SADDLE BROOK, N.J., Feb. 13, 2013 /PRNewswire/ -- Capstone Advisory Group, LLC is pleased to announce that it has reached a settlement, subject to approval of the bankruptcy court, with the Executive Office of the United States Trustee of the allegations in the GSC Group bankruptcy case regarding Capstone's relationship with Robert Manzo.
Mr. Manzo was, for more than six years, a full-time Capstone Executive Director who led Capstone's engagements in some of the most significant bankruptcy cases in the country, including the GSC Group matter. Mr. Manzo, like many senior professional advisors and attorneys, elected to structure his relationship with Capstone through a single-member limited liability company that entered into a contract with Capstone. Despite acknowledging in court filings that "there is no evidence that Mr. Manzo's rates were inflated," the United States Trustee contended that, because Mr. Manzo was not a member or employee of Capstone, it was inappropriate for Capstone to pay Mr. Manzo from fees earned in the bankruptcy cases and that his compensation from Capstone had to be disclosed. Capstone vigorously disputed these allegations, including the need for any disclosure, and the parties' settlement agreements acknowledge that denial.
Capstone elected to settle without the need for further litigation to avoid the disruption and cost of continued litigation. Through the settlement, if approved, Capstone will reduce its total fees for post-filing work for the GSC Group by $1 million, or approximately 15%. Capstone will receive a full release from the United States Trustee with respect to these issues and will be entitled to keep all other fees earned in the GSC Group estate. Capstone has agreed to retain the services of a monitor to review its bankruptcy retention and disclosure policies and procedures, which Capstone believes are already among the best in the industry and were the product of prior reviews by leading law firms and undertaken independent of this litigation. Capstone takes seriously its obligations to the courts before which it appears, and welcomes the opportunity to ensure that it continues to make all necessary disclosures.
The GSC Group case represents the best of what Capstone does as a firm for its clients every day. While initially offered only $5 million for all the debtors' assets, Capstone managed an auction process that raised more than $235 million in proceeds, and, together with other subsequent asset sales, is expected to generate a meaningful recovery for creditors. The remarkable success of Capstone's work for the GSC Group.
SOURCE Capstone Advisory Group, LLC