The best way to avoid litigation is to prepare for it.

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Timothy W. Mungovan

Partner

The best way to avoid litigation is to prepare for it.

Tim Mungovan is the immediate past chair of the Firm’s Litigation Department, chair of the Securities Litigation practice and is currently a member of the Firm’s Executive Committee. His practice is focused on securities, commercial litigation, governance, and bankruptcy-related matters. He has a national reputation for advising sponsors of private investment funds (hedge, private equity, private credit and venture capital) in a wide variety of matters, including litigation, governance, securities, fiduciary obligations, and regulatory enforcement.

Chambers USA describes Tim as “an extraordinary lawyer who is a fierce and very talented litigator. He is extremely knowledgeable, responsive and client-oriented.” Best Lawyers in America lauds Tim’s experience, integrity, work ethic, communications and courtroom skills. Tim has been listed in the “Top 100 Lawyers” in Massachusetts, and Benchmark Litigation has continually recognized Tim as a Litigation Star in Massachusetts.

Over the last six years, Tim has been the lead litigator representing the Financial Oversight and Management Board for Puerto Rico in the historic restructuring of Puerto Rico’s debts. The scale and complexity of this restructuring has resulted in one of the most active litigation dockets in the U.S. Almost every aspect of the litigation involved matters of first impression in part because the restructuring is governed by the Puerto Rico Oversight, Management, and Economic Stability Act, which was enacted for Puerto Rico in 2016. The track record of success speaks for itself: in the more than 150 lawsuits filed, Tim and the Proskauer team have prevailed in almost 95% of the cases.

Tim is recognized nationally for his experience in private fund litigation and disputes, having focused on the industry for more than 25 years. As part of that focus, Tim created and is the lead editor of Proskauer’s blog on Private Equity litigation, The Capital Commitment.

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Matters

Investment Fund Disputes

Financial Oversight and Management Board for Puerto Rico, in its own right and as debtors’ representative, in litigation against various creditors including hedge funds, SPVs, and bond insurers related to the restructuring of the Commonwealth’s $74 billion of bond debt and $50 billion of unfunded pension obligations (D.P.R.) (Bankr. D.P.R.)
Several institutional limited partners in defense of claims related to alleged fraudulent conduct at a private equity-owned portfolio company prior to its leveraged buyout, in which the plaintiff trust is seeking the avoidance of approximately $250 million in equity distributions (D. Del. Bankr.)
Fund sponsor, together with its funds and co-investment vehicles, in defense of claims related to sale of a portfolio company for tens of millions of dollars (Del. Ch.)
A large institutional investor, as a limited partner and a member of the LP advisory committee, in investigating the misappropriation by a general partner of tens of millions of dollars, removing and replacing the general partner, and bringing an action against the general partner, and others, for fraud, conversion, and breach of fiduciary duty. (Cal. Super. Ct.)
A limited partner (and majority interest holder) in connection with the dissolution of investment fund and court-ordered liquidation of fund assets (Del. Ch.) and derivative lawsuit initiated by member of general partner (Cal. Super. Ct.)
Rhode Island governmental issuer of tobacco settlement revenue-backed bonds in defense of lawsuit brought by two municipal bond funds seeking to block proposed $600 million bond issuance. After expedited discovery, the court granted the issuer's motion for summary judgment in all respects, permitting the bond issuance to proceed. (Oppenheimer Rochester High Yield Municipal Fund et al. v. Tobacco Settlement Financing Corporation (R.I. Super. Ct.))
A venture capital firm in defense of claims brought by limited partner related to alleged failure to make timely distributions of fund assets and properly allocate carried interest (N.Y. Sup. Ct.)
A private equity firm and two of its founders in defense of claims brought by the third founder related to alleged improper distributions of tens of millions of dollars, misallocation of fees and expenses, and self-dealing (Del. Ch.)
Investors in the International Management Associates Ponzi scheme/hedge fund fraud, defending against claw back actions filed by the trustee in bankruptcy who is seeking to recover redemptions of principal and profits
An institutional investor and member of the liquidation committee of Fairfield Sentry Limited, the largest Madoff feeder fund, concerning complex issues including settlement with Madoff trustee Irving Picard, claims of fraud, claw back actions, investor class actions, distribution of recovered assets, and Chapter 15 proceedings in U.S. Bankruptcy Court
Founder of private equity fund in connection with a dispute with a younger partner over control of the firm
Multiple institutional limited partners in connection with litigation involving Wellspring Capital Partners IV LP brought by the litigation trustee of a portfolio company concerning distributions made in 2012-2013
A large European investment fund that lost approximately $400 million in various Madoff feeder funds in the Madoff bankruptcy case
The institutional limited partners and members of the LP advisory committee of two venture funds with combined assets of $670 million that were managed and advised by Bay Partners in a forced restructuring of the management and successfully negotiating a resolution through mediation that preserved the value of the investment portfolio and restructured fund management while avoiding litigation
Boston Financial Qualified Housing Tax Credits L.P. IV , a public limited partnership, and its general partner in defeating a limited partner’s efforts to gain control of the limited partnership by removing the general partner through a consent solicitation and litigation
Founder of a hedge fund regarding a dispute with younger partner regarding control over the firm
A private equity fund and two individual partners in litigation brought by a commercial lender arising out of the liquidation of a portfolio company, obtaining the dismissal of litigation against two individual partners and settling on highly favorable terms
A registered investment adviser who placed more than forty clients into a hedge fund that failed in October 2008, two months after the initial investment, Successfully settling claims against the hedge fund and obtaining a full general releases for the adviser

