IN RE HEALTHCO INTERN., INC.

Bankruptcy No. 93-41604-JFQ. Adv. No. 95-4154.

195 B.R. 971 (1996)

In re HEALTHCO INTERNATIONAL, INC., Debtor. William A. BRANDT, Jr., Trustee, Plaintiff, v. HICKS, MUSE & CO., INCORPORATED, et al., Defendants.

United States Bankruptcy Court, D. Massachusetts.

May 17, 1996.


Attorney(s) appearing for the Case

J. Joseph Bainton, Jose Baez, Ross & Hardies, New York City, Michael A. Khoury, Cohn & Kelakos, Boston, MA, for William A. Brandt, Trustee.

Thomas G. Rafferty, Cravath, Swaine & Moore, New York City, Arnold P. Messing, Choate, Hall & Stuart, Boston, MA, for Lazard Freres & Co.

Mark N. Parry, Moses & Singer, New York City, for Gemini Partners, Arthur M. Goldberg.

Mark K. Schonfeld, Testa, Hurwitz & Thibeault, Boston, MA, for Wand Partners, Mercury Asset Management, Life Partners Group.

David C. Fixler, Rubin & Rudman, Boston, MA, for Robert Casey, Helen Cyker.

Andrew A. Kress, Cherise Wolas Kasica, Arthur Steinberg, Kaye, Scholer, Fierman, Hays & Handler, New York City, for Kaye, Scholer, Fierman, Hays & Handler.

Edwin G. Schallert, Debevoise & Plimpton, New York City, for Chancellor Trust Co., Chancellor Capital Management.

David A. Parke, Bulkley, Richardson & Gelinas, Springfield, MA, for Cramer, Rosenthal, McGlynn.

H. Bissell Carey, III, John E. Tener, Robinson & Cole, Boston, MA, Joseph L. Clasen, Robinson & Cole, Stamford, CT, for Chrysler Capital Corp.

Dennis E. Glazer, Matthew Gluck, Davis, Polk & Wardwell, New York City, for J.P. Morgan.

Gary L. Weiner, Fried, Frank, Harris, Shriver & Jacobson, New York City, for Vincent A. Mai, Thomas L. Kempner.

Hugh J. Gorman, III, Hinckley, Allen, Snyder & Comen, Boston, MA, for Joel Lewin.

Christopher T. Vrountas, Cooke, Clancy & Gruenthal, Boston, MA, for Marvin Cyker.

Peter T. Wechsler, Warner & Stackpole, Boston, MA, for Freshfields, Nabarro Nathanson.

Louis Goodman, Skadden, Arps, Slate, Meagher & Flom, Boston, MA, for Skadden, Arps, Slate, Meagher & Flom.

Darragh Kasakoff, Seder & Chandler, Worcester, MA, for Richards, Layton & Finger Martineau Walker.

Robert Seder, Seder & Chandler, Worcester, MA, for Weil, Gotshal & Manges.

James F. Wallack, Goulston & Storrs, Boston, MA, for Morgan Stanley & Co.

Nancy Lazar, Davis, Polk & Wardwell, New York City, for J.P. Morgan & Co., Inc.

Mark D. Cress, Bulkley, Richardson & Gelinas, Springfield, MA, for Cramer, Rosenthal, McGlynn.

Kathleen Donius, Michael Jankowski, Reinhart, Boerner, Van Deuren, Norris & Rieselback, Milwaukee, WI, for Valuation Research Corp.

Vincent Amoroso, Parker, Coulter, Daley & White, Boston, MA, for Robert Mulcahy, III.

Timothy C. Blank, Dechert, Price & Rhoads, Boston, MA, for Bar & Karrer.

John Gilmore, Hill & Barlow, Boston, MA, for `The Airlie Group'.

Phillip N. Smith Jr., Jeffrey A. Carter, Robert Elkin, Scott R. Jacobs, Mike McKool, Jr., Michael A. Piazza and Melanie G. Cowart, McKool Smith, PC, Dallas, TX, for `The Hicks, Muse Group'.

Steven M. Pesner, Akin, Gump, Strauss, Hauer & Feld, New York City, for `The Apollo Group'.

Christian M. Hoffman, Foley, Hoag & Eliot, Boston, MA, for Coopers & Lybrand.

William J. Hanlon, Goldstein & Manello, PC, Boston, MA, for Conseco.

Daniel J. Lyne, Hanify & King, Boston, MA, for Ray Doherty.


OPINION

JAMES F. QUEENAN, Jr., Bankruptcy Judge.

This is yet another case of a leveraged buyout gone sour. In May of 1991, management of Healthco International, Inc. ("Healthco") escaped from a proxy contest by causing all the company's capital stock to be sold to a "white knight" in a leveraged buyout (the "LBO"). Healthco filed a chapter 11 petition with this court on June 9, 1993. The case was soon converted to chapter 7.

William A. Brandt...

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