NEW YORK -- A bankruptcy judge on Monday signed off on a deal for Russian oil giant OAO Lukoil, Lukoil Americas Corp., and other parties to pay $93 million to its former Getty Petroleum Marketing Inc. (GPMI) unit to resolve lawsuits concerning GPMI's bankruptcy.
Judge Shelley Chapman approved the settlement at a hearing in U.S. Bankruptcy Court, Southern District of New York, Abid Qureshi, a lawyer for Lukoil, told Reuters.
Gas station operator GPMI declared bankruptcy in Dec. 2011, eventually appointing a trustee, Alfred Giuliano, to liquidate its assets and pay back creditors.
A key piece of Giuliano's strategy was to sue Lukoil, saying the company stripped GPMI of its best stations and exacerbated its insolvency. The sides reached a settlement earlier this month, halting a trial after 17 days of testimony, said the news agency.
Giuliano alleged that Lukoil moved GPMI's most profitable stations to another subsidiary in 2009 in exchange for $120 million, far less than what GPMI believed the assets were worth. Under the settlement, Lukoil will pay the GPMI estate an extra $93 million, resolving both the trial and a separate dispute between the parties over the allocation of tax benefits, court documents showed.
"The Settlement Agreement and the relief requested in the Motion and granted
herein are fair and equitable and in the best interests of the Debtors, their estates, their
creditors and all other parties in interest," said the documents. "Without the Settlement Agreement, continued complex and protracted litigation is likely and the probability of a more favorable result for the [GPMI] Trust and the creditors is uncertain."
The cases were Getty Petroleum Marketing, Inc. v. Lukoil America Corp., et al. and Getty Petroleum Marketing, Inc. v. Lukoil America Corp.
As reported in CSP Daily News, the court approval will allow East Meadow, N.Y.-based GPMI to "promptly repay" loans that it borrowed from real-estate investment trust (REIT) Getty Realty Corp., Jericho, N.Y., which owns and leases approximately 1,040 properties nationwide, in order to finance the costs of the litigation.
Getty Realty agreed to loan GPMI up to $6.725 million to fund certain liquidating trustee expenses in connection with the prosecution of the litigation against Lukoil and the wind-down of the debtors' estates.
GPMI previously leased approximately 800 stations from Getty Realty, which terminated GPMI's leases in Dec. 2011 when GPMI was unable to pay the rents and has since re-leased the properties.
The trial was unique in that most of it was held behind closed doors, a rarity in bankruptcy court, which puts a premium on transparency, said Reuters,
During the 2009 transaction at the center of the dispute, Lukoil's lawyers at Akin, Gump, Strauss, Hauer & Feld represented both the buyer and seller because, at the time, GPMI and Lukoil were part of the same corporate family.
Because Akin was on both sides of the deal, the parties in the trial had access to information that would normally be kept confidential due to attorney-client privilege. That information was fair game in the trial, but still not fit for the public.
The uncharacteristic sealing led to logistical issues in managing the case, including the accidental release of sealed transcripts. Asked last month by Reuters for transcripts for all dates that were public, Veritext LLC, a court transcription company, supplied transcripts that included four days of trial that the court later told Veritext should have been sealed.
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