Highland Capital U.S. Trustee opposes governance settlement

By Caroline Salls

Pittsburgh, Jan. 7 – Highland Capital Management, LP’s motion for approval of a company governance settlement reached with its official committee of unsecured creditors drew an objection on Monday from Region 6 U.S. trustee William T. Neary, according to a filing with the U.S. Bankruptcy Court for the Northern District of Texas.

Neary said the settlement “is an agreement to do an agreement in the future, and it leaves many open litigation issues.”

In addition, the U.S. Trustee said the bankruptcy court does not have the authority to enter an order defining the corporate governance of non-debtor Strand Advisors, a non-debtor, and Highland’s proposed settlement improperly supplants Delaware corporate law defining governance for that non-debtor.

“This bankruptcy case is not just about resolving monetary claims between individuals, Neary said in his objection. “It is also about protecting investors.”

In the objection, Neary confirmed his belief that a Chapter 11 trustee should be appointed to oversee Highland Capital’s bankruptcy.

HCMLP is a Securities and Exchange Commission-registered investment adviser on Dallas-based Highland Capital Management’s global alternative investment platform. The company filed bankruptcy on Oct. 16 in the U.S. Bankruptcy Court for the District of Delaware. The case was later transferred to the Texas court under Chapter 11 case number 19-34054.

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