Investment Firm Pentwater Accuses Baker, Donelson of Fraud in Reneging on Agreement to Defer Fees Owed by a Company to which Pentwater Extended Credit

In January 2014, investment adviser Pentwater Capital Management, L.P. (Pentwater), through certain funds it managed, extended credit to American Standard Energy Corporation (ASEN).  Pentwater claims that, to satisfy a condition to making that loan, ASEN’s counsel, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. (Baker), agreed to defer certain legal fees that were owed to it.  That agreement was reflected in a letter agreement between ASEN and Baker.  However, Pentwater claims that Baker surreptitiously replaced that letter agreement with a revised agreement containing more favorable terms.  Pentwater and its funds have sued Baker, asserting several claims of fraudulent misconduct and seeking a declaration that the original letter agreement is binding on Baker.  This article summarizes the facts alleged by the plaintiffs and their specific claims against Baker.  For coverage of another suit by a hedge fund manager against an attorney for allegedly deceptive conduct, see “In Lawsuit by Hedge Fund Manager against Law Firm, the Viability of a Statute of Limitations Defense Turns Not on the Length of the Limitations Period, But on When the Period Starts Running,” Hedge Fund Law Report, Vol. 6, No. 8 (Feb. 21, 2013).

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