SLG has represented a wide variety of business in diverse industries.
While the facts of the engagement are different, the process to align the client’s business goals with the legal outcome followed the same basic proprietary formula.
The following case studies are just a few of the matters that Shields Legal Group has managed, using our Litigation Management process called Corporate Litigation Advisors (CLA). To learn more about CLA and how it can help manage your company’s litigation, please visit our CLA page.
Our client, a start-up airline, offered specialized air service that catered to the business traveler, based in a top 5 market.
More amenities and first class service throughout the aircraft were part of the business model. Flights to business destinations were to be offered. The combination of the improved customer experience could potentially result in a substantial competitive advantage over a major, established carrier.
The major carrier filed suit in a local “home town” court and sought to block the start-up from commencing operations.The major carrier also pursued several administrative avenues, seeking to block issuance of FAA flight approval.
When CLA was hired, there were multiple court actions and administrative proceedings pending. The start-up airline was spending an average of $350,000 per month in legal fees. Senior Officers of the company were also investing substantial time with legal counsel to discuss strategic and tactical plans. Major resources of capital, time and attention were devoted to the litigation and not to the core business of the start-up airline.
CLA was retained to manage all legal and administrative actions, and became the client representative to all legal counsel and experts.
Legal fees dropped to approximately $75,000 per month (a savings of $275,000 a month). A successful result in the legal proceedings was achieved in about 12 months.
Because of CLA’s engagement, the officers and directors were free to execute the business plan, which required substantial effort independent of the legal proceedings. The start-up airline won the legal action on appeal. The necessary administrative and governmental authorizations were issued, and they began flight operations in a highly competitive market, despite the vigorous actions of the established carrier.
Internet Service Provider
Our client, an international internet service provider (ISP), had multiple server farms with tens of thousands of web hosting customers. It was being operated by the original founder, a software engineer who successfully grew the Company into one of the largest ISPs in the world with proprietary software that was well recognized in the industry.
In order to obtain capital to finance growth, the Company entered into a preferred debt agreement with restrictive affirmative and negative debt covenants, including change of control provisions regarding the election of board members. Our client’s interest and that of the preferred debt holder became adverse when the debt holder alleged defaults in the parties’ debt agreement.
As the legal dispute intensified, it was clear that the debt holder was using the terms and covenants of the financing agreement to leverage the ISP into a complete change of control. It brought suit to accelerate the debt instruments and force a resignation of all current board members in order to elect new directors and appoint new officers in a complete takeover of the company. The debt holder terminated the current board members and appointed new board members, and sought to have a court confirm this action. After spending enormous sums on legal counsel, the Company was in dire financial straits and contemplating bankruptcy as a legal strategy to prevent a hostile takeover.
CLA preserved the directorships of all current board members and procured a restraining order against the debt holder, preventing it from taking further action to effectuate a hostile takeover of the company.
The hostile debt holder controlled the senior preferred bank, which held a first lien security interest on all tangible assets of the Company. CLA negotiated an agreement with the senior preferred bank, preventing the Company from forcible bankruptcy, resolving the civil litigation with a dismissal with prejudice, and ending the dispute with a purchase of all of the hostile debt holder’s interest.
Months later, current management sold the company to a private equity firm for a substantial premium, having ended all litigation with the hostile debt holder and stabilized control of the company in the hands of the original founder.
These are just a few of the many examples of how CLA stepped into a situation and resolved it in an effective and timely manner. The businesses were freed from the constraint of costly litigation and could proceed with their business.
To learn more about CLA and how it can help manage your company’s litigation, please visit the Corporate Litigation Advisor page.