EHTE - Ethanex

[ragnarisapirate]

I recently did a post on a long that I have called Ethanex. It's a TINY bankrupt company with what seems to be a solvent estate and a heck of a lawsuit against it's former lawyer's firm. I was curious if you guys had any experience with this sort of legal matter or investment.

 

The case has been going on for close to 5 years, and both sides filed for summary judgments in Dec. A court trial is set for May.

 

The defense's argument is basically "We didn't know anything illegal was going on, and even if we did, we didn't have the duty to monitor our lawyer. Furthermore, even if we did, we don't owe anything to this company because they weren't profitable, and we have no way of knowing if they would have ever been."

 

I started buying shares well below market price, so even without the suit, I *should* be OK.

 

The thesis can be read here: http://ragnarisapirate.blogspot.com/2013/02/fraud-bankruptcy-and-ethanex.html

 

-Jeff

[Olmsted]

I converse with some guys who specialize in these kinds of situations.  Will get their perspective for you.

[ragnarisapirate]

I converse with some guys who specialize in these kinds of situations.  Will get their perspective for you.

 

Thanks, and feel free to give them my contact info. :)

[ragnarisapirate]

For those of you that are interested (seems to be little from the responses, but a decent bit from the views of this thread). There is now a settlement with McGuire Woods that was just put on PACER, which is awaiting approval from the BK court (could be wrong but I don't see any hangups). The legal matters in this case were fascinating, irrespective of the investment thesis.

 

The settlement is for $6.7 million. So, there seems to be a good bit of upside left for the equity:

http://ragnarisapirate.blogspot.com/2013/03/ethanex-settles-with-mcguire-woods.html

 

The Trustee has also hired a firm to help determine shareholders, which is interesting, but not nearly as interesting as the proposed settlement:

http://ragnarisapirate.blogspot.com/2013/03/law-firm-to-determine-ethanex.html

 

I don't know the extent of my participation at this point, depends on how much of the spread is left in the coming weeks/months, I suppose.

[Hielko]

For those of you that are interested (seems to be little from the responses, but a decent bit from the views of this thread)

It's a fascinating company/situation to read about. Not within my circle of competence though...