AM General Holdings LLC v. The Renco Group, Inc. -and

• Court: Court of Chancery of Delaware
• Decided: April 9, 2015
• Docket: CA 7639-VCN -AND- CA 7668-VCN
• Status: Published

Opinion

EFiled: Apr 09 2015 02:57PM EDT Transaction ID 57054285 Case No. Multi-Case COURT OF CHANCERY OF THE STATE OF DELAWARE JOHN W. NOBLE 417 SOUTH STATE STREET VICE CHANCELLOR DOVER, DELAWARE 19901 TELEPHONE: (302) 739-4397 FACSIMILE: (302) 739-6179

April 9, 2015

Stephen P. Lamb, Esquire Kevin G. Abrams, Esquire Paul, Weiss, Rifkind, Wharton J. Peter Shindel, Jr., Esquire & Garrison LLP Abrams & Bayliss LLP 500 Delaware Avenue, Suite 200 20 Montchanin Road, Suite 200 Wilmington, DE 19801 Wilmington, DE 19807

Thad J. Bracegirdle, Esquire Wilks, Lukoff & Bracegirdle, LLC 1300 N. Grant Avenue, Suite 100 Wilmington, DE 19806

Re: AM General Holdings LLC v. The Renco Group, Inc. C.A. No. 7639-VCN The Renco Group, Inc. v. MacAndrews AMG Holdings LLC C.A. No. 7668-VCN Date Submitted: April 2, 2015

Dear Counsel:

On March 25, 2015, the Court entered a temporary restraining order

preventing the Renco Parties1 from using the assets of Ilshar Capital LLC

(“Ilshar”) to pay a substantial judgment recently entered in the Southern District of

1 The Renco Group, Inc., Ira L. Rennert, and ILR Capital, LLC are the “Renco Parties.” AM General Holdings LLC v. The Renco Group, Inc. C.A. No. 7639-VCN The Renco Group, Inc. v. MacAndrews AMG Holdings LLC C.A. No. 7668-VCN April 9, 2015 Page 2

New York in an unrelated matter. That order also prohibited the Renco Parties

from using Ilshar’s assets to obtain an appeal bond.

The risk that Ilshar’s funds would be used for such purposes has been

substantially reduced by the posting of a supersedeas bond to cover the risk of

nonpayment of the judgment. There does remain a risk, but it is significantly

reduced from the potential harm that supported entry of the temporary restraining

order.

The Renco Parties had resisted AM General Holdings LLC’s (“Holdco”)

efforts at discovery in support of its motion for a preliminary injunction. They

now seek to terminate the preliminary injunction process initiated by Holdco and

to have the temporary restraining order vacated because the potential harm—the

risk that Ilshar’s assets will be used for purposes of the New York judgment—has

been substantially reduced. AM General Holdings LLC v. The Renco Group, Inc. C.A. No. 7639-VCN The Renco Group, Inc. v. MacAndrews AMG Holdings LLC C.A. No. 7668-VCN April 9, 2015 Page 3

Holdco pursued the interim injunctive relief because of the potential

exposure of Ilshar’s funds. The risk it identified was real, even if there was a

speculative aspect to it. If there had been no New York judgment, it is unlikely

that Holdco’s injunctive relief efforts would have occurred last month. That

potential for irreparable harm has abated to the extent that, at least on the present

record, the expedited scheduling of a preliminary injunction is no longer

warranted.

The scope of discovery for preliminary injunctive purposes has been a

principal topic of debate between the parties. That discovery, such as discovery

into the self-dealing transactions by the Renco Parties over the last several years,

goes to the core of the dispute in the case in chief and is better addressed in the

regular course of this proceeding—not as an appendage to expedited proceedings.

If the Renco Parties are being unreasonable and recalcitrant, as Holdco seems to

suggest, the appropriate way to obtain the discovery is through a motion to compel. AM General Holdings LLC v. The Renco Group, Inc. C.A. No. 7639-VCN The Renco Group, Inc. v. MacAndrews AMG Holdings LLC C.A. No. 7668-VCN April 9, 2015 Page 4

Accordingly, the temporary restraining order entered on March 25, 2015,

will be vacated and will expire as of 11:59 p.m. today. Unless the Renco Parties

file a claim within five days against the security posted by Holdco for the

temporary restraining order, that bond will be released. The preliminary injunctive

process is no longer justified and, for present purposes, this proceeding no longer

needs expedited handling.

IT IS SO ORDERED.

Very truly yours,

/s/ John W. Noble JWN/cap cc: Joel Friedlander, Esquire Register in Chancery-K