ABFS Deepening of Insolvency Litigation

In this case, a bankruptcy trustee sued our clients, JP Morgan Chase, Morgan Stanley, Credit Suisse, and Bear Stearns, claiming that they were responsible for losses of $900 million suffered by American Business Financial Services, Inc., an originator of subprime loans. Compass Lexecon expert Daniel R. Fischel performed a valuation analysis, as well as an analysis of the economics of the subprime loans and the factors which affected the value of those loans, and concluded that the plaintiff and its experts had not established that the financial institution defendants were responsible for any losses. The case settled for a small fraction of the amount claimed on the eve of trial. We were retained by Steven Feirson and Michael Doluisio of Dechert LLP and by Andrew Goldman and Douglas Curtis at Wilmer Cutler Pickering Hale & Dorr LLP.