GoldenTree Must Face Countersuit in $1.7 billion Debt Fight – “We’d like the chance to tell our side of the story,” Erika Pike Turner, a lawyer for Meyers’s EB Holdings II

< Back to View All News

Bloomberg Law

March 21, 2017

(Bloomberg) –Distressed-debt investors led by  GoldenTree Asset Management must face a lawsuit that accuses them of trying to take over one of the world’s biggest lead producers by dragging out debt talks with no intention of making a deal, a judge in Las Vegas ruled.

Tuesday’s decision means GoldenTree and the holding company for Howard Meyers’s lead empire can begin moving forward with dueling lawsuits against each other — just 10 days before more than 1.6 billion euros ($1.7 billion) in debt at the center of dispute comes due.

Although a trial to decide the competing suits won’t start for at least a year, the ruling gives the Dallas industrialist an important legal victory in a fight that may determine who owns the crown jewel of his lead producing business, Eco-Bat Technologies Ltd.

“We’d like the chance to tell our side of the story,” Erika Pike Turner, a lawyer for Meyers’s EB Holdings II, told the judge Tuesday.

The dispute involves a 600 million-euro loan that EB Holdings took out in 2007 and spent much of last year trying to renegotiate. The debt comes due at the end of March and, because of its “payment in kind” interest structure, has ballooned to more than 1.6 billion euros, according to papers filed in state court in Nevada.

Suits Filed

After restructuring talks broke down, lenders led by GoldenTree Asset Management sued in August, accusing Meyers of fraud and racketeering. They say he caused EB Holdings to overstate its financial health to get the loan and then took some of the proceeds for himself. EB Holdings countersued, saying the lenders, including GoldenTree chief investment officer Steven Tananbaum, dragged out the negotiations, waiting for the debt to go into default.

Each side denies the other’s allegations. Both cases are before the same Nevada judge, who said last month that the GoldenTree group’s claims can proceed.

In the hearing Tuesday, Turner told Clark County Judge Joe Hardy that Meyers could have fixed his company’s debt problems by selling stock in Eco-Bat but held off at Tananbaum’s request.

Hardy has said he has “concerns” about both lawsuits but that the claims should proceed, an important legal step that allows the parties to begin gathering more documents and questioning each others’ executives under oath.

Company Control

A default on the loan, or a big loss in court, could cost Meyers control over Eco-Bat, his main operating company. In court papers, EB Holdings said that unless the Nevada court intervenes, the “takeover scheme may well succeed.”

Meyers has been building his lead recycling business since the 1970s. Matlock, England-based Eco-Bat’s main activity is extracting lead from old car batteries and selling it to makers of industrial and automotive batteries.

The case is GoldenTree Master Fund Ltd. v. Meyers; and related counter- and third-party claims of EB Holdings II v. GoldenTree Master Fund Ltd., A-16-742507-B, Nevada Eighth Judicial District Court, Clark County (Las Vegas).                                     # # #