Bondholder Class Action Against BNY Mellon Settled on Eve of Closing Arguments

4/19/2018 - On April 16, 2018, Barrack Rodos & Bacine began a trial before Judge Juan R. Sánchez in the United States District Court for the Eastern District of Pennsylvania in a class action lawsuit brought on behalf of former bondholders of Lower Bucks Hospital.  The lawsuit was brought against The Bank of New York Mellon Trust Co., N.A., and J.P. Morgan Trust Company, National Association, as indenture trustees for bonds issued on behalf of Lower Bucks Hospital.  Barack Rodos & Bacine represents the plaintiff, Leonard Becker, and the certified class of bondholders.  The plaintiff alleged that the defendants breach their fiduciary and contractual duties to the bondholders by failing to ensure that the bondholders’ security interest in the collateral backing the bonds was perfected, resulting in a diminished recovery for the bondholders in the Lower Bucks Hospital bankruptcy and sought $15 million in damages, plus interest, from the indenture trustees.

On April 19, 2018, on the eve of closing arguments, the parties entered into an agreement in principle to settle the action for $13.5 million, to be distributed to the bondholders on a pro rata basis.  The parties are currently drafting the settlement agreement and related papers, and will be seeking preliminary approval of the settlement later this month.