the plaintiff voluntarily dismissed one lawsuit that sought $1 billion in damages, in part, as a result of Van Conway’s analysis.
Van Conway was retained by the post-confirmation committee of unsecured creditors of a $150 million franchisor of quick printing service centers to investigate and determine whether the debtor was insolvent at the time of, or was rendered insolvent as a result of, the distributions and transfers made to the sole shareholder of the debtor. Van Conway investigated the debtor’s financial condition, restated the debtor’s historical balance sheets and determined the debtor was insolvent at the time of the distributions and transfers in question. Subsequent to the delivery of Van Conway’s report, Van Conway assisted the post-confirmation committee of unsecured creditors during a mediation process whereby a favorable settlement was reached.
Van Conway was initially retained by the unsecured creditors’ committee to provide financial advisory services in the Chapter 11 case of a $100 million, publicly traded manufacturer of printed circuit boards. The company sourced employees and raw material from, and outsourced certain manufacturing operations to India. When it became apparent that the debtor would be unable to effectuate a viable plan of reorganization, the company commenced liquidation. Van Conway was subsequently retained by the liquidating trust to assist, as a financial expert, in the pursuit of various actions against former officers and directors. Van Conway investigated the debtor’s transactions during the look-back period, established the date of the debtor’s insolvency and analyzed various actions taken by the board of directors, including those relating to officer compensation and affiliate transactions. This matter was settled on a basis satisfactory to the client, following delivery of Van Conway’s expert report and rebuttal of the conclusions of the defendant’s expert.
Van Conway professionals were accountants for the Chapter 11 Trustee, in this complex and highly successful Chapter 11 reorganization involving over 100 properties and 140 legal entities. Services rendered included investigation of alleged commingling of funds and fraud; identification and financial control of cash, properties and legal entities; identification and control of financial records; structuring and monitoring of the auction process for seller-financed dispositions of residential tower properties; cash flow projections; creation of tax-advantaged transactions for the seller-financed sales (including use of imputed interest rules); development and creation of financial terms of plan of reorganization; modeling of limited partner tax consequences from transactions executed by the Chapter 11 Trustee; supervision of the preparation of pass-through tax returns; and account and cash monitoring for the Chapter 11 Trustee and reporting to the Bankruptcy Court. The result of Van Conway's services along with those of the Trustee and Trustee’s counsel was a substantial recovery for many of the investors in the larger limited partnerships, with full recoveries for a large portion of the secured lenders and trade creditors.
Van Conway served as defense expert in connection with a claim for aggregate damages exceeding $400 million against the acquirers in a bankruptcy auction and subsequent foreclosure of what had been an over $1 billion portfolio of hard money loans and servicing rights. The hard money loans were made to finance the acquisitions of raw land for residential and mixed-use development. Such loans went into default following the significant real estate declines and illiquidity in principally the southwest, west and southeast marketplaces. Despite the market decline, the company continued to generate fees from funding speculative new transactions and misappropriated loan payoffs from property sales to fund ongoing interest obligations owed to the company’s retail investors in loans on other properties. The President of USA Commercial Mortgage was criminally prosecuted and plead guilty to wire fraud. The retail investors who funded the hard money loans asserted damages from alleged improper servicing by the acquirer and entities affiliated with its hedge fund lender, seeking to charge the defendants with the investors’ entire loss on the outstanding hard money loans. Following the submission of Van Conway's expert report and Van Conway's rebuttal affidavit to the plaintiff’s expert report, the plaintiffs determined not to proceed with their damages expert and his assertion of over $400 million aggregate damages.
Molly Conway assisted in obtaining voluntary dismissal of putative class action complaint alleging unlawful and deceptive practices in connection with the marketing and sale of vehicles.
Molly Conway obtained dismissal of a substantial portion of plaintiff’s case in a commercial dispute in Eastern District of Michigan, defeating all of the plaintiff’s franchise, fraud, tortious interference, and quasi-contractual claims.
Molly Conway defeated a substantial portion of defendant’s counterclaims on a motion for summary disposition in a trade secrets and fraud case.