Securities and Investment Management Litigation

Indus Capital Partners in connection with its investment in Bright Scholar Education Holdings, Ltd., a Cayman domiciled company with operations in the People’s Republic of China and ADS that is traded on the New York Stock Exchange
Institutional limited partner regarding the investigation of certain alleged misconduct by members of the manager and related litigation pending in New York Supreme Court, JZ International LLC v. Rueda, et al., [Index# 65126/2022]
.406 Ventures Management and Sparta Group in defending litigation pending in the Massachusetts Superior Court in connection with claims brought by the CEO of a portfolio company
Fund sponsor in connection with an SEC investigation into Binance and crypto exchanges
Shamrock Capital Advisors in a lawsuit filed after one of its portfolio companies, FanDuel, merged with Paddy Power Betfair, alleging breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and unjust enrichment against FanDuel board members and shareholders due to a claim on undervaluing of FanDuel. We obtained dismissal of all claims against Shamrock Capital Advisors
Fund sponsor in connection with SEC investigation into claims by a co-founder that the sponsor covered up insider trading and self-dealing; the SEC closed the investigation with no finding of wrongdoing
A registered investment adviser who placed more than forty clients into a hedge fund that failed in October 2008, two months after the initial investment, successfully settling claims against the hedge fund and obtaining a full general releases for the adviser and responding to and resolving an inquiry from the SEC

Complex Commercial Litigation

Global pharmaceutical company in dispute with licensee over the reacquisition of two separate drugs in Japan
Global pharmaceutical company in connection with claims arising out of termination of joint development contract and license
Successfully defended the constitutionality of PROMESA against a complaint brought by several Puerto Rico-based labor unions that raised complex, novel theories regarding Puerto Rico’s political status. UECFSE v. United States, No. 19-2243 (1st Cir. April 16, 2021). The union plaintiffs alleged PROMESA violates numerous provisions of the U.S. Constitution, including the First, Fifth, Thirteenth, Fourteenth, and Fifteenth Amendments, as well as various international accords. The Title III Court dismissed the complaint for lack of standing, holding that Plaintiffs had not alleged concrete and particularized injuries entitling them to the requested relief. The First Circuit affirmed, agreeing with the Board that the union plaintiffs raised only general grievances that were not sufficient to confer Article III standing
Obtained a landmark Supreme Court victory on behalf of the Oversight Board, defending the constitutionality of PROMESA’s mechanism for appointing its members. Several creditors—including a hedge fund, a bond insurer, and a local union—alleged that PROMESA’s method for appointing the members of the Oversight Board violates the Constitution’s Appointments Clause. In February 2019, the First Circuit ruled in the creditors’ favor, holding the appointment of the Oversight Board’s members was unconstitutional. After granting cert, the Supreme Court reversed, holding that the Appointments Clause does not apply to the appointment of the Oversight Board’s members because they are not “officers of the United States.” This critical victory ensured that the Oversight Board is able to continue its important work
Led litigation on Act 7, Puerto Rico statehood legislation, where the Oversight Board was invalidating legislature in September 2021 that would have prohibited the Board of going forward with the plan of adjustment. Court invalidated and allowed to proceed to confirmation hearing in November 2021
In December 2021, argued act 53 legislation, a debt authorization law in Puerto Rico, had passed to replace Act 7 and enabled issuance of replacement bond as part of the plan of adjustment continued accrual of pension benefits of certain government employees pursuant to a defined benefit plan
Defeated the preliminary injunction filed by the Puerto Rico House of Representatives to prevent the Governor of Puerto Rico to use public funds related to a vote over the political future of the county to become independent or a state
In a landmark decision, obtained summary judgement for the Oversight Board on several of its claims, finding the Governor and Government had violated PROMESA including by enacting and implementing a law (Law 29) in violation of PROMESA. As a result, the District Court entered an order nullifying Law 29 retroactively

Government Investigations and Regulatory

A private fund sponsor in connection with the SEC’s investigation into crypto exchanges
Private fund sponsors in connection with the SEC’s and Department of Education’s investigations into for-profit colleges and educational institutions
Multiple fund sponsors in connection with investigation by SEC into secondary market trading by pre-IPO shareholders
A private equity firm in connection with SEC examination regarding compliance with the whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act
A hedge fund and its manager in insider trading investigations launched by the U.S. Attorney in the Southern District of New York and by the SEC concerning the use of "expert networks"
Several venture capital firms in connection with an SEC investigation into alleged pay-to-play and expense shifting violations and whether certain firm personnel are "covered associates"
A hedge fund, its manager, and trader in connection with SEC investigation for insider trading arising from a trade in listed call options in the hours preceding a takeover announcement, successfully obtaining a termination notice six months after the investigation was opened
A registered investment adviser and private wealth manager in an SEC investigation of collapsed hedge fund, resulting in no action being taken against the client
A global asset manager in an investigation by the Massachusetts Attorney General of a registered representative’s sales and marketing practices and the ability of municipalities to invest legally in certain financial products, which settled with the filing of an Assurance of Discontinuance

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Tips for Trying a Case Before a Hostile Judge

Trial Strategies: Running Into a Brick Wall, Who Wears a Black Robe, Part I

The Capital Commitment

Proskauer on private fund litigation

Edited by Timothy W. Mungovan, Howard J. Beber, Michael R. Hackett, Steohen T. Mears, Kevin J. Perra and Joshua M. Newville

Proskauer

The best way to avoid litigation is to prepare for it.

Timothy W. Mungovan

Partner

Boston +1.617.526.9412

New York +1.212.969.3201

The best way to avoid litigation is to prepare for it.

Matters

Investment Fund Disputes

Securities and Investment Management Litigation

Complex Commercial Litigation

Government Investigations and Regulatory

Tips for Trying a Case Before a Hostile Judge

Trial Strategies: Running Into a Brick Wall, Who Wears a Black Robe, Part I

The Capital Commitment

Proskauer on private fund litigation

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