Item 1. Legal Proceedings
Item 1. Legal Proceedings
From time to time, we may become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While we do not expect that the resolution of these matters if they arise would materially affect our business, financial condition or results of operations, resolution will be subject to various uncertainties and could result in the expenditure of significant financial and managerial resources.
On May 20, 2013, the Company was named as a defendant in a complaint by the bankruptcy trustee of DSI Renal Holdings and related companies (“DSI”). The complaint alleges, among other things, that the Company participated in a “fraudulent conveyance” involving a restructuring and subsequent sale of DSI in 2010 and 2011 and aided and abetted a breach of fiduciary duty. The complaint seeks, jointly and severally from all defendants, (1) damages of approximately $425 million plus interest, of which the Company’s share would be approximately $41 million plus interest, and the return of 9,000 shares of common stock of DSI obtained by the Company in the restructuring and sale and (2) punitive damages. At this point in time, the Company is unable to assess whether it may have any liability in this action. On July 20, 2017, the United States Bankruptcy Court for the District of Delaware, where the action is pending, granted in part and denied in part the Company’s (and other defendants’) motion to dismiss the complaint.
Discovery has concluded, and on April 30, 2019, defendants (including the Company) filed motions for partial summary judgment. On February 4, 2020, the court granted defendants’ summary judgment motion to cap exposure on fraudulent transfer claims at the amount of creditor claims in the estate; it denied as premature that motion with respect to common law claims. Defendants moved to reconsider that decision, which motion was denied. On March 30, 2020, the court granted two additional summary judgment motions relevant to the Company. With respect to the first motion, the court held that the trustee could not recover from defendants value that was never property of the debtor. With respect to the second motion, the Court held that the trustee could not recover from defendants payments that were made on account of debt. The other summary judgment motions relevant to the Company remain pending.
On November 27, 2019, Healthclaim Recovery LLC ("Healthclaim") (an entity formed by the adversary proceeding defendants, including the Company) filed objections to two creditors' claims. On January 9, 2020, the two creditors whose claims Healthclaim objected to and the Trustee filed motions to stay the Court's consideration of Healthclaim's objections. On February 25, 2020, the Court heard oral argument on the motions to stay and granted the creditors’ and Trustee’s motions and stayed consideration of Healthclaim’s objections.
On October 15, 2020, the Court heard oral argument on the defendants’ remaining motions for summary judgment and took the motions under advisement. The Company has not made any determination that this action is or may be material to the Company and intends to vigorously defend itself.
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