Wells Fargo & Co. (WFC:US), the fourth- largest U.S. bank by assets, won appointment of a chief restructuring officer for prison-service provider Medical Development International Ltd. in a lawsuit seeking re-payment of $30 million in loans.
Delaware Chancery Court Judge Sam Glasscock approved the appointment of Mark C. Healy of Michael Moecker & Associates of Jacksonville, Florida, in an order made public today in Wilmington, Delaware.
“The financial condition of defendants has deteriorated dramatically” and the company isn’t being operated “in the best interests” of stakeholders, plaintiff’s lawyer Brian Rostocki said in court papers.
A lawyer for Medical Development, Thad Bracegirdle, today filed a motion asking the judge to dismiss the case or transfer it to Florida for the convenience of defendants in that state.
“We’re pleased to be able to work with Mr. Healy” and “look forward to his assistance in bringing the company through this challenging period; we’re confident that someone of his ability will help create the platform for future success,” Bert Ralston, a spokesman for Medical Development, said in a phone interview.
Claims Against Bank
Medical Development, based in Ponte Vedra, Florida, sued San Francisco-based Wells Fargo on March 21 in state court in St. Johns County, Florida, seeking at least $15 million in damages over claims the bank tried to dominate its business.
Wells Fargo “abandoned its traditional role as lender and took up the role of corporate raider” to divert company assets, according to the complaint in Florida.
In its suit, filed March 23 in Delaware, Wells Fargo initially asked Glasscock to appoint a receiver for the company.
In his order, Glasscock said Healy “shall work in tandem” with Medical Development Chief Executive Officer Richard Willich to run the company and will have “complete access” to books and facilities. Wells Fargo declined to comment on the ruling.
The Delaware case is Wells Fargo Bank v. Medical Development International Ltd., CA7352, Delaware Chancery Court (Wilmington). The Florida case is MDI v. Wells Fargo Bank, CA12- 0570, Florida Circuit Court, Seventh Judicial Circuit, St. Johns County.
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