The bankruptcy estates of a group of ambulance providers have settled a dispute with several former directors and officers and private equity sponsors whom the companies accused of maximizing value for themselves at the companies’ expense for $8.5 million, the bankruptcy trustee’s attorneys reports.
Brad Evans of Ward and Smith in Raleigh said that the adversary proceeding was filed in U.S. Bankruptcy Court for the Eastern District of North Carolina in November 2015. The trustee alleged that the defendants used company funds to develop new business ventures that ultimately caused the companies’ financial demise.
The defendants contended they acted in the companies’ best interests and the negligence of intervening third parties also played a role in the bankruptcy, and raised the defenses of unclean hands and contributory negligence.
In July 2018 the two sides agreed to a mediated settlement releasing the other from all claims in exchange for $8.5 million to be paid by the defendants and their insurers. Judge Stephani Humrickhouse approved the settlement in September.
“We were pleased to represent the trustee and generate a settlement for the benefit of the creditors, which includes the former employees of these businesses,” Evans said.
The companies filing for bankruptcy were American Ambulette & Ambulance Service Inc., Coastline Care Inc., Eastern Shore Acquisition Corporation, Eastern Shore Ambulance Inc., MarMac Transportation Services Inc., TransMed LLC. The affiliated companies operated in North Carolina, South Carolina, Virginia, Ohio, and Maryland.
James Hash of Everett Gaskins Hancock in Raleigh and Eric Walker of Perkins Coie in Chicago represented the defendants in the case. They did not respond to requests for comment before press time.
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SETTLEMENT REPORT — BREACH/FRAUD
Amount: $8.5 million
Injuries alleged: Destruction of value of company
Case name: In Re: American Ambulette & Ambulance Service Inc. et al. v. Enhanced Equity Fund II, et al.
Court: U.S. Bankruptcy Court for the Eastern District of North Carolina
Case No.: 13-07673-8-SWH
Judge: Stephani Humrickhouse
Date of settlement: Sept. 18, 2018
Attorneys for plaintiff: Brad Evans and Michael Parrish of Ward and Smith in New Bern
Attorneys for defendant: James Hash of Everett Gaskins Hancock in Raleigh and Eric Walker of Perkins Coie in Chicago