Securities Mosaic, May 23, 2005
At Home Shareholders Fight Settlement
By: Staff Writer Deal.com
======================
EXCERPT: Shareholders of defunct broadband network provider At Home Corp.
are expected to challenge a $400 million settlement agreement recently
hashed out between the company's bondholders and AT&T Corp. The settlement,
announced May 3 following mediation between the parties, would end
litigation over whether AT&T breached fiduciary duties it owed to At Home
as its controlling shareholder and whether AT&T misused At Home's trade
secrets in connection with building its own high-speed Internet access
network. A hearing to approve the settlement is set for June 21 in the U.S.
Bankruptcy Court for the Northern District of California in San Francisco.
Mike Kelly, a member of the shareholders' committee, said the group will
ask the court for more information regarding the settlement and how the
sides came up with the terms before it makes a formal challenge. "Our
lawyer has not seen all of the evidence yet," he said. Holly Falkowitz, a
partner with Sonnenschein Nath & Rosenthal LLP in New York representing the
shareholders' committee, said the group is "keeping all options open" with
regards to contesting the settlement. But the chances of getting the judge
to set aside the agreement appear slim. "What's their likelihood of
derailing the settlement? Zero. Or really close to zero," said a bankruptcy
lawyer who asked not to be identified. "No judge is going to let $400
million walk." A best-case scenario for shareholders would be if the
settlement was restructured and there was a small payment to them, but even
that would be unlikely, the lawyer said. "It's a bankruptcy case," he said.
"The equity guys lose; everyone knows that." Brian Lewis, another member of
the shareholders' committee, conceded that the odds of getting the
agreement overturned are long. "Based on the actions of the court, it looks
like it's going to be a rubber-stamp approval," he said. |
