Genesis Health Ventures

Pomerantz represents 275 individuals who formerly owned over $205 million of Genesis Health Ventures ("Genesis") junior debentures. When Genesis filed for bankruptcy, the bankruptcy plan provided little for the bondholders, while the senior lenders received over 90% of the stock of the new Genesis. Over the debentureholders' objections, the bankruptcy plan was approved by the Court. We were retained after the plan was approved and put into effect. We now claim that the senior lenders conspired with Genesis' management to issue fraudulently deflated financial information during the bankruptcy, leading the Court to approve the plan based on the mistaken belief that Genesis was worth no more than the senior lenders' claims. In fact, had bona fide financial information been released, the junior creditors would have been entitled to receive a significant distribution in the bankruptcy. The case was originally brought in New York State Court, but was removed and has now been transferred to the Delaware bankruptcy court.

Since the transfer, parties have spent years in preliminary motion practice. At the end, the claims against Genesis were dismissed on technical grounds, but the claims against the senior creditor defendants (Mellon Bank, Goldman Sachs, Highland Capital and George Hager, Genesis' former chief operating officer) have been sustained and discovery is going forward from the defendants, the plaintiffs, and various third parties who participated in the bankruptcy proceedings.