An Unofficial Committee of Noteholders Has Been Formed. Join Now!
The following is the opinion of Sonn Law Group and is not intended to be legal advice. Consult your own attorney.
Sonn Law Group is urging Woodbridge Group promissory noteholders to join the Ad Hoc (unofficial) Promissory Noteholders Committee (“Noteholders Committee”). The purpose of the Noteholders Committee is to have a voice in the bankruptcy case to advocate for the rights of the Woodbridge Promissory Noteholders, who were promised a “First Lien” Commercial Promissory Note, that would enjoy first lien secured on the real estate you were shown in the appraisals and pictures to secure your investment.
Woodbridge Group has announced its intent to sue thousands of investors in so-called “avoidance” lawsuits to try to defeat the “first lien” secured creditor status that the Woodbridge Group of Companies promised to its investors. Woodbridge now seeks to break that promise and destroy your first lien rights.
The Office of the United States Trustee, for the District of Delaware, represented by Assistant U.S. Trustee T. Patrick Tinker, Esq. (302) 573-6491, Trial Attorney Timothy J. Fox, Esq. (302) 573-6491 , and Trial Attorney Jane Leamy (302) 573-6566, has refused to appoint a Noteholders Committee that would seek to protect the rights of the noteholders. The Office of the US Trustee has only appointed an Unsecured Creditors Committee that is actually adverse to the interests of the Promissory Noteholders.
In fact, once the avoidance lawsuits are filed against the Noteholders, the Unsecured Creditors Committee will have a duty to align with and support Woodbridge Group against the Noteholders. What is particularly sad is the Office of the United States Trustee obtained agreements from two Noteholders to waive their first lien rights as a condition of being appointed to the Unsecured Creditors Committee.
So, while the Unsecured Creditors Committee does have façade of two “Noteholders” on their committee, these Noteholders waived their lien rights and are now legally bound to actually oppose the rights and interests of all other Woodbridge noteholders.
If the Promissory Notes ultimately lose their first lien rights in an avoidance lawsuit, then the Noteholders will be getting the same distributions from the bankruptcy court as all other unsecured creditors, such as trade creditors (e.g. vendors and construction contractors). However, if the Noteholders are granted their rights to the first lien, as promised by Woodbridge, then the Noteholders may have superior lien rights in that certain real estate that they were promised would serve as collateral for their promissory notes.
The Office of the United States Trustee was requested to appoint a Promissory Noteholders’ committee, but they refused. Therefor, the unofficial aka Ad Hoc Promissory Noteholders Committee was formed and it filed a motion with Judge Kevin Carey to direct the Office of the United States Trustee to form an official noteholders committee. The Ad Hoc Noteholders Committee is represented by Steven Kortanek, Esq. and Patrick Jackson, Esq., Drinker Biddle and Reath, LLP.
The reason for the motion to form the official noteholders committee is simple: the Unsecured Creditors Committee, in our opinion, is adverse to the noteholders. The noteholders have the right to request that the Court affirm their rights to a “first lien” on specific property that they were promised by Woodbridge Group would serve as collateral for their loan. Woodbridge Group wants to defeat that first lien.
The members of the Unsecured Creditors Committee have an obligation to the “unsecured creditors” to oppose the rights of the Noteholders and try to defeat the claim of a first lien. There is NO official committee presently formed that will advocate for the noteholders, and the Office of the United States Trustee has refused to voluntarily form a noteholders committee. Thus, the noteholders are being victimized a second time now in bankruptcy court, being denied a voice via an official committee.
The only recourse is for each noteholder to spends tens of thousands of dollars on their own independent lawyer. No independent noteholder can afford that. However, an official committee, if approved by the Court and the US Trustee, can be that voice.
Interestingly, the unofficial Ad Hoc Noteholders committee filed papers in opposition to Woodbridge’s request for $19 million in new financing, which would be a first lien ahead of all creditors. The Unsecured Creditors Committee, an official committee, failed to file an opposition, and just “reserved” their rights to oppose at the hearing.
It is clear from this that the Noteholders Committee is simply doing a better job for the Noteholders at this juncture. Judge for yourself why the Unsecured Noteholders Committee failed to file a substantive opposition to the $19 million requested by Woodbridge, and simply just “reserved rights” without any meaningful argument.
Sonn Law Group is not getting paid for airing this opinion. Sonn Law Group is not being paid by the Ad Hoc Noteholders Committee and is not representing the Committee as its attorneys. The attorneys for the Ad Hoc Noteholders Committee is Drinker Biddle, attention Steven Kortanek Steven.Kortanek@dbr.com and Patrick Jackson Patrick.Jackson@dbr.com and we urge you to contact them if you are a Noteholder and join the Ad Hoc Noteholders Committee. There is no charge to do so. If the committee is approved as an official committee, the bankruptcy estate of Woodbridge will pay the attorneys fees.
Sonn Law Group represents investors in the Woodbridge Group of Companies investments, and believes that the investors are the victims of a massive fraud. One only need look to the case brought by the SEC against Woodbridge, and see that both the comptroller, Nina Pederson, and the former President, Robert Shapiro, have both hired criminal defense attorneys to represent them and they have both asserted their 5th Amendment rights not to incriminate themselves.
The efforts by the Woodbridge Group to tell investors that “everything is ok” is still another act of deception by the Woodbridge Group, because, in the opinion of Sonn Law Group, the Woodbridge Group has been operating a massive Ponzi Scheme, taking investor money from one investor, and using it to pay returns to still other investors. Indeed, Sonn Law Group has discovered that several investors were sold investments in November, 2017, just a few weeks before the obviously preplanned bankruptcy and AFTER a new chief restructuring officer was allegedly hired by Gibson, Dunn and Crutcher attorneys for Woodbridge.
Those November 2017 investors never received signed promissory notes and other documents they were promised to document their investments. Those investments, in our opinion, were unregistered securities sold in violation of the securities laws, and improperly sold by unregistered financial advisors.
In otherwords, ever after Robert Shapiro stepped down, it appears to us, in our opinion, that the fraud continued in October and November, 2017, with so-called new management and attorneys in place. In our opinion, it is important to learn how this fraud was allowed to continue after the Chief Restructuring Officer and Gibson Dunn and Crutcher were hired; this will be the subject of an investigation to determine if they knew, or if they did not know, why it was allowed to happen under their watch.
These and other questions need answers. That is why you should join the Ad Hoc Noteholders Committee.