The Work

January 28, 2011 7:05 PM

Book It: Kasowitz Takes Lead on Borders Restructuring

Posted by Brian Baxter

When Borders Group was sued on January 25 in New York state court by J.P. Morgan Securities, Marc Kasowitz and the firm that bears his name were there to defend the nation's second-largest bookseller.

Kasowitz's tobacco ties to Borders CEO Bennett LeBow have also landed him the lead role advising the Ann Arbor, Mich.-based company on its restructuring. In addition to his role with the bookseller, LeBow is chairman of the board at the Vector Group, the holding company for Liggett Group, which owns several tobacco brands.

In a profile of Kasowitz last year, the New York Law Journal, a sibling publication, reported that his relationship to Liggett extends back to 1996, three years after Kasowitz set up Kasowitz, Benson, Torres & Friedman following his departure from Mayer Brown. Liggett continues to be one of Kasowitz Benson's largest clients--the firm opened an office in Miami in April 2009 to deal with a wave of new tobacco litigation, according to the NYLJ.

Earlier this month, The Am Law Daily reported on four Am Law 100 firms advising various parties involved in Borders's ongoing restructuring efforts. Sources now say that one of those firms, Jones Day, has fallen by the wayside to make way for Kasowitz Benson name partner and bankruptcy chair David Friedman and restructuring partner David Rosner. (The Wall Street Journal first reported on Kasowitz's involvement for Borders earlier this month.)

According to The Am Law Daily's previous reports, Jones Day began working for Borders two years ago when the company first began experiencing restructuring pains. But that was before tobacco executive and corporate raider LeBow took over the top job in May 2010 after investing $25 million in Borders.

The deal pushed LeBow past private equity firm Pershing Squire Capital Management--advised by Sullivan & Cromwell--as the company's largest shareholder. LeBow, represented by Latham & Watkins global M&A chair M. Adel Aslani-Far, then became the company's new CEO and chairman of its board. (Meanwhile, as noted by sibling publication Corporate Counsel, longtime Borders general counsel Thomas Carney stepped down earlier this month.)

Baker & McKenzie represented Borders on the transaction with LeBow last year and continues to advise the company as its regular outside corporate counsel. The firm is working closely with Kasowitz Benson on Borders' restructuring, which got a boost on Thursday when the company received a $550 million loan commitment from GE Capital.

The deal hinges on several requirements being met. Borders, which has been suffering from declining sales numbers, must come to an agreement with publishers to convert delayed payments into loans. (Borders' stock had been trading at around $1 before the deal was announced.)

As for the suit filed by J.P. Morgan Securities against Borders this week, it remains under seal. A hearing is scheduled for February 8.

Andrea Weiss, a partner with New York's Levi Lubarsky & Feigenbaum who is representing J.P. Morgan in the case, did not respond to a request for comment. Howard Levi, a name partner at the firm, also did not return a phone call.

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