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December 22, 2009 1:10 PM

Winston Lawyer Accepts Spot on CIT Board

Posted by Zach Lowe

Daniel Ninivaggi, of counsel at Winston & Strawn and former general counsel of the bankrupt auto supplier Lear Corp., is familiar with high-flying companies that come crashing down to earth during an economic crisis. So perhaps it's not surprising that he would accept a role as one of CIT Group's new directors. 

CIT, a midsize lender saddled with enormous debt, filed for bankruptcy in early November and emerged from Chapter 11 proceedings in just over a month after striking a prefiling deal with its major bondholders. Under the terms of the deal, bondholders agreed to accept 70 cents on the dollar (and some equity) for their holdings. Shareholders, including the U.S. government, were wiped out. (Skadden, Arps, Slate, Meagher & Flom served as lead counsel to CIT in the bankruptcy proceedings, and Sullivan & Cromwell advised CIT's board before shifting its role to general company counsel as part of the Chapter 11 filing.)

Those bondholders got something else: The right to appoint seven of CIT's 13 directors on the lender's reconstituted board. A steering committee of major bondholders (including Carl Icahn) had the right to appoint four of those seven new directors. 

They chose Ninivaggi for one of those spots. Ninivaggi, who was a partner at Winston until leaving for Lear in 2003, returned to the firm at the end of July, a month after Lear filed for Chapter 11 protection. Since then, he says he's been concentrating on rebuilding his private practice that focuses on distressed auto companies and funds that invest in these companies. 

That's a lot of work. Why sign on for a role on CIT's board? 

"It's certainly not the director's fees," Ninivaggi says with a laugh. "It's a very interesting company in the middle of a very interesting credit environment. It is very important to the economy, and it has some important decisions to make. I thought it would be very interesting work. That's the only reason I'm doing it."

We asked Ninivaggi how the steering committee found him, and he said he has a prior relationship--though not an attorney-client relationship--with several members of the committee, including Carl Icahn. Icahn was a big investor in Lear, holding a 16 percent stake in the company before selling two-thirds of those shares in November 2008, according to the Associated Press. In statements about his decision to sell his stake in Lear, Icahn spoke highly of the company's senior executives and Ninivaggi spoke openly about his solid personal relationship with Icahn. 

Andrew Rosenberg, a partner at Paul, Weiss, Rifkind, Wharton & Garrison who represented the steering committee in negotiations with CIT, did not immediately respond to a call seeking comment about the nomination of Ninivaggi and the other directors Tuesday. 

Ninivaggi says he is 100 percent committed to Winston despite his choice to return to the firm this year as "of counsel" instead of as a partner. The title simply gives him "more latitude," he says, and Winston has been supportive of his involvement in outside projects such as CIT.

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