CORRECTING and REPLACING Top-10 Litigation Boutique, Smyser, Kaplan & Veselka, L.L.P., Seeks over $200 Million for Oil and Gas Industry Creditors Defrauded by Embattled Billion-Dollar New York Hedge Fund
CORRECTION…by Smyser, Kaplan & Veselka, L.L.P.
HOUSTON–(BUSINESS WIRE)–Please replace the release with the following corrected version due to multiple revisions.
The corrected release reads:
TOP-10 LITIGATION BOUTIQUE, SMYSER, KAPLAN & VESELKA, L.L.P., SEEKS OVER $200 MILLION FOR OIL AND GAS INDUSTRY CREDITORS DEFRAUDED BY EMBATTLED BILLION-DOLLAR NEW YORK HEDGE FUND
Retired United States Bankruptcy Judge Richard S. Schmidt serves as Trustee of the Black Elk Energy Offshore Operations, LLC Litigation Trust. Judge Schmidt filed an Original Complaint alleging that Platinum Partners Value Arbitrage Fund LP, Platinum Partners Credit Opportunities Master Fund LP, Platinum Partners Liquid Opportunities Master Fund LP, and PPVA Black Elk (Equity) LLC (collectively “Platinum”) is liable for more than $200 million in improperly transferred assets for its use and benefit. See Richard Schmidt, Trustee of The Black Elk Energy Offshore Operations, LLC Litigation Trust vs. Platinum Partners Value Arbitrage Fund LP, et al, Case No. 16-03237, In the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
Contemporaneous with that filing, came an Emergency Application for Preliminary Injunctive Relief in Houston bankruptcy court. In it, the Trustee sought and won an immediate temporary restraining order and subsequently intends to seek a temporary injunction to freeze $97,959,854.79 Platinum fraudulently transferred to itself from Black Elk Energy Offshore Operations, LLC (“Black Elk”).
The Black Elk-Platinum relationship began when Platinum aggressively overtook Black Elk by acquiring 85% of the company within three years of its initial investment. Once in control, Platinum stripped Black Elk of its valuable assets, leaving the company without the financial means to repay creditors. Platinum then engaged in shrewd financial maneuvers to route funds obtained from the sale of Black Elk’s assets back to itself. Platinum’s actions ultimately forced Black Elk into involuntary bankruptcy, later converted into a Chapter 11 reorganization and subsequent liquidation.
Although the Complaint details actions Platinum took to Black Elk’s detriment on several transactions, a primary focus in the Emergency Application was on Platinum’s manipulation of the more than $120 million in proceeds from the sale of Black Elk’s best Gulf of Mexico assets. Smyser stated: “Platinum engineered a transfer of more than $97 million to it and for its benefit from the sale of Black Elk’s prime oil and gas assets, a transfer that led to Black Elk’s demise and deprived creditors and oilfield workers of payment for work they’d done. It was an outrageous plundering of a company.”
While Platinum’s main fund has money owed to Black Elk creditors, the Platinum fund itself has now initiated a Chapter 15 bankruptcy. The fund, in liquidation proceedings in the Cayman Islands, has filed a request that the New York bankruptcy court recognize the Cayman liquidation proceedings and enter a stay of U.S. proceedings against the fund’s creditors. Earlier this year, the federal government indicted one of Platinum’s principals, Murray Huberfeld. The Trustee is pleased that the trust could count on the Houston bankruptcy court to freeze Platinum’s funds fraudulently acquired from Black Elk before Platinum could succeed in dissipating them or other creditors obtained them.