Grant, Ashby Spar Over Lead In $3B Rouse Deal
Wilmington (November 4, 2016, 8:12 PM EDT) -- A battle over which law firm
would lead the judicial appraisal of
Brookfield Asset Management Inc.’s $2.8 billion buyout of
Rouse Properties Inc. unfolded Friday before the Delaware Chancery
Grant & Eisenhofer PA clashing with
Ashby & Geddes PA over how the leadership structure should be set.
During a teleconference before Vice Chancellor Joseph R. Slights III,
Stuart M. Grant of Grant & Eisenhofer argued that Ashby & Geddes’ proposal
that the firms litigate the case in tandem would essentially give it a
“free ride” and create a “bizarre and unworkable structure” that would set
”an awful precedent” for future multipetitioner appraisal actions.
Grant called Ashby & Geddes proposal a “money-motivated ploy” for its
client, Rouse investor Brookdale International Partners LP, to get out of
paying attorneys fees for his firm, and argued that the leadership
structure Grant & Eisenhofer proposes still has Ashby & Geddes
participating in every aspect of the case.
“No one is looking to take away Brookdale’s right to participate,” Grant
told Vice Chancellor Slights. “Brookdale says they’re not satisfied with a
seat at the table. They want their own table.”
Andrew D. Cordo of Ashby & Geddes strongly objected to Grant’s
contentions, arguing that a free ride was “categorically not what was
Cordo argued that Brookdale, which had a $25 million stake in Rouse, has
its own case to pursue and hired Ashby & Geddes to do it. For it to be
lumped into a leadership structure with Grant & Eisenhofer would
essentially mean it’s being drafted as an involuntary client, subject to
however the firms wants to litigate the case, and on the hook for its
fees, Brookdale argued.
“If Brookdale wanted Grant & Eisenhofer to do all the work in this case,
it would have hired Grant & Eisenhofer,” Cordo told Vice Chancellor
The issue stems over petitions for judicial appraisal Brookdale and others
lodged in the wake of Brookfield unit Brookfield Property Partners LP’s
deal earlier this year to buy out the shares of Rouse it didn’t
already own for $18.25 apiece.
Brookdale, which is managed by Weiss Asset Management, was the first to
petition for appraisal, followed by several other shareholders including
Hudson Bay Master Fund Ltd. and Sunrise Partners LP. Grant said Friday
that the investors who’d retained his firm held 74 percent of the shares
up for appraisal compared with Brookdale’s 24 percent.
Under Delaware law, shareholders can seek to have the Chancery Court
examine a deal they think might have been valued incorrectly, and be
awarded the difference if the court finds the transaction price was too
Typically, the cases involve several petitioners and the court
consolidates them under one docket, appointing one or more law firms to
take the lead in the litigation.
In this instance, Ashby & Geddes says it is seeking a posture similar to
how it and Grant & Eisenhofer co-litigated the
Metromedia International Group appraisal in 2007, with no lead counsel
appointed and both firms taking the reins on the case and each client only
paying its respective counsel.
Vice Chancellor Slights did agree to consolidate the Rouse petitions
Friday but left open the lead counsel question, saying he wanted to “stew”
on the issue.
“I want to step back and ponder a little bit the ramifications on this
case and maybe beyond this case,” the vice chancellor said.
Grant had argued that if Ashby & Geddes’ request were granted, nothing
would stop other petitioners in other cases with much smaller stakes from
doing the same.
Cordo countered that the slippery-slope argument was not a “realistic
concern and this case shouldn’t turn on a hypothetical.”
Vice Chancellor Slights did not appear to fully agree.
“It might be a concern in terms of how folks read this precedent,” the
vice chancellor said.
Brookdale is represented by Stephen E. Jenkins, Andrew D. Cordo and Marie
M. Degnan of Ashby & Geddes PA.
Hudson Bay, Sunrise and the other petitioners are represented by Stuart M.
Grant, Cynthia A. Calder and Kimberly A. Evans of Grant & Eisenhofer PA.
The cases are case numbers 12549, 12609, 12611, 12617 and 12674 in the
Court of Chancery of the State of Delaware.
--Additional reporting by Chelsea Naso. Editing by Brian Baresch.
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