UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION. Plaintiffs, No CV-159 v. (Jury)

Transcription

1 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION LANE McNAMARA, et al., Plaintiffs, No CV-159 v. (Jury) BRE-X MINERALS LTD., et al., Defendants. JOINT MOTION BY PLAINTIFFS AND BRESEA RESOURCES LTD. FOR EXPEDITED HEARING ON MOTION FOR PRELIMINARY APPROVAL OF PROPOSED SETTLEMENT Pursuant to Local Rules CV-7(e), plaintiffs and defendant Bresea Resources Ltd. respectfully request an expedited hearing on their Joint Motion for Preliminary Approval of Proposed Settlement Between Plaintiffs and Bresea Resources Ltd. (filed with the Court on November 2, 2001), including requiring that any responsive pleading to such motion be filed three calendar (3) days before such hearing. As grounds, plaintiffs and Bresea show as follows: Background The terms of the settlement between plaintiffs and Bresea are set forth in the Amended and Restated Settlement Agreement ( Settlement Agreement ), executed on October 11, 2001, and attached to the Motion for Preliminary Approval as Exhibit A. The settlement between plaintiffs and Bresea is a significant positive development in this litigation, as it resolves not only all investor claims against Bresea currently pending before this Court, but also resolves similar claims brought on behalf of Canadian purchasers of Bre-X and Bresea common stock currently being considered by Canadian courts. The Settlement Agreement was negotiated at arms length and ultimately agreed to by representatives of both Bre-X and Bresea

2 shareholders in all lawsuits against Bresea in Canada and the United States, as well as by Bresea and Deloitte & Touche Inc., as the Trustee in Bankruptcy of the Estate of Bre-X. In general terms, the Settlement Agreement requires that Bresea make a payment of C$9 million on behalf of Bre-X investors to Deloitte & Touche, in its capacity as Trustee of the Estate of Bre-X Minerals Ltd., for eventual distribution to those Bre-X investors, after the payment of certain fees, expenses, and bankruptcy administration costs. In addition, a pool of shares equal to ten percent of the common equity of reorganized Bresea (now known as Sasamat Capital Corporation) will be established through a Canadian Plan of Arrangement for the benefit of purchasers of Bresea common stock. Basis for Expedited Consideration The circumstances which require expedited consideration of the motion for preliminary approval arise from Bresea s limited financial resources and from the ongoing Canadian receivership action to which it is a party. Akin to a U.S. bankruptcy proceeding, the receivership action was brought against Bresea in early 1998 and significantly restricts its ability to operate as an ongoing business. As a result of Bresea s circumstances, all signatories to the Settlement Agreement -- including representatives of Bre-X and Bresea shareholders in both the U.S. and Canada -- agreed that the Settlement Agreement will terminate if certain conditions are not fulfilled by February 28, Most important among those conditions is the approval of the Settlement Agreement by both this Court and the Superior Court of Justice for Ontario (the Ontario Court ) and the approval of the Settlement Agreement and the Plan of Arrangement by the Court of Queen s Bench of Alberta (the Alberta Court ). The Ontario Court, which has carriage over claims brought on -2-

3 behalf of a class of Canadian Bre-X share purchasers, granted approval of the Settlement Agreement on October 29, In addition, the Alberta Court, which has responsibility for supervising Bresea s receivership, approved the Settlement Agreement and the Plan of Arrangement on September 26, 2001, specifically finding that they are fair and reasonable. 1 Other than obtaining the approval of this Court, there are no remaining impediments of any significance to implementation of the Settlement Agreement. Following completion of the Settlement Agreement, Bresea will emerge from its receivership as an ongoing concern. Without this Court s approval, however, the Settlement Agreement and the Plan of Arrangement cannot become effective, the various litigation concerning Bresea in Canada and the U.S. will continue, and the receivership will remain in place. The pendency of the receivership causes Bresea substantial prejudice, which in turn affects investors. First, by its nature, the receivership significantly restricts Bresea s ability to operate as an ongoing business concern. Consequently, until the Settlement Agreement is approved, Bresea will continue to be restrained from acting in the normal course of its business affairs, a proposition highly damaging to both Bresea and its current shareholders. Second, while Bresea remains in receivership, its approximately 8,000 shareholders in the U.S. and Canada are further damaged by the fact that Bresea s shares cannot be listed or traded, meaning that their Bresea 1 On August 23, 2001 a meeting was held of Bresea s creditors, consisting entirely of former Bre-X and Bresea shareholders, who voted over 99% in favor of the proposed Settlement Agreement and Plan of Arrangement. The meeting was open to U.S. and Canadian creditors and advertised in both countries. -3-

