FILED: NEW YORK COUNTY CLERK 08/28/ :14 PM INDEX NO /2017 NYSCEF DOC. NO. 69 RECEIVED NYSCEF: 08/28/2017 EXHIBIT 7

Transcription

1 EXHIBIT 7

2 IN THE COURT OF CHANCERY OF THE STATE OF DELAW ARE THE NATIONAL COLLEGIATE STUDENT LOAN MASTER TRUST, et al, Plaintiffs, C.A. No VCS v. PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY D/B/A AMERICAN EDUCATIONAL SERVICES, Defendant. W ILMINGTON TRUST COMPANY S UNOPPOSED MOTION TO INTERVENE W ilmington Trust Company, a Delaware trust company ( W ilmington Trust or W TC ), by and through its undersigned counsel, hereby requests that this Court permit it leave to intervene in this action pursuant to Court of Chancery Rule 24 for the purpose of obtaining instructions concerning the identity of the proper owners of certain Delaware statutory trusts 1 (collectively, the Trusts ), to 1 The Trusts include The National Collegiate Student Loan Master Trust I, The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student 1

3 which it serves as trustee (in such capacity, the Owner Trustee ). In support thereof, W TC avers as follows: FACTUAL BACKGROUND 1. W ilmington Trust currently serves as the Owner Trustee of the Trusts. 2. Under the various trust instruments governing the Trusts (the Trust Agreements ), the Owner Trustee has the right to seek instructions from the beneficial owners of the Trusts (the Owners ), before executing documents or taking actions on behalf of the Trusts. 3. To discharge its duties as Owner Trustee, subject to its rights, privileges and protections in the Trust Agreements, W ilmington Trust may be required to follow directions from, and cause the Trusts to act at the behest of, the Owners from time to time. 4. A dispute has arisen between Defendant Pennsylvania Higher Education Assistance Agency ( PHEAA ) and the Trusts concerning the validity of certain transfers of ownership interests in the Trusts (the Purported Transfers ), which purportedly resulted in a concentration of 100% of the beneficial ownership interests of the Trusts held by NC Owners, LLC, NC Residuals Owners Trust, and Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust , The National Collegiate Student Loan Trust

4 PathmarkAssociates, LLC (the Purported Owners ) 2. The dispute concerning the validity of the Purported Transfers (the Ownership Dispute ) is detailed in numerous pleadings and filings on the Court s docket and will be presented to the Court for determination by the existing parties to this action. 5. Before becoming aware of the Ownership Dispute, the Owner Trustee followed the instructions of the Purported Owners. As a result of the Ownership Dispute, the Owner Trustee is now uncertain as to whether the Purported Transfers were valid 3 and whether the Purported Owners validly own 100% of the beneficial interests of the Trusts with the corresponding right, under the Trust Agreements, to direct the actions of the Owner Trustee. Based on such uncertainty, the Owner Trustee believes in good faith that it cannot prudently follow the directions of the Purported Owners unless or until the Ownership Dispute is resolved by the Court. 2 In reliance on documentation provided to W TC by the Purported Owners and by a prior owner, the Owner Trustee registered transfers effective March 25, 2016 indicating on the Trusts records that the Purported Owners owned 100% of the beneficial interests of all of the Trusts, except National Collegiate Student Loan Master Trust Ifor which consent of a note insurer was required but has not yet been provided to the Owner Trustee. 3 The applicable Trust Agreement language at issue provides in relevant part: [Section 3.04](c) Except for the initial issuance of the Trust Certificates to the Depositor, no Transfer shall be valid if, as a result of such Transfer, (i) any Person would have a Percentage Interest or a Sharing Ratio of 100%, considering for such purpose all interests owned by any Affiliate of such Person as owned by such Person, or (ii) such Transfer would result in a termination of the Trust for Federal income taxpurposes. 3

