Press Release

Conseco Attorneys Defeat Donald Trump in Battle Over General Motors Building in New York

Attorneys representing Conseco won a substantial legal victory when a panel of arbitrators ruled that Donald Trump was contractually obligated to sell his half of the GM Building to the company for $15.6 million.  Trump, who co-owns the building with Conseco, had argued that Conseco should be forced to sell its share to him for $295 million. 

Conseco and Trump jointly bought the GM Building for $800 million in 1998 as equal partners.  Estimates over the last two years have put its value at more than $1.2 billion.

Kirkland & Ellis litigation partner Reed Oslan served as lead counsel for Conseco before the three member American Arbitration Association panel, which issued its ruling on May 28, 2003. 

On June 12, 2003, Judge Karla Moskowitz of the Supreme Court of the state of New York, confirmed the award in favor of Conseco and rejected Trump’s motion to vacate the award.  Pursuant to the terms of the parties’ investment agreement, Trump will now be forced to sell his half-interest in the landmark building for approximately 15 percent of the $295 million he was demanding that Conseco pay him.  Mr. Oslan said that Trump’s threat of additional appeals should be promptly rejected by the New York appellate courts as having no merit.

Conseco, a Carmel, Ind.-based insurance company now in bankruptcy proceedings, plans to sell the 50-story New York skyscraper and use the proceeds to improve the risk capital ratios of the four Conseco insurance companies owning the investment.  Thereafter, Conseco hopes the various debt-rating agencies will upgrade their analyses of the insurance companies and increase their ratings.  James Sprayregen, the head of Kirkland & Ellis’ prominent bankruptcy practice, commented that the victory against Trump is one of the critical steps to successfully reorganizing Conseco.

The dispute began in 2001, when Conseco decided to sell its holdings in the building.  In a agreement reached in July, 2001, Mr. Trump offered to buy Conseco’s share for $295 million in a deal that was to be completed by September 15, 2001.  Mr. Trump, however, was unable to resolve details of the acquisition, vaguely blaming the events of September 11, and the parties’ agreement terminated without a deal.

In early 2002, Conseco issued a contractual ‘buy-sell’ notice, triggering a provision that gave Mr. Trump 60 days to elect to either buy Conseco’s  stake for nearly $500 million or allow the company to buy Mr. Trump's interest for $15.6 million.

Mr. Trump rejected both aspects of Conseco’s proposal and demanded that the company accept his offer of $295 million.  Trump then resorted to 16 months of litigation and arbitration.  In its 12-page ruling, the arbitrators rebuffed all of Trump’s arguments.  Judge Moskowitz concurred.

Conseco, whose pre-bankrupcty assets of $61.4 billion made it the third-largest bankruptcy filing in U.S. history, according to BankruptcyData.com, hopes to emerge from bankruptcy later this summer.

Kirkland & Ellis is a 900-attorney law firm representing global clients in complex corporate and tax, workout, insolvency and bankruptcy, litigation, dispute resolution and arbitration, and intellectual property and technology matters.  The Firm has offices in New York, Chicago, Los Angeles, London, San Francisco and Washington.