In a recent development in the legal realm, Schulte Roth & Zabel, a prominent law firm, faces legal action in Texas state court over alleged excessive fees in connection with its involvement in the bankruptcy proceedings of retailer Tuesday Morning. The lawsuit was filed by Invictus Special Situations Master 1, a privately held investment fund controlled by TREO Vitus GP LLC.
Allegations Against Schulte Roth & Zabel
Invictus Special Situations Master 1 accuses Schulte Roth & Zabel of seeking “exorbitant and unjustified” fees amounting to more than $5.3 million for its services related to the failed investment on Tuesday Morning. The fund contends that it did not consent to arbitration with the law firm and insists that a judge should determine any compensation owed.
Details of the Lawsuit
The lawsuit highlights the long-standing relationship between Schulte Roth & Zabel and the former managers of Invictus Global Management, who engaged the firm to facilitate financing for Tuesday Morning’s bankruptcy proceedings. Despite the efforts, the retailer eventually liquidated, resulting in substantial losses for the investment fund.
Contractual Terms and Dispute
Invictus Special Situations Master 1 emphasizes the extraordinary terms of Schulte Roth & Zabel’s contract, including an hourly rate exceeding $2,000 and a 20% “success” fee. Moreover, the fund asserts that the arbitration agreement was with the former managers, not with Invictus, thus disputing the law firm’s basis for arbitration.
Response and Legal Proceedings
Neither Schulte Roth & Zabel nor representatives for the investment fund have provided immediate comments on the lawsuit. However, the case is pending before the 455th Civil District Court in Travis County, Texas, under the caption Invictus Special Situations Master 1, by and through TREO Vitus GP LLC v. Schulte Roth & Zabel et al, with legal representation for the plaintiff provided by Christopher Hilton and Judd Stone II of Stone Hilton PLLC.
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