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REID COLLINS DEFEATS APPEAL IN $1 BILLION CASE AGAINST EVANS-FREKE, MAYO, AND AUVEN THERAPUETICS IN NEW YORK’S FIRST DEPARTMENT

On May 21, 2020, Reid Collins defeated an appeal by a group of defendants seeking to reverse the New York Supreme Court’s denial of their motions to dismiss. Defendant Stephen Evans-Freke withdrew his appeal prior to the ruling, but his current fund Auven Therapeutics, John Mayo, and a number of Mayo’s and Evans-Freke’s Celtic entities continued to press their appeals. The First Department rejected each of their arguments, finding that plaintiffs sufficiently pleaded that all defendants were subject to personal jurisdiction in New York based on, among other things, New York’s “closely-related doctrine” and that Auven was subject to liability as a successor to the Celtic investment manager. In the suit, plaintiffs are asserting direct and alter-ego-based claims against Evans-Freke, Mayo, Auven, and the Celtic entities for breach of their obligations to pay principal and interest due on notes purchased by plaintiffs and issued by one of defendants’ shell companies. Plaintiffs also assert that Evans-Freke, Mayo, and Auven used the Celtic corporate structure to bleed out the assets of the issuing entity and the related guarantors in an attempt to ensure plaintiffs could not recover the payment due on the notes, and instead that Auven could conduct the same business free and clear of the obligations owed to plaintiffs. Plaintiffs seek to recover the nearly $1 billion currently owed on the notes. The First Department’s opinion can be found here.

Reid Collins Defeats Motions to Dismiss in In re Renren, Inc. Derivative Litigation Involving Billion Dollar Sham “Spin-Off”

On May 20, 2020 Reid Collins defeated five motions to dismiss filed by defendants in a suit involving an alleged scheme by Renren insiders to squeeze out minority shareholders and take the company’s billion-dollar investment portfolio for themselves. The New York Supreme Court for New York County today entered a 71-page order denying all of the motions filed by insiders and others involved in the transaction.
The defendants – Joseph Chen, David Chao and related DCM Investments funds, Oak Pacific Interactive (“OPI”), and Duff & Phelps, LLC – had moved to dismiss, asserting lack of personal jurisdiction and that Reid Collins’ clients, including Renren shareholders Heng Ren Silk Road Investments LLC and Oasis Investments II Master Fund Ltd., lacked derivative standing under Cayman law to pursue the claims.
The suit arises out of Mr. Chen’s and Mr. Chao’s alleged scheme to take Renren’s billion-dollar investment portfolio for themselves and their associates through a sham transaction in which Renren’s investment portfolio was transferred to an entity (OPI) that was then divested from Renren. Unlike a normal spin-off, Renren’s minority shareholders did not receive shares of OPI, but instead received an artificially low cash dividend based on a deflated value for OPI and its assets, including a $560+ million interest in renowned fintech company Social Finance, Inc. The valuation on which the cash dividend was based undervalued the investment portfolio by hundreds of millions of dollars. Renren had originally obtained the investment portfolio at issue with the proceeds of its initial public offering of American depository shares on the New York Stock Exchange.
Justice Andrew Borrok rejected the defendants’ arguments that New York courts could not exercise specific personal jurisdiction. Justice Borrok similarly rejected the defendants’ arguments that the claims at issue did not give rise to derivative standing under Cayman law’s “fraud on the minority” exception.
See Story Here.
See Decision Here.

REID RECOGNIZED AS A “TRAILBLAZER” BY THE NATIONAL LAW JOURNAL

Reid Collins is pleased to announce that William T. Reid, IV, a founding partner of the firm, has been recognized by the National Law Journal in its 2020 Plaintiffs’ Lawyers Trailblazers series for the second year in a row. This series spotlights “a handful of individuals . . . that are truly agents of change” on the plaintiffs’ side of the docket. See story here.

A NOTE TO OUR CLIENTS REGARDING COVID-19

Like you, Reid Collins is monitoring the rapidly evolving situation related to COVID-19. Our priority is to protect the health and wellbeing of our employees’ families and to contribute to safeguarding the most vulnerable in our communities, while still providing you with the creative, relentless, and exceptional representation you deserve. For that reason, we made the decision to close our offices and allow our employees to work remotely indefinitely to ensure we are doing everything we can to aid containment efforts. For us, the decision was not difficult because remote work has always been very much part of the Reid Collins’ business model. Our entire team is equipped with the technology and resources they need to continue to serve your needs from any location as we navigate these uncertain times. As before, we want you to know that you can continue to reach each of us at our usual email addresses and office telephone numbers. More importantly, we want to assure you that we are continuing to carry on the important work you have entrusted to Reid Collins: representing you. If you have any questions or concerns, please reach out day or night. We are here for you.

REID COLLINS PARTNER AND ABI HIGHLIGHT GLOBAL RESPONSES TO LIMIT THE ECONOMIC IMPACT OF COVID-19 PANDEMIC

Reid Collins partner Adam Swick is a project editor for the ABI International Committee in an effort to highlight individual measures undertaken by various countries to curb the negative impact of the COVID-19 pandemic on their respective economies. In a comparative format, the committee created a comprehensive schematic summarizing the macro- and micro-economic efforts in response to COVID-19. The countries featured include Canada, Cayman Islands, Chile, France, Germany, Channel Islands (Guernsey), Channel Islands (Jersey), Hong Kong, India, Italy, Mexico, Netherlands, Russia, Singapore, Spain, the United Kingdom, and the United States. Summaries of the measures from other countries are forthcoming and will be posted to this page.

The attorney responsible for this website is William T. Reid, IV

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