O’Melveny & Myers Hit in New Century Report
The bankruptcy examiner who investigated the failure of New Century Financial was irritated by some failures and tactics of the lender’s law firm.
A report (PDF) issued by bankruptcy examiner Michael Missal criticized O’Melveny & Myers for discovery delays and witness interviews that could have revealed too much information, the Recorder Reports.
The report said O’Melveny promised quick delivery of an e-mail database but failed to promptly deliver, hampering the investigation. “The [discovery] process proved to be cumbersome and difficult …., with inexplicable delays,” he wrote.
O’Melveny created other problems, the report said, when it met with witnesses it did not represent. “The examiner informed counsel for the company in October 2007 that he did not consider it appropriate for them to give witnesses they did not represent a preview of the examiner’s interviews as it could harm the integrity of his investigation,” Missal wrote.
Despite those criticisms, O’Melveny was “relatively unsoiled” by Missal’s scathing report released yesterday, according to the Recorder story. Much of Missal’s criticism focused on the role of accounting firm KPMG in New Century’s collapse. KPMG helped New Century adopt accounting practices that permitted the mortgage lender to report a profit instead of a loss, the report says.
O’Melveny has blamed an outside vendor for discovery problems.
