Shockingly, folks, I’m learning that former Skadden Arps attorney Robert Pincus in his capacity as custodian for TransPerfect in now being sued for misrepresenting to now current owner and CEO Philip Shawe that there were other competitive bids during the final round of the auction process to induce Mr. Shawe to pay an additional $70 million dollars! He even went as far as offering to pay $4 million to one of the bidders to stay in the auction so he wouldn’t look like a fool and a thief for paying himself $50 million to run a fraudulent process for two years! That’s how Skadden makes its money. Truly shocking! What is more criminal than this, folks?!
This is beyond belief! Such highway robbery should not be allowed and as I see it, this should be prosecuted to the highest extent of the law! I’ve been saying this auction was a sham since back when I was talking with employees and no one was showing up to the bidder meetings. I’ve been calling this out as a sham forever! Thank God Pincus is going to FINALLY be brought to justice for paying himself $50 million for running a fake auction.
In Delaware Chancery Court’s now famous TransPerfect case, Pincus was put in charge as the court custodian for the sale of the company. When bids for the company were not as rich as expected, it looks like Pincus led the way to misrepresent higher bids, to, in essence, inflate the final sale price by $70 million! Paying ’em to put in a shill bid, in summary, folks. Outrageous!
Former Skadden attorney Pincus, who acted as court custodian for the sale, and Credit Suisse Securities LLC are being accused of securities fraud, as you’ll see in the Law360 story below. I also heard from my sources that Credit Suisse who was hired by Pincus earned a commission in the range of $15 million to maintain a phony auction and forced the TransPerfect CEO to pay a commission on buying back his own shares.
Another black eye for Delaware. This all smells to high-heaven folks and heads need to roll, here. Please send your feedback to this news folks. I want to hear your thoughts on this. They’re always welcome and appreciated.
Law360 (November 10, 2022, 4:21 PM EST) — Language translation company TransPerfect Holdings LLC has sued a retired Skadden Arps Slate Meagher & Flom LLP partner and an investment banking company in Delaware federal court, alleging that the attorney misrepresented the results of a judicial auction and caused the company to pay an extra $70 million when it already had the highest bid.
“We have confidence in the federal judiciary,” Martin Russo, lead counsel for TransPerfect, told Law360 Pulse, adding that the allegations show “how serious the conduct was.”Credit Suisse was hired by Pincus to act as a financial adviser to TransPerfect Global Inc., which is owned by TransPerfect Holdings, in connection with the sale of the company. According to court documents, Pincus was appointed to conduct the sale of TransPerfect Global by the Delaware Chancery Court. TransPerfect’s complaint alleged that Pincus orchestrated “an ill-advised but highly profitable (for Defendants) auction process to sell TransPerfect Global Inc.”
“When the auction failed to produce bids materially better than those Plaintiff’s principals had made pre-auction, Pincus had to act to justify the tremendous cost of the auction and preserve his reputation,” the filing said. “He and Credit Suisse then misrepresented to Plaintiff that there were higher value bids requiring Plaintiff to bid $70 million more to win the auction. In reality, Plaintiff already was the highest value bid and had won the auction without the need for any price improvement.”
According to court documents, the judicial auction took place after TransPerfect Global co-founder Elizabeth Elting petitioned the Court of Chancery for the dissolution and forced sale of TransPerfect Global due to alleged shareholder and director gridlock. The following year, the court ordered that TransPerfect Global be sold as a going concern.
Pincus hired investment banking company Houlihan Lokey Inc. to assess sale alternatives. He sent a report to the Court of Chancery recommending a modified auction that the report said was dependent on an ungranted, post-sale competition restriction to be imposed by the court on Elting and TransPerfect Global co-founder and CEO Phil Shawe, according to the complaint. In July 2016, the Court of Chancery issued a saleorder that adopted Pincus’ recommendation for a modified auction but declined to impose the noncompetes. TransPerfect alleges that Pincus failed to inform the court of the editorial control it says he had over the report.
“In the end, as explained further below, Pincus achieved his true goal – he ran a costly ‘broad auction’ with 92 participants and made many tens of millions of dollars for himself, Skadden and his advisors in the process,” TransPerfect said in its complaint. “The results of that auction were clear by November 8, 2017, but Pincus and Credit Suisse sought to extract more from Holdings through misstatements and omissions.”
Credit Suisse was hired in November 2016, according to court documents. Credit Suisse and Pincus are alleged to have come up with a sale process that involved three “discrete” rounds of bidding but changed the rules and increased the bidding rounds along the way to create the false impression of real price competition in the auction.
According to court documents, on Nov. 8, 2017, Blackstone Inc., H.I.G. Capital and Shawe submitted Phase III bids. TransPerfect alleges in its complaint that by that time, Credit Suisse and Pincus knew that Shawe’s bid was “best in economic value and certainty” while Blackstone was not competitive and H.I.G. had reached the top of its bid. TransPerfect accused Pincus of paying one of the three remaining bidders up to $4 million to stay a bidder.
Pincus did not immediately respond to a request for comment.TransPerfect Holdings is represented by Jeremy D. Eicher of Eicher Law LLC and Martin P. Russo and Robert Sidorsky of Russo PLLC.Counsel information was not available for the defendants.The case is TransPerfect Holdings LLC v. Robert Pincus and Credit Suisse Securities (USA) LLC, case number 1:99-mc-09999, in the U.S. District Court for the District of Delaware.–Editing by Gemma Horowitz