ITT Tech Trustee Enlists Proskauer For Fraud Suits
By Jonathan Randles
Law360, New York (September 27, 2016, 3:23 PM EDT) -- The trustee overseeing the liquidation of ITT Technical Institute sought an Indiana bankruptcy judge's permission Monday to retain Proskauer Rose LLP to handle the bevy of fraud lawsuits brought against the now-shuttered for-profit college by state and federal regulators.
Rubin & Levin P.C. attorney Deborah Caruso, currently serving as the interim Chapter 7 trustee in ITT Tech's bankruptcy, said Proskauer will help oversee government investigations and regulatory suits accusing the business of engaging in predatory lending practices. Proskauer will also analyze ITT Tech's insurance coverage and any related insurance litigation, Caruso said in a court filing.
Proskauer is poised to become the third law firm brought in to wade through the fallout from ITT Tech's abrupt closure earlier this month and subsequent bankruptcy. Caruso has also requested permission from the bankruptcy judge to retain Rubin & Levin and Faegre Baker Daniels LLP to wind up ITT Tech's affairs. Faegre Baker Daniels is being sought to handle ITT Tech's reporting requirements to the U.S. Securities and Exchange Commission and employee benefit issues, Monday's filing said.
The fraud lawsuits Proskauer is being brought in to help manage could be a major factor in the Chapter 7 case. Lawsuits against ITT Tech have been brought by the SEC, Consumer Financial Protection Bureau and multiple state attorneys general. Regulators have already indicated that they will attempt to continue prosecuting lawsuits against ITT Tech during the bankruptcy, and more litigation could be on the horizon.
Caruso cited Proskauer's past involvement in several complex bankruptcies in support of her request to retain the firm, including its representation of Texas energy company Energy Future Holdings Corp. in its massive Chapter 11 case and of the committee of statutory unsecured claimholders of Caesars Entertainment Operating Co. in the casino operator's complex bankruptcy.
Proskauer partners Jeff Marwil, Timothy Karcher and Marc Rosenthal are expected to the be the firm's primary attorneys on the ITT Tech case, according to the filing. The firm has in the past charged a blended hourly rate of between $650 and $800 in similar types of cases, Caruso said.
"The trustee selected Proskauer because its attorneys have extensive experience, knowledge and resources in the area of debtors' and creditors' rights, and, in addition to a national bankruptcy practice, have extensive experience with litigation, claims, and dispute resolution and insurance recovery," Caruso said in the filing.
Proskauer attorneys did not immediately return a message Tuesday seeking comment.
ITT Tech shut its doors earlier this month, after the U.S. Department of Education threatened its federal funding amid intense regulatory scrutiny about the company's business practices. The company filed for Chapter 7 on Sept. 16, listing assets and liabilities of between $100 million and $500 million.
ITT Tech is represented by trustee Deborah Caruso of Rubin & Levin P.C. and Jay Jaffe, Kayla Britton and Dustin R. DeNeal of Faegre Baker Daniels LLP.
The bankruptcy case is ITT Educational Services Inc., case number 16-07207, in the U.S. Bankruptcy Court for the Southern District of Indiana.
--Editing by Catherine Sum.