<strong>AGRR</strong>eportsbreaking newsLEGAL NEWSDiamond Creditor Sues Ken LevinePLAINFIELD SPECIAL SITUATIONS MASTER FUNDLtd., a creditor of Diamond Glass, has filed a complaintagainst Ken Levine, former chief executive officerof Diamond Glass and the company’s largestshareholder, for allegedly delaying the company’s bankruptcyfiling in an effort to preserve $10 million he investedin the company.The complaint, filed in the U.S. Bankruptcy Court for theDistrict of Delaware on Friday, September 5, alleges thatLevine originally contributed $6 million in equity to Diamondin January 2007 as part of the agreement with the company’smain lender, Guggenheim. The agreement also made it possiblefor Guggenheim to provide commitments for up to a $20million term loan and a $15 million revolving line of credit; italso granted Guggenheim a lien on Diamond’s assets.In late April and early May 2007, Diamond requested thatGuggenheim “relax the liquidity requirements contained inthe Credit Agreement, thereby allowing the Debtors to borrowmore money without increasing their total debt commitmentunder the Credit Agreement.” According to courtdocuments, Guggenheim agreed to do so only if Levinewould “increase his equity stake … by making another $4million capital contribution.”In July 2007, Guggenheim issued a notice of default toDiamond, “stating that the Debtors had breached acovenant regarding [their] cumulative earnings.”The complaint alleges that, as a result of the default onthe Guggenheim loan, the company could have at any timecollected Levine’s $10 million contribution—but did not,and continued financing the company, despite the default.Though Levine resigned from his post as chairman of theboard of directors and chief executive officer of the companyin October 2007, Levine remained on the company’sthree-person board of directors. In <strong>Dec</strong>ember 2007, Levinemet with fellow directors Bill Cogswell, who was then presidentof the company, and Myron Levine, Ken Levine’s father.The three at that time passed a resolution authorizingfiling for bankruptcy protection, according to the complaint,but delayed filing until April 1, <strong>2008</strong>, “in order to protectLevine and his Capital Contribution.”According to Plainfield, had Diamond filed for bankruptcywithin 90 days of the decision to do so, Guggenheim couldhave been classified as an unsecured creditor. Likewise, thecompany alleges that despite his possible concern forGuggenheim, “Levine was primarily motivated by self-interest,since the Debtors’ decision to delay filing for bankruptcyprotection until after the 90-day period greatly improved hischanges of recovering his $10 million capital investment.”In June <strong>2008</strong>, Levine filed a claim for more than $10 million(the amount of his contribution plus interest) againstthe Diamond estate, claiming rights as a “secured creditor,”according to the complaint.Via the complaint, Plainfield both objects to the filing“The complaint completelylacks any merit whatsoeverand we will vigorouslydefend [our client].”—Russell C. Silberglied,Richards Layton & Finger,representing Ken Levineof Levine’s claim and “seeks to have the claims re-characterizedas equity.” The company also requests thatLevine’s claim be disallowed, “because they reflect notclaims of a creditor, but equity interests in the Debtors.”As an alternative, the plaintiff requests that if Levine’sclaims are not re-characterized as equity, that the claimsshould be “equitably subordinated to the claims of all unsecuredcreditors.”“The complaint completely lacks any merit whatsoeverand we will vigorously defend [our client],” says Russell C.Silberglied of Richards Layton & Finger, who representsLevine.Robert J. Dehney, who represents Plainfield and is withthe firm of Morris, Nichols, Arsht & Tunnell LLP, was notavailable for comment.Levesque Denies Belron US Allegations,Files Counterclaim for Damages inExcess of $1 Million; Alleges She,Family Members Being FollowedFormer Belron US employee Michelle Levesque has filedboth her response to the company’s complaint against her anda counterclaim against the company in the U.S. District Courtof Massachusetts. In a suit filed in August, Belron US allegedthat Levesque and an associate, Edward Lee, solicited BelronUS employees to leave the company and join a new venture(see related story in September/October <strong>AGRR</strong>, page 20).continued on page 1816 <strong>AGRR</strong> <strong>Nov</strong>ember/<strong>Dec</strong>ember <strong>2008</strong> www.agrrmag.com
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