March 30, 2016 / 7:05 PM / 3 years ago

Icahn's CVR Energy loses malpractice case vs Wachtell law firm

NEW YORK (Reuters) - A federal judge dismissed an unusual lawsuit in which CVR Energy Inc accused the powerful Manhattan law firm Wachtell, Lipton, Rosen & Katz of malpractice tied to the company’s 2012 hostile takeover by billionaire investor Carl Icahn.

In a decision made public on Wednesday, U.S. District Judge Richard Sullivan in Manhattan said he was bound by a February 2015 ruling by a New York state judge that Wachtell was not legally at fault over its defense of CVR against Icahn’s tender offer.

Based in Sugar Land, Texas, CVR specializes in petroleum refining and nitrogen fertilizer manufacturing.

CVR claimed that Wachtell should have disclosed that Goldman Sachs Group Inc and Deutsche Bank AG stood to earn far higher fees for providing financial advice to CVR if the takeover bid succeeded than if it failed.

In effect, CVR claimed it paid too much through the process that enabled Icahn to gain control, causing the billionaire to be stuck with extra financial burdens resulting from his 82 percent ownership stake.

But in a Feb. 24, 2015 ruling in a related case, Justice O. Peter Sherwood of the state supreme court in Manhattan said CVR was bound by contracts to hire the banks because it failed to object to the terms fast enough.

Sullivan said he was bound by that decision, and that Sherwood had ruled on the merits of CVR’s malpractice claim.

“In fact, plaintiff barely disputes that the fee malpractice claim in this action is essentially identical,” he wrote.

Neither CVR nor Herbert Beigel, a lawyer for the company and Icahn, immediately responded to requests for comment. Wachtell did not immediately respond to a similar request.

CVR has been cooperating with a U.S. Securities and Exchange Commission probe that began in 2014 into the tender offer, according to regulatory and court filings.

Goldman and Deutsche Bank had separately sued CVR to recoup fees they claimed the company refused to pay. That litigation was settled in October, CVR has said.

The case is CVR Energy Inc v. Wachtell, Lipton, Rosen & Katz et al, U.S. District Court, Southern District of New York, No. 14-06566.

Reporting by Jonathan Stempel in New York; Editing by Andrew Hay

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below