Bank of America offered $39.9 million to settle claims relating to representations and warranties on mortgages conveyed to an RMBS Trust. An investor in the Trust petitioned the New York State Supreme Court to direct the Trustee, Deutsche Bank National Trust Company, to reject the settlement on the ground that it provided inadequate consideration. The Trustee responded to the petition and asked the New York State Supreme Court to approve the settlement. Justice Marcy S. Friedman of the New York State Supreme Court asked the Trustee to retain an expert to evaluate the settlement. Michael S. Kraut and Susan F. DiCicco of Morgan, Lewis & Bockius LLP, counsel to the Trustee, retained Compass Lexecon’s President Professor Daniel R. Fischel to provide an independent opinion of the reasonableness and adequacy of the settlement.
Professor Fischel, supported by a team at Compass Lexecon, analyzed the risk associated with rejecting the proposed settlement, the support and opposition to it, and compared the proposed settlement to recent settlements involving similar issues. Professor Fischel provided a report outlining his methodology and his recommendation that the proposed settlement was reasonable and adequate. He then provided a rebuttal report responding to arguments made by experts retained by the investor objecting to the settlement.
Justice Friedman found that Professor Fischel was a qualified and experienced expert and cited his analyses and recommendations in concluding that the Trustee exercised its discretionary power reasonably and in good faith in approving the proposed settlement. Professor Fischel was supported by a team at Compass Lexecon led by Jerry Lumer that included Neal Lenhoff, Kevin Hartt and Donald Hong in Compass Lexecon’s Chicago office.