The privilege granted to Wells by Judge Colleen McMahon last Wednesday is called a “right to intervene.”
The judge also granted a motion from the New York Department of Financial Services, which brought the lawsuit, a preliminary injunction. It also appointed a receiver for the case — Denis O’Connor, managing director at AlixPartners LLP.
These actions are important because they could allow Condor to start up operations again, this time under the receiver’s leadership.
The judge wrote that the receiver should understand that getting Condor back into operating mode is more important to the Court than taking the time to understand every nuance of the company’s financial picture.
Hauppauge N.Y. based Condor stands accused of bilking $11 million from its customers. It also owes Wells Fargo around $260 million.
The judge wrote that Wells Fargo had satisfied the criteria for intervention “as of right.” Wells was granted the right, because of its position as a secured lender. Her order also stated that under the loan agreement, the lenders “unquestionably have an interest in this action; they are effectively the factor of Condor’s business operations and they hold a secured interest in its loan portfolio.”
The judge said it may take time for the newly named receiver to get up to speed concerning Condor’s operations, considering the apparent messy state of Condor’s finances.
The judge acknowledged that Wells Fargo has already, likely, seen its interests at Condor impaired since the company has been effectively shut down since April 23. She wrote that it stands to reason that a lengthy period of disengagement from Condor’s sole source of income, making car loans, will decrease the value of the Lenders’ security interest.
The judge also wrote if “there is any shortage of funds to pay customers, the DFS Superintendent has absolutely no intention” of pressing Wells Fargo’s claim that all the money in Condor’s bank accounts is in fact subject to a security interest.
Meanwhile, Schindler Cohen & Hockman LLP were named as the new attorneys for Department of Financial Services in the Condor case. The New York firm replaces Friedman Kaplan Seiler & Adelman. Last week, the judge had raised concerns that Friedman Kaplan Seiler & Adelman had a conflict of interest because it has represented Wells Fargo.
Wells Fargo is being represented in this case by New York firm Blank Rome LLP.