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NBA SEEKS DAMAGES FROM LAW FIRM INVOLVED IN
The lawsuit was filed against Weil, Gotshal & Manges (Weil) on Thursday, Sept. 15 in the U.S. Bankruptcy Court in San Antonio, TX, the court which presided over the NBA bankruptcy. NBA alleges that Weil failed to act as reasonably prudent attorneys in their representation of the NBA by, among other things, making unreasonable demands in negotiations with lenders, leading the NBA to believe that the bankruptcy process was likely to result in a substantial reduction in bond and bank debt and failing to advise the NBA that filing the bankruptcy created a significant risk that the NBA would have to sell most or all of its senior care facilities. The NBA further alleges that Weil breached its fiduciary duty to the NBA by, among other things, advising the NBA to pursue a course of action that was unfavorable to the NBA but was designed to generate excessive fees to Weil. In April the NBA Board of Trustees agreed to engage counsel to inquire into the issues surrounding NBA's financial restructure and bankruptcy. Following a search, NBA hired Daniel J. Sheehan & Associates in Dallas, TX, to conduct the inquiry and to report to the board at its June meeting. Based on the recommendations in that report, the board authorized Daniel J. Sheehan & Associates to file a formal complaint against Weil. On Friday, NBA also announced that it had reached a settlement with Huron Consulting Group of Chicago which has agreed to reduce its professional fees charged to NBA by $500,000. NBA engaged Huron as its professional financial advisor in May 2003 while the non-profit attempted to negotiate with creditors to restructure approximately $230 million of debt. NBA and the U.S. Trustee for the Western District of Texas also have filed objections to payment of fees submitted by Cain Brothers, an investment banking firm hired by NBA before and during bankruptcy. A hearing on the objection is scheduled for Sept. 26 in the bankruptcy court in San Antonio. NBA, the social and health services division of the Christian Church (Disciples of Christ) once owned or managed in excess of 90 facilities in more than 20 states. At its height, it provided care and housing to nearly 20,000 people and had more than 2500 employees. NBA now operates five facilities - three for children (two in Missouri and one in Alabama) and two for the developmentally disabled (one in California and one in Missouri). To read the entire legal filing against Weil, Gotshal & Manges, go to: http://www.disciples.org/dns/Releases2005/NBAComplaint.pdf
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