NEW YORK, Jan. 30, 2004 (PRIMEZONE) -- The law firm of Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) announces that it has commenced an action on behalf of 275 former holders of over $200 million worth of debentures issued by Genesis Health Ventures Inc. The suit was filed in New York state court in Manhattan. Defendants include Genesis, Goldman Sachs & Co., a wholly owned subsidiary of Goldman Sachs Group, Inc., (NYSE:GS), Mellon Bank, N.A., Highland Capital Management, L.P. and George V. Hager, Genesis' chief financial officer.
The complaint alleges that the defendants conspired to cause Genesis to issue false financial information during its bankruptcy proceedings, which understated the company's earnings. Relying on this financial information, the Bankruptcy Court approved a reorganization plan that awarded over 90% of the capital stock of the reorganized Genesis to the senior creditor group, including Goldman, Mellon and Highland, while providing minimal distributions to the debentureholders and other junior creditors.
The fraudulent scheme alleged in the complaint consists of about a dozen instances where Genesis' earnings were "adjusted" during the bankruptcy proceedings. While most of these adjustments, taken alone, were relatively small, taken as a whole they depressed Genesis' earnings by roughly 25%, and reduced the valuation of the Company that was presented to the Bankruptcy Court by hundreds of millions of dollars. Not surprisingly, the Bankruptcy Court concluded that there was little, if any, value left over for distribution to junior creditors.
"It takes quite a lot to get 275 bondholders this angry," commented H. Adam Prussin, counsel for the plaintiffs. The scheme alleged here was "sophisticated and comprehensive," he added.
The Pomerantz firm, which has offices in New York, Chicago and Washington D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.