Beach Point Capital Management
O’Melveny has represented Beach Point on several recent matters, including:
- Counseling on Beach Point’s investment in Residential Credit Opportunities LLC, a joint venture with American Mortgage Investment Partners and their various investment vehicles that was set up to invest in distressed residential mortgages, pools of mortgages, and properties with a potential total investment of US$150 million.
- Securing a favorable settlement for Beach Point in a dispute stemming from a loan of more than US$73 million provided to real estate company Variant Holding Company, LLC to finance the acquisition of various apartment complexes around the United States. Beach Point sued in California state court after Variant defaulted on the loan. Discovery revealed that Variant had used shell entities, kick back arrangements, and forged documents to abscond with loan proceeds intended for capital expenditures on the apartment complexes. Variant also was skimming proceeds off the top of the sales of certain properties that were otherwise due to Beach Point under the loan agreement. The scheme resulted in the diversion of millions of dollars to Variant and its management at Beach Point’s expense. Variant responded by filing for bankruptcy in the District of Delaware, temporarily staying the California litigation and the foreclosure auction. O’Melveny then immediately filed a motion for the appointment of a chapter 11 trustee to take over control of Variant. Restructuring lawyers worked with litigators to buttress the trustee motion with the evidence of fraud collected in the California action. The US Department of Justice joined in the request for a trustee, citing the overwhelming evidence of fraud that O’Melveny had amassed and presented. On the eve of the trustee motion hearing, Variant agreed to oust current management and appoint an independent board of managers and a chief restructuring officer to oversee the sale of its assets. Variant also agreed to pay Beach Point US$78 million plus interest from the proceeds of the sales—an amount that includes payment of all of O’Melveny’s fees.