Debtor Sues Former Chief Restructuring Officer for Breach of Fiduciary Duty
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January 11, 2023, US Bankruptcy Court for Eastern Kentucky – Coal Network, LLC (“Debtor”) brings an adversary proceeding against Hillyer Group LLC, as a consultant (“Hillyer Group”) and John T. Hillyer, as the former chief restructuring officer (“Mr. Hillyer”) of the Debtor. The complaint makes allegations of breach of contractual and fiduciary obligations against the Defendants and seeks compensatory damages and lost profits for such breach.
The complaint alleges that the Debtor engaged Hillyer Group as its consultant and Mr. Hillyer as its chief restricting officer (“CRO”) on the recommendations of the Debtor’s primary lender, KeyBank National Association. Mr. Hillyer executed an agreement for engagement as CRO of the Debtor. The Debtor alleges that Mr. Hillyer unilaterally extended his role beyond the scope of his engagement agreement and kept significant information from Coal Network’s managers regarding asset sales and offers.
The Debtor further alleges that Mr. Hillyer “colluded” with KeyBank to appoint him as a receiver so that he could liquidate Coal Network at the most opportune time for the benefit of KeyBank and the detriment of Coal Network and all its creditors.
The Debtor claims that Mr. Hillyer stopped payments to all vendors of the Debtor on the alleged instructions of KeyBank. At the same time, Mr. Hillyer allegedly directed over $3,000,000 to be paid to KeyBank on the outstanding balance of the loan. The Debtor claims that the alleged actions of Mr. Hillyer and Hillyer Group resulted in millions of dollars of loss to the Debtor and allegedly pushed Coal Network into Chapter 11 bankruptcy.
Debtor, through its complaint, brings a breach of contract and breach of fiduciary duty claims against Mr. Hillyer and Hillyer Group. The Debtor seeks entitlement to compensatory damages and lost profits as a result of the alleged breach.
Coal Network, LLC v. John T. Hillyer, et al., AP No. 23-01001, US Bankruptcy Court for Eastern Kentucky