In an important step in protecting their clients’ interests and preventing Bausch Health Companies (“Bausch Health”) from putting the assets of Bausch + Lomb (“B+L”) beyond the reach of judgment creditors through a corporate spin-off, Rolnick Kramer Sadighi LLP (“RKS”) has secured a vital legal ruling that will allow their clients to pursue fraudulent transfer claims against Bausch Health and B+L in New Jersey state court. United States District Judge Michael A. Shipp granted RKS’s motion to remand their clients’ fraudulent transfer action against Bausch Health and B+L back to state court, holding that Bausch Health and B+L had improperly removed the action to federal court earlier this year. In removing the action, the defendants purported to rely on a 1998 federal law (the Securities Litigation Uniform Standards Act or “SLUSA”), which was designed by Congress to prevent securities fraud strike suits from being filed in state court. Defendants argued that SLUSA barred Plaintiffs’ fraudulent transfer claims. Judge Shipp agreed with RKS that SLUSA does not apply to RKS’s clients’ declaratory judgment action brought pursuant to New Jersey’s fraudulent transfer statute because: (i) the relief RKS seeks on behalf of its clients is a declaration that the spin-off is voidable, such that they may continue to look to B+L’s assets to satisfy their claims against Bausch Health; and (ii) securities fraud is not a factual predicate of the fraudulent transfer claims. RKS’s clients’ fraudulent transfer action will now proceed against Bausch Health and B+L in state court. Following this adverse ruling by the Federal District Court, Bausch Health has designated Bausch + Lomb as an unrestricted subsidiary.
Rolnick Kramer Sadighi, LLP (RKS) provides strategic litigation solutions for the investment management community. Launched in 2020, RKS is a premier securities litigation boutique dedicated to serving the investment management industry, including hedge funds, mutual funds, private equity, credit, real estate, and structured finance firms. For more information, visit RKS online: https://www.rksllp.com/.