Bankruptcy case involving ex Charlotte mayor, general ends. Here’s the deal they made.

A federal bankruptcy court judge on Tuesday approved a settlement that resolves a long-running series of contentious lawsuits over a failed Charlotte bus company.

The agreement settles four lawsuits brought by trustee Elaine Rudisill, who has been charged with liquidating DesignLine after its 2013 bankruptcy filing. The litigation, first filed in 2015, ensnared a number of high-profile figures as defendants: retired Air Force Gen. Buster Glosson, former Charlotte Mayor Anthony Foxx and former North Carolina Gov. Jim Martin.

As part of the global settlement first disclosed last month, the defendants in the suits will pay $8.25 million to the bankruptcy estate. That amount will be covered by directors’ and officers’ insurance except for $125,000 to be paid by defendant Jim Fadiman. The parties will also give up $9.1 million in unsecured claims they had made against the company.

At a hearing Tuesday, attorney Michael Barrie, who represents the trustee, said the deal will avoid further costly litigation, allowing for a more meaningful return for creditors. The case involves enough documents to fill 18 tractor-trailers, 80 potential deposition witnesses and nine legal teams, he said.

The settlement is expected to provide unsecured creditors with a payment of 7 to 9 cents on the dollar, up from a previous estimate of 4 to 6 cents on the dollar, Barrie said. Unsecured claims in the case are a little over $28 million, according to court documents.

In approving the settlement, Judge Craig Whitley called the agreement fair and congratulated the attorneys that crafted the pact.

“It’s been a long road,” Whitley said. “I’m glad you are at the end.”

A group led by Glosson and his son, Brad, bought DesignLine in 2006 and moved it to Charlotte from New Zealand, looking to capitalize on hybrid technology that promised lower emissions. After struggling financially for years, the company filed for bankruptcy in 2013, costing investors millions and leading to layoffs for a workforce that once reached 250.

Starting in 2013, the Observer began reporting on losses sustained by DesignLine’s investors and problems with buses the company sold to Charlotte Douglas International Airport, including fire and brake issues. The airport in 2014 auctioned off its 10 DesignLine buses.

As part of DesignLine’s bankruptcy proceedings, Rudisill filed “adversarial proceedings” against various defendants to recover more money for the bankruptcy estate. The settlement covers four of those actions:

▪  A lawsuit alleging Anthony Foxx, the former Charlotte mayor and U.S. Transportation Secretary, performed little to no work in a past job as deputy general counsel at DesignLine.

▪  A complaint against former leaders of DesignLine, including Buster and Brad Glosson, alleging that they committed fraud against the company’s creditors and investors.

▪ A suit against six former DesignLine directors, including former Gov. Jim Martin, alleging breach of fiduciary duties.

▪ A suit alleging two other directors breached their duties.

The defendants had denied the allegations and sought to have the suits against them dismissed. The agreement says the defendants “deny all liability and allegations of wrongdoing” and that the pact was agreed to “only for the purpose of avoiding the burdens, inconveniences and expenses of further disputes and litigation.”

Of the $9.1 million in unsecured claims released by the parties, about $7.4 million was a claim asserted by a company run by Glosson, who gained fame for running the air campaign in the Persian Gulf War.

After years of litigation, Barrie noted that the settlement approval only took 27 minutes, and Whitley expressed surprise when the assembled legal teams had no further remarks.

“It’s the first time in this case,” he said, “where the group has been speechless.”

This story was originally published November 7, 2017 at 12:24 PM with the headline "Bankruptcy case involving ex Charlotte mayor, general ends. Here’s the deal they made.."