5 DISCUSSION 6. The Court should permit W TC to intervene in this action as a matter of right because the identification of the proper beneficial owners of the Trusts is necessary for W ilmington Trust to perform its duties and obligations as Owner Trustee, and W ilmington Trust desires to rely upon a definitive ruling of the Court as to such identification to properly perform its duties as Owner Trustee. 7. Court of Chancery Rule 24provides, in pertinent part: (a) Intervention ofright. Upon timely application anyone shall be permitted to intervene in an action:(1) W hen a statute confers an unconditional right to intervene;or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant s ability to protect that interest, unless the applicant s interest is adequately represented by existing parties. (b) Permissive intervention. Upon timely application anyone may be permitted to intervene in an action:(1) W hen a statute confers a conditional right to intervene;or (2) when an applicant s claim or defense and the main action have a question of law or fact in common. In exercising its discretion the Court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties. CT. CH. R. 24(a)-(b) (emphasis added). 8. [U]nder either variety of intervention the applicant must, as a threshold matter, present a potentially valid claim. In re Interstate Gen.Media 4

6 Holdings,LLC, 2014W L , at *3(Del. Ch.). Because of the Ownership Dispute, W ilmington Trust believes that it is at riskshould it follow the directions of the Purported Owners without the Court s determination that they are the true and correct beneficial owner(s) of the Trusts. Delaware law long has recognized that a trustee s petition for instructions to determine whether and what actions it may take validly states a claim. See,e.g., Mennen v.wilmington Trust Co., 2013 W L , at *2(Del. Ch. Sept. 18, 2013);Wilmington Trust Co.v.Haskell, 282A.2d 636, 639(Del. Ch. 1971), a f d,304a.2d 53(Del. 1973);Wilmington Trust Co.v.Lee, 298A.2d 358, 359(Del. Ch. 1972) 9. The Ownership Dispute between PHEAA and the purported beneficial owners has placed W ilmington Trust in a precarious position;it is being asked by the Purported Owners to follow their instructions, but it has actual knowledge of the Ownership Dispute questioning their identity as the proper owners of the Trusts. That dispute will be resolved in this action, indisputably concerns the Trusts (in which W ilmington Trust has an interest through its role as Owner Trustee), and may impair or impede W ilmington Trust s ability to discharge its duties as Owner Trustee. Under these undisputed facts, intervention is appropriate. In re Interstate Gen.Media Holdings,LLC, 2014W L , at *3(Del. Ch.) ( A potential intervenor need only claim, rather than prove, an interest in the subject of the litigation;the validity of that claimed interest is assessed by 5

7 reference to the allegations accompanying the motion to intervene, and such allegations are accepted as true. ). 10. Even if W ilmington Trust does not assert a claim giving rise to intervention as a matter of right, the Court should allow W ilmington Trust to intervene under the less exacting standard of a permissive intervention. Noe v. Kropf, 2008 W L , at *3 (Del. Ch.) W ilmington Trust s petition for instructions would require the resolution of the very same question presented by the parties i.e.the determination of the identity of the beneficial owner(s) of the Trust. This issue is already presented in this action and necessarily implicates a common question of law with the claims W ilmington Trust seeks to resolve. W ilmington Trust does not take a position with respect to the identity of the beneficial owner(s) of the Trust, will not require any delay of the parties existing schedule, and cannot, therefore, cause any undue delay or prejudice. Moreover, the parties do not oppose W TC s intervention in this matter. The Court should therefore permit W ilmington Trust to intervene in this matter. 6

8 W HEREFORE, W ilmington Trust Company respectfully requests that this Court enter an order in the form attached permitting it to intervene for the purpose set forth herein, and grant such further relief as this Court deems appropriate. Dated:December 20, 2016 BAYARD, P.A. /s/ Stephen B.Brauerman Stephen B. Brauerman (No. 4952) Sara E. Bussiere (No. 5725) 222Delaware Avenue, Suite 900 P.O. Box25130 W ilmington, Delaware (302) Counsel to Intervenor Wilmington Trust Company 7