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Ciena Capital's False Claims Act, SBA settlement agreements approved
By Lisa Kerner
Charlotte, N.C., June 9 - Ciena Capital LLC's False Claims Act lawsuit and Small Business Administration settlement agreements were approved on Wednesday, according to a filing by the U.S. Bankruptcy Court for the Southern District of New York.
As previously reported, Ciena said the disputes with the SBA and the False Claims Act litigation were two of the principal factors that drove the filing of its Chapter 11 bankruptcy case.
Under the False Claims Act settlement, the United States and related parties James R. Brickman and Greenlight Capital, Inc. will dismiss the lawsuit in exchange for Business Loan Center granting the United States an allowed general unsecured claim under which it would receive two actual cash distributions totaling $10.1 million.
One of the distributions would be for $8.2 million and would be paid in partial settlement of the lawsuit, and the second would be for $1.9 million in full satisfaction of claims for lawsuit-related costs and fees.
Under the SBA settlement the parties would provide mutual releases, and the SBA will vote in favor of and support confirmation of Ciena's plan of reorganization.
The SBA has also agreed to support an impending settlement of challenge and avoidance actions filed by the SBA and the official committee of unsecured creditors against Ciena's pre-bankruptcy secured lenders, as reported previously.
Ciena is a New York-based portfolio company for Allied Capital, a business development company that invests long-term debt and equity capital in middle market businesses. The company filed for bankruptcy on Sept. 30, 2008. Its Chapter 11 case number is 08-13783.
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