Wow! U.S. Bank is suing Verizon for spinning-off their yellow pages unit, called “Idearc Media” after the spinoff, with too high a debt load. Idearc Media was the operator of Superpages.com, a major internet yellow pages site. U.S. Bank is the trustee for Idearc.
For anyone who hasn’t followed the string of companies involved, here’s the super-brief overview: Verizon spun off their yellow pages publishing arm, which included print yellow pages and Superpages.com. That company was then named Idearc Media. After a fairly short timeframe, Idearc filed for Chapter 11 bankruptcy restructuring, meaning that stockholders lost virtually everything, and creditors took over and restructured the company. Emerging from the Chapt 11 reorganization, the company was named “SuperMedia”.
If you want a more detailed description, I wrote an opinion piece a year ago entitled “Idearc’s Bankruptcy: Why? A Former Employee’s View“. This lawsuit appears to be founded on my premise that Verizon was responsible because they likely knowingly spun off the yellow pages company with a heavier-than-reasonable debt load. In the comments of that article, I actually suggested that this could be a form of “fraudulent conveyance“, and indeed, the Dallas Business Journal article states that the suit claims Verizon’s representative committed “fraudulent transfers and breach of fiduciary duty”.
At this point, I can’t really predict how this will all play out. If Verizon was found to be responsible, I can imagine a number of different options for remedies that would be possible.
Also, I’ve recently conjectured that there could be a merger between SuperMedia and Dex One, and I can’t even imagine how the US Bank vs Verizon suit might effect that. Perhaps we’re in for yet more interesting days.
Update 10/6/2010: The Courthouse News Service adds more details around the suit in “Verizon’s Idearc SPinoff Called a Put-Up Job“.