Idearc Bankruptcy Fraud Litigation

U.S. Bank, N.A., v. Verizon is a case filed by the Idearc “Bankruptcy Litigation Trustee”, and the underlying thesis is that the entire spinoff transaction was fraudulent and doomed to result in Idearc’s bankruptcy.  This case is also pending in Dallas federal court before Senior Judge A. Joe Fish who is handling the Murphy case.

The latest complaint in this case contains accusations that “CEO Seidenberg remarked privately that the directories business was undergoing a ‘secular’ change and would never compete with the Internet.” The new complaint further alleges that Verizon hired a consultant that “confirm[ed] the directories business would likely continue to decline.” One of Verizon’s chief, highly-paid, outside lawyers who was intimately involved in the spinoff transaction wrote in an email that, “Since we [Verizon] basically decided not to give spinco [Idearc] eyes, ears, limbs and advisors until close to closing, I am not sure why we would want to give it a brain.” All of this was happening behind the scenes.  In short, the case contends that the spinoff transaction was fraudulent because Verizon effectively removed approximately $9.5 billion from Idearc without providing Idearc with reasonably equivalent value in exchange, Verizon cast Idearc adrift, burdened with an anchor of debt around its neck, insolvent and without adequate resources to survive.

The case is filed for the benefit of creditors and is not brought by the Association of BellTel Retirees. However, the Bankruptcy Litigation Trustee’s case against Verizon is materially important to our Murphy case which is filed for the benefit of retirees. The information revealed in the case filed by the Bankruptcy Litigation Trustee confirms the retirees’ claim asserted in the Murphy case that it was not in their best interests to be surreptitiously and involuntarily transferred to Idearc/SuperMedia.

We will provide updates and post documents of importance on this page as a resource.

• February 23, 2015 – Supreme Court Clerk’s Letter Confirming Petition for a Writ of Certiorari Was Denied
• December 15, 2014 – Petition for a Writ of Certiorari, Case No. 13-718   (Please Note:    On September 15, 2010, the U.S. Bank National Association (U.S. Bank), as Litigation Trustee for the Idearc Inc. Litigation Trust (Litigation Trust), filed suit in U.S. District Court for the Northern District of Texas against Verizon and certain subsidiaries challenging the November 2006 spin-off of Verizon’s former directories business then known as Idearc Inc. U.S. Bank, which represents a group of creditors who filed claims in Idearc’s bankruptcy, alleged that Idearc was insolvent at the time of the spin-off or became insolvent shortly thereafter. The Litigation Trust sought over $9 billion in damages. In its June 18, 2013 decision, the District Court entered judgment for Verizon and its subsidiaries and ruled that U.S. Bank would “take nothing” on its claims. U.S. Bank appealed the decision to the U.S. Court of Appeals for the Fifth Circuit, which upheld the District Court’s decision on July 30, 2014. The Litigation Trust has sought review of the decision by the United States Supreme Court.
• July 30, 2014 – Appeals Court Decision Confirming Judgement
  
• March 10, 2014 – Appellant’s Reply Brief
• February 5, 2014 – Verizon Appellees’ Joint Response Brief
• December 2, 2013 – Appellant’s Brief — (Please Note: The creditors have challenged the trial court’s rulings striking plaintiff’s jury demand and denying reconsideration and clarification; granting in part Verizon Defendants’ motion to dismiss; granting in part Verizon Defendants’ motion for summary judgment; granting in part Mr. Diercksen’s motion for summary judgment; admitting and excluding certain evidence at trial; finding after trial that Idearc’s enterprise value at the time of the spinoff was at least $12 billion and that Idearc was therefore solvent; and concluding, following issuance of an order to show cause (that plaintiff also challenges), that the valuation and solvency findings supported entry of judgment in favor of all defendants on all remaining claims.)
• July 15, 2013 – Notice of Appeal to Fifth Circuit Court
  
• June 24, 2013 – Update Report
• June 18, 2013 – Conclusions of Law
• June 18, 2013 – Judgment for Verizon Defendants
• June 5, 2013 – Order Denying Plaintiffs’ Motion to Either Correct or Certify for an Immediate Appeal Judge Fish’s Order Denying Plaintiffs a Jury Trial
• June 3, 2013 – Plaintiffs’ Motion to Either Correct or Certify for an Immediate Appeal Judge Fish’s Order Denying Plaintiffs a Jury Trial
• March 15, 2013 – Plaintiff’s Reply to Order to Show Cause
• March 15, 2013 – Plaintiff’s Reply in Support of Motion for Entry of Judgment
• March 1, 2013 – Defendants’ Opposition to Plaintiff’s Motion for Entry of Judgment
• February 8, 2013 – Plaintiff’s Brief Pursuant to Order to Show Cause
• February 8, 2013 – Plaintiff’s Motion for Entry of Judgment
• January 22, 2013 – Court’s Finding of Facts and Conclusion that Idearc Had a Total Enterprise Value of at least $12 Billion on Spin-off Date
• November 30, 2012 – Defendants’ Joint Reply Trial Brief for Concluded Phase 1 of Trial
• November 30, 2012 – Plaintiff’s Reply Trial Brief for Concluded Phase 1 of Trial
• November 16, 2012 – Defendants’ Proposed Findings of Fact for Concluded Phase 1 of Trial
• November 16, 2012 – Defendants’ Joint Trial Brief for Concluded Phase 1 of Trial
• November 16, 2012 – Plaintiff’s Proposed Findings of Fact for Concluded Phase 1 of Trial
• November 16, 2012 – Plaintiff’s Trial Brief for Concluded Phase 1 of Trial
• September 27, 2012 – Update Report – Case Set for Phase 1 of Trial Starting October 15, 2012
• September 21, 2012 – Plaintiffs’ Proposed Findings of Fact and Conclusions of Law For Phase 1 of Trial
• September 19, 2012 – Joint Status Report Regarding Phase One of the Trial
• September 14, 2012 – Memorandum Opinion and Order Addressing Various Summary Judgment Motions
• August 22, 2012 – Order Scheduling Phase I of Trial to Start on October 15, 2012
• August 8, 2012 – Memorandum Opinion and Order Granting Plaintiff a Partial Summary Judgment (Concluding the Idearc board resolution made on November 16, 2006 ratifying the spin-off was not properly accomplished under Delaware law and is, therefore, void as a matter of law).
• August 6, 2012 – Order Denying Verizon Defendants’ Motion for Partial Summary Judgment on Claims 1, 2 and 5 of the Amended Complaint
• August 3, 2012 – Order Denying Retirees’ Motion to Intervene for Limited Purpose
• July 31, 2012 – Order Dismissing Parts of Claims 1 and 2 and Dismissing All of Claim 10 of the Amended Complaint
• July 27, 2012 – Plaintiff’s (the “Bank’s”) Notice of Non-opposition to the Retirees’ Motion for Permissive Intervention
• July 27, 2012 – Verizon Defendants’ Opposition to the Retirees’ Motion for Permissive Intervention
• July 25, 2012 – Order Reconfirming the Case Will Not be Tried to a Jury
• June 22, 2012 – Retirees’ Motion to Intervene for Limited Purpose
• March 21, 2012 – Order Striking Plaintiffs’ Demand for Jury Trial
• February 17, 2012 – Plaintiffs’ Amended Complaint and Jury Demand (Expurgated)