Nanovation Technologies v. BearingPoint
In Nanovation Technologies v. BearingPoint -- a complex stock valuation suit in the telecommunications sector -- the United States Bankruptcy Court for the Northern District of Illinois ruled for Analysis Group client BearingPoint, Inc. (formerly KMPG Consulting, LLC) on all counts of the complaint. BearingPoint counsel Lord, Bissell & Brook, LLP retained Analysis Group to provide consulting and expert witness services. Affiliate Robert A. Sherwin provided valuation analysis and delivered expert testimony.
Integrated optical solutions provider Nanovation sought bankruptcy relief on July 25, 2001, shortly after the precipitous downtown of the telecommunications industry. Nanovation charged that then-KPMG's September 20, 2000 valuation of Nanovation stock had failed to properly ascertain the stock's fair market value, had been negligently prepared, and had aided and abetted insiders in breaching their fiduciary duties to Nanovation when those individuals sold their stock to repay loans to the failing company. The trustee for Nanovation sought damages in excess of $20 million.
In ruling for BearingPoint, the court's 89-page decision hinged on two critical issues: that plaintiff Nanovation contradicted itself in accepting then-KPMG's valuation methodology prior to the date on which the alleged violations took place, subsequently rejecting that same methodology after the date in question; and that Nanovation's valuation expert "refused to take into account any real market transactions involving the purchase and sale of Nanovation's stock." The court further opined that "while not quite irrational, the [plaintiff's] exuberant pursuit of [BearingPoint] was seriously misguided" and that "the court was not fooled."