What started as a $1.88-billion lawsuit claiming mismanagement by directors of a bankrupt McLean-based consulting firm has ended with a $55-million settlement.
The case arising from the bankruptcy of BearingPoint Inc. was litigated in Fairfax County Circuit Court after a bankruptcy judge lifted restrictions that normally force creditors to bring claims against directors and officers in bankruptcy court.
Until the 2009 bankruptcy, BearingPoint was one of the largest businesses based in Northern Virginia, with more than 3,700 employees in the Washington area, according to a 2012 news release from a representative of the creditors who brought the lawsuit.
The creditors claimed former BearingPoint CEO Edwin Harbach and eight former directors breached their fiduciary duties by ignoring opportunities to sell off some or all of the company.
Once filed in the Fairfax court in 2011, the case was removed to federal court and then remanded. Circuit Judge Jane Marum Roush last May denied defense motions to block the claims and set an April 2013 trial date.
Discovery involved production of more than 6 million pages of materials, depositions of nearly 30 witnesses and 13 expert witness reports, according to the parties’ request for settlement approval. The case would have involved the application of Delaware law, according to Andrew J. Terrell of Falls Church, local counsel for the creditors’ representative.
Insurance companies with directors-and-officers coverage agreed to the settlement terms in February after two days of mediation. The settlement also brings an end to a counter lawsuit filed by three of the former directors which produced a motion for sanctions based on claims of contempt of court.
Despite the complexities of the case, things went smoothly in the Fairfax court, Terrell said. The only discovery dispute was resolved with a 5-minute hearing about deposition scheduling, he said. Northern Virginia state courts can expect more corporate governance litigation, he said.
“I think this is something you’re going to see more often,” Terrell said.