4 investment has no liquidity in the absence of a market for their shares. Finally, Bresea would note that, due to its limited resources (which include assets of only about US$18.4 million), as well as due to the expectation that the Settlement Agreement will be implemented, Bresea has elected to conduct a limited defense at this time. The harm to Bresea of foregoing a vigorous defense, therefore, is proportionate to any delay in consideration of the Settlement Agreement. This may also apply to the Canadian lawsuits, as Bresea s dismissal from these lawsuits is subject to the closing of the Settlement Agreement which in turn is subject to the approval of this Court. This request for expedited consideration of the motion for preliminary approval should be unopposed. Indeed, no objections were lodged by any party in connection with the Ontario Court s recent consideration of the Settlement Agreement. Furthermore, it is well established that non-settling defendants have no standing to object to a partial settlement. See, In re Beef Industry Antitrust Lit., 607 F.2d 167, 172 (5th Cir. 1979); Agretti v. ANR Freight Systems, Inc., 982 F.2d 242, (7th Cir. 1992); 2 Newberg on Class Actions at (3d ed & Supp. 2001). On this basis, Court should not be burdened with dilatory filings by the non-settling defendants. Conclusion For these reasons, plaintiffs and Bresea respectfully request that the Court grant this Motion, order an expedited hearing, and require that any responsive pleadings be filed three (3) calendar days before such hearing. -4-

5 Dated: November 5, 2001 Respectfully submitted, Damon Young State Bar No John M. Pickett Young, Pickett & Lee 4122 Texas Boulevard Texarkana, Texas (903) Attorney-in-Charge for Plaintiffs Charles Edward Miller State Bar No A. Paul Miller State Bar No Miller, James, Miller & Hornsby 1012 Olive Texarkana, Texas (903) R. Paul Yetter State Bar No Autry W. Ross Yetter & Warden, L.L.P. 600 Travis, Suite 3800 Houston, Texas (713) H. Lee Godfrey State Bar No Charles R. Eskridge, III James T. Southwick Susman Godfrey L.L.P Louisiana, Suite 5100 Houston, Texas (713) Lead Counsel for Plaintiffs Of Counsel: Michael C. Spencer U. Seth Ottensoser Milberg Weiss Bershad Hynes & Lerach LLP One Pennsylvania Plaza, 49th Floor New York, New York (212) Mark C. Gardy James S. Notis Abbey, Gardy & Squitieri, LLP 212 East 39th Street New York, New York (212) Steven J. Toll Matthew J. Ide Cohen Milstein Hausfeld & Toll, P.L.L.C West Tower, Suite New York Ave., N.W. Washington, DC (202) Jeffrey G. Smith Ira P. Lustbader Wolf Haldenstein Adler Freeman & Herz LLP 270 Madison Avenue New York, New York (212)

6 Certificate of Conference Based on discussions with defense counsel, the undersigned believes that the relief requested by this motion is opposed. Autry W. Ross -6-

7 Certificate of Service I hereby certify that on this 5th day of November, 2001, a copy of the foregoing was served on the following lead counsel for defendants by facsimile, hand-delivery, or overnight mail: Linda L. Addison Fulbright & Jaworski, L.L.P McKinney, Suite 5100 Houston, Texas Counsel for Defendant Bresea Resources Ltd. D. Stuart Meiklejohn Sullivan & Cromwell 125 Broad Street New York, New York Counsel for Defendant Rolando C. Francisco Johnny P. Arnold 1405 College Dr. Texarkana, Texas Counsel for Defendant Paul Kavanagh David J. Beck Beck, Redden & Secrest, L.L.P McKinney, Suite 4500 Houston, Texas Counsel for Defendants Kilborn Engineering Pacific Ltd. and P.T. Kilborn Pakar Rekayasa John R. Mercy Mercy, Carter & Elliott, L.L.P Galleria Oaks Dr. Texarkana, Texas Counsel for Defendant John B. Felderhof Gary D. Grimes Grimes & Craytor 8 Woodmont Crossing St. Texarkana, Texas Counsel for Defendant Hugh C. Lyons Lawrence J. Portnoy Davis Polk & Wardwell 450 Lexington Avenue New York, New York Counsel for Defendant J.P. Morgan Securities, Inc. Daniel R. Murdock Winston & Strawn 200 Park Avenue New York, New York Counsel for Defendant Nesbitt Burns Inc. Mark Wegener Howrey Simon Arnold & White, L.L.P Pennsylvania Avenue, NW Washington, DC Counsel for Barrick Gold Corporation Autry W. Ross -7-