$8M Settlement Approved in Fabrikant Diamond Company Case
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23.06.09, 10:13
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Retail
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The proposed settlement in the lawsuit filed against the former owners of the bankrupt diamond company M. Fabrikant and Sons has been approved by a federal judge.
According to the settlement, Matthew, Theresa, Charles, Marjorie and Susan Fortgang in addition to other affiliate defendants will make a cash payment of $8.05 million to lenders and creditors, known as the "shared assets trust" (SAT).
The SAT is also to receive any amounts remaining in the Fortgangs' $5.5 million insurance policy, net of the $1 million the insurance company is contributing to the $8.05 million settlement.
Defendants with a claim against the General Unsecured Creditors (GUC) Trust and/or the De Beers diamond company in the antitrust case will also be obligated to assign those claims to the SAT.
Another stipulation is that the SAT is entitled to 40% of recoveries obtained by the GUC Trust. However, is not entitled to share in other distributions by the GUC Trust, including the $5 million the SAT will be handing over to the GUC Trust.
The SAT had originally sought a $201.5 million settlement when it filed suit in June 2008. It had claimed that the Fortgangs diverted funds prior to filing for Chapter 11 bankruptcy protection for the M. Fabrikant and Sons diamond company, potentially cheating them out of millions.
Last summer a judge authorized U.S. marshals to enter the Fortgangs' residences on Manhattan’s Park and Fifth avenues to seize their assets. The plaintiffs subsequently withdrew their request for the seizure of assets. It is believed that the family’s assets are less than originally estimated.
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By: Rachel Lieberman, Israel Diamond Industry Portal
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