Opinion ID: 609176
Heading Depth: 2
Heading Rank: 4

Heading: Milken Global Settlement

Text: 12 Pursuant to the authority vested in them by the Drexel Burnham-SLC Agreement, the Pool Administrators attempted to settle their $1 billion in claims against Milken, 200 other former employees of Drexel Burnham's junk bond department, and some 350 affiliated entities. The Administrators recognized that an equitable settlement was in the best interest of all the parties to the Drexel Burnham-SLC Agreement because, absent settlement, they would be locked into years of costly litigation with Milken and his colleagues and believed any eventual recoveries would likely be hindered by numerous individual bankruptcies. Thus, the Pool Administrators joined non-signatories to the Drexel Burnham-SLC Agreement for five months of negotiations with Milken and his associates, all of which were closely monitored by the district court. 13 In February 1992 the parties reached a tentative agreement known as the Milken Global Settlement to resolve about 180 pending Drexel Burnham-related lawsuits against Milken, his former colleagues in the Drexel junk bond department, and related entities. The principal terms of this settlement include: a) payment of $1.3 billion by Milken and his colleagues on a prescribed schedule to the settlement participants; b) designation of Milken and his compatriots as Identified Settling Parties under the Injunction-Release provision of the Drexel Burnham-SLC Agreement and the Drexel Burnham bankruptcy plan; c) release of over $300 million in claims against Drexel Burnham by Milken and the related parties; d) creation of a $50 million fund to deal with any claims not covered by the Global Settlement, including those of claimants who elect not to participate in the Global Settlement; and e) election by plaintiffs in pending cases against Milken and the other settling parties whether or not to opt into the Global Settlement. The $1.3 billion to be paid to the settlement participants comes from the following sources: $400 million from the SEC Disgorgement Fund, under a plan of distribution to be presented by the SEC and approved by the district court; $500 million paid directly by Milken; $300 million from other Drexel Burnham employees and related entities; and $100 million from various insurers that issued policies to Drexel Burnham.