Creditor’s Litigation Trust

Testifying Expert - Hospital Turnaround Mangement

The creditor’s litigation trust (the “Trust”) for the estate of a bankrupt not-for-profit multi-hospital system (the “System”) engaged HMP to provide advice and expert testimony in support of its corporate malpractice litigation against the former turnaround management firm, the members of that firm who served as officers of the System, and the former special bankruptcy counsel to the System.

Issues

  • Was the turnaround management firm grossly negligent in the conduct of its responsibilities?
  • Did the parties actively withhold vital information from the System board of directors solely to protect their private economic interests?
  • The Trust, which was created as part of the approved plan of reorganization in the bankruptcy, had limited resources to investigate the matter.

Approach

  • HMP reviewed all reports produced by the turnaround firm during its 21-month tenure at the System including all board and board committee minutes for the period.
  • HMP reviewed the work plans executed by the turnaround firm and the resulting written work product to determine if they met with acceptable standards for the professional turnaround management of a complex healthcare provider.
  • HMP worked closely with counsel and the Trust’s damages experts to quantify the damages resulting from the defendant’s gross negligence.

Result

           

  • The Trust secured a very favorable out-of-court settlement with each of the defendants.