US firms hit court for JPMorgan/Bear showdown

US firms hit court for JPMorgan/Bear showdownA quartet of US firms gathered in a New York courtroom yesterday (11 August) for a crucial hearing relating to the rescue takeover of Bear Stearns by JPMorgan.

New York State Supreme Court Justice Herman Cahn heard motions for summary judgment that could see JPMorgan and Bear directors avoid a trial. The case has been brought by a group of Bear shareholders, who felt shortchanged by the JPMorgan deal.

Cadwalader Wickersham & Taft partner Greg Markel (pictured) and Sullivan & Cromwell partner Vince DiBlasi yesterday defended a group of Bear directors against an alleged breach of fiduciary duty in connection with the takeover.

Wolf Haldenstein Adler Freeman & Herz partner Daniel Krasner is advising former Bear shareholders as lead plaintiffs while Wachtell Lipton Rosen & Katz litigator Marc Wolinsky represented JP Morgan.

Yesterday, Krasner argued that control of Bear was handed to JPMorgan with little negotiation or shareholder consideration.

Krasner said: “Bear turned the keys over to JPMorgan and the Bear Stearns shareholder vote was sold to JPMorgan. There could have been an opportunity for other banks to come in and perhaps make another offer for Bear Stearns.”

JPMorgan disputes the alleged control placed on Bear during the time of the merger while Bear directors, defended by Cadwalader’s Markel, argued that rigorous negotiation took place.

“Bear Stearns was in crisis. The board met 12 times in 11 days and tried to come up with a solution to the crisis,” said Markel. “It is wrong to say that we did not negotiate on the terms of the merger. There was intense negotiation with JPMorgan.”

The case is separate from Bear’s ongoing litigation with Barclays, in which Linklaters New York litigation head Larry Byrne is representing the UK bank. Barclays claims Bear lied about the performance of two of its hedge funds that collapsed last summer.