Lynn Tilton Is Again in Court docket, Looking for to Purchase Map Maker She Sued
(Bloomberg) — Lynn Tilton returns to bankruptcy court Monday seeking to buy historic map maker Rand McNally, which she once ran as part of her distressed-debt empire until she quit the company and sued it for millions in unpaid management fees.
Tilton has argued that her last-minute offer of $46 million is higher than the bid Rand’s current managers have already accepted from Teleo Capital Management. Because the distressed lender that controls Rand’s equity is in bankruptcy, a federal judge in Wilmington, Delaware, must decide whether to throw out Teleo’s offer and let Tilton try to close the sale.
The hearing is just the latest in a years-long court battle Tilton has been waging with noteholders and the court-appointed overseer of her bankrupt collateralized loan funds — Zohar I, II & III. Those funds borrowed about $2.5 billion in order to buy distressed companies and distressed loans. About $1.8 billion of that debt matured without being repaid, according to court documents.
Under a deal between the noteholders and Tilton, Rand and other companies tied to the Zohar bankruptcy may be sold in order to raise money to pay off creditors.
But Zohar’s independent manager is pushing back on Tilton’s offer, saying she waited too long to bid. Teleo’s offer is also worth more in part because Zohar would retain the right to file claims against Tilton, including for “millions of dollars of payments to these former insiders,” according to court papers.
The Zohar overseer “ran this particular sale process in a way that unfortunately discouraged superior bids, essentially discouraging Ms. Tilton’s participation from the get-go and then rushing an inferior deal through for court approval,” Tilton lawyer Monica Loseman said in an email. She called claims against Tilton “baseless and worthless.”
Rand is one of at least 15 companies whose fates are intertwined with Zohar’s bankruptcy. Earlier this year, Tilton resigned from her various management positions at the companies, which are part of the portfolio of Tilton’s investment firm, Patriarch Partners. Tilton, acting through affiliates, then sued the companies, including Rand, claiming Patriarch is owed $32.1 million in management fees and other costs, according to court papers..
Noteholders fought Tilton for control of the portfolio companies in state court in Delaware. Before the state’s highest court could take up the dispute, Tilton put Zohar into bankruptcy in 2018. Within months, a bankruptcy judge stripped her of control of Zohar and appointed a retired federal judge to oversee the collateralized loan obligation.
Tilton subsequently signed a deal with bondholders in which she agreed to work with the judge to sell the portfolio or find some other means of “monetizing” the companies.
The case is Zohar III Corp., 18-10512, U.S. Bankruptcy Court, District of Delaware (Delaware.)
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