Steven H. Felderstein
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Representative Cases and Clients
Chapter 9 Cases
The Association of Retired Employees of Stockton (ARECOS) initially retained Steve and his partner Jake Rios to represent its 600+ members on behalf of all City retirees in the pre-bankruptcy negotiations required by California law as a prerequisite to filing a chapter 9 bankruptcy case. After Stockton filed chapter 9, the U.S. Trustee’s Office refused to appoint an official retirees' committee until the Bankruptcy Court ruled on the bond insurers’ objection to the City’s solvency. That litigation took almost a year to resolve. The retirees’ predicament of not having an official committee and therefore not having a place at the negotiating table for plan treatment called for a creative response. Our solution: to help ARECOS solicit all retirees to find representative retirees willing to serve on an ad hoc retirees’ committee that would be qualified for appointment en mass as an official committee once the Bankruptcy Court ruled on the City’s solvency. Immediately after the Bankruptcy Court determined the City was insolvent the U.S. Trustee, rather than use its normal selection process that could have taken weeks, appointed all the members of the ad hoc committee to the official Retirees’ Committee. Both the ad hoc and the official committees focused on the need to protect all retirees’ pension benefits from impairment, even though that meant approximately 1100 retirees would receive small cash dividends in return for the loss of their very valuable promised healthcare benefits in retirement. With the active support of the Retirees’ Committee, the City of Stockton confirmed its Plan of Adjustment over the objection of the major bondholder without any impairment to the retirees’ pension benefits.
Chapter 11 Cases
Following a competitive selection process, the Official Committee of Creditors retained Steve and his partner Tom Willoughby to represent it in the chapter 11 bankruptcy of Heller Erhman, an AM Law 100 law firm of over 600 lawyers. The recoveries to creditors in that case far exceeded initial expectations, with unsecured creditors receiving 55 percent on their claims to date.
The Official Committee of Creditors, which represented over $1 billion in unsecured claims, selected Steve and Tom as counsel to the committee in the Tri Valley Growers chapter 11 case. Again, the recoveries to unsecured creditors greatly exceeded the low expectations at the beginning of the case.
Public Sector Cases and Clients
California Public Employees Retirement System (CalPERS)
For more than 25 years, Steve has represented CalPERS in numerous cases, including: where a public entity was a debtor in bankruptcy (City of Vallejo); where CalPERS was an investor or where it invested in an asset-based lending transaction (Texaco, Drexel Burnham, Delta Airlines, Enron, Worldcom, Lehman Brothers); where the debtor/debtor in possession was an investment partner of CalPERS; where the debtor/debtor in possession contracted with CalPERS (Maxicare, Health Plan of the Redwoods); and, bankruptcy matters involving the wind down of a financial institution (Lehman Brothers) and a real estate investment firm.
Steve also represented CalPERS in the chapter 9 case of the City of Vallejo where retiree pension benefits were not impaired under the city’s plan of adjustment. Recently, CalPERS retained Steve as co-counsel with K & L Gates in the chapter 9 bankruptcy case of the City of San Bernardino.
Other California State Agencies and Departments
The California Attorney General’s office continues to retain Steve and his partner Paul Pascuzzi to represent many state agencies and departments as outside bankruptcy counsel in complicated cases in California and around the nation. In each case our firm represented the state agency or department as a regulatory body and a creditor protecting the regulatory authority of the agency or department in bankruptcy courts around the country. These cases include Pacific Gas & Electric, Pacific Lumber/Scotia Pacific, Worldcom, and Enron. Steve also represented the California Department of Transportation in the chapter 11 of the largest California public-private partnership formed to build a toll road in Southern California (South Bay Expressway).
Private Sector Cases and Clients
Steve has represented all restructure constituencies inside and outside of bankruptcy court, including debtors, official creditor and equity committees, and purchasers of assets of troubled companies, as well as buyers of going-concern entities. Recent representations include: a private-equity firm in the contentious out-of-court debt restructure of a large central California novelty food manufacturer; conversion of a chapter 11 case to a chapter 7 case and obtaining relief from stay to permit the purchase-money lender to foreclose on a multi-million dollar mansion; the debtor in the chapter 11 of a religious organization in the California Central Valley; and several residential and commercial real estate developers in financial distress. He has experience in numerous industries, including agriculture, food processing, travel, hospitality, entertainment, banking, and commercial and residential real estate.