IN RE HEALTHCO INTERN., INC.

Bankruptcy No. 93-41604-JFQ, Adversary No. 95-4154.

208 B.R. 288 (1997)

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

United States Bankruptcy Court, D. Massachusetts.

April 9, 1997.


Attorney(s) appearing for the Case

J. Joseph Bainton, Ross & Hardies, New York City, for Trustee.

John A.D. Gilmore, Hill & Barlow, Boston, MA, for Airlie Group, L.P., Dort A. Cameron, III, EBD, L.P., Lee M. Bass, Perry Bass, TMT-FW, Inc., Thomas M. Taylor.

Steven M. Pesner, Akin, Gump, Strauss, Hauer & Feld, LLP, New York City, for Akin, Gump, Strauss, Hauer & Feld, Altus Finance, S.A., Lion Advisors, L.P., Apollo Advisors, L.P., Apollo Capital Management, Inc., Apollo Group, L.P., Apollo Investment Fund, L.P., Lion Advisors, L.P., Lion Capital Management, Inc.

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

Jeffrey A. Carter, McKool Smith, P.C., Dallas, TX, for B. Tom Carter, Jr., J. Jerry McCombs, John D. Harkey.

Bar & Karrer, pro se.

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

John E. Tener, Robinson & Cole, Boston, MA, for Chrysler Capital Corp.

William J. Hanlon, Goldstein & Manello, P.C., Boston, MA, for Conseco, Inc.

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

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

Phillip N. Smith, Jr., McKool Smith, P.C., Dallas, TX, for Davis McCombes Harvey & Carter, HMC Partners, L.P., Healthco Holding Co., Inc., Hicks, Muse & Co., Inc., Hicks, Muse Equity Fund, L.P., Jack D. Furst, John R. Muse, Ray C. Davis, Thomas O. Hicks.

Freshfields, pro se.

David C. Fixler, Rubin and Rudman, Boston, MA, for Helen Cyker, J. Robert Casey, Tr.

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

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

Arthur Steinberg, Kaye, Scholer, Fierman, Hays & Handler, New York City, for Kaye, Scholer, Fierman, Hays & Handler.

Vincent M. Amoroso, Parker, Coulter, Daley & White, Boston, MA, for Kenneth W. Aitchison, Robert E. Mulcahy, III.

Arnold P. Messing, Choate, Hall & Stuart, Boston, MA, for Lazard Freres & Co.

William J. Hanlon, Goldstein & Manello, P.C., Boston, MA, for Life Partners Group, Inc., Nat. Fidelity Life Ins. Co.

Darragh K. Kasakoff, Seder & Chandler, Worcester, MA, for Martineau Walker.

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

Carl E. Metzger, Testa, Hurwitz & Thibeault, LLP, Boston, MA, for Mercury Asset Management.

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

Nabarro Nathanson, pro se.

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

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

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

Kathleen S. Donius, Reinhart, Boerner, Van Deuren, Norris, Milwaukee, WI, for Valuation Research Corporation.

Carl E. Metzger, Testa, Hurwitz & Thibeault, LLP, Boston, MA, for Wand Partners, Inc.

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


OPINION

JAMES F. QUEENAN, Jr., Bankruptcy Judge.

William A. Brandt, Jr., the chapter 7 trustee (the "Trustee"), has brought this action against virtually everyone who participated in the 1991 leveraged buyout (the "LBO") of the debtor, Healthco International, Inc. ("Healthco"). The initial defendants included selling shareholders, the buyer, financing banks (who have since settled for $10 million), debenture holders, directors, officers, financial...

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