Legal brawl with former Charlotte mayor, an ex-governor and a wa - | WBTV Charlotte

Legal brawl with former Charlotte mayor, an ex-governor and a war hero almost over

(Credit: Todd Sumlin | The Charlotte Observer) (Credit: Todd Sumlin | The Charlotte Observer)

CHARLOTTE, N.C. (Rick Rothacker | The Charlotte Observer) - A series of contentious lawsuits involving a former Charlotte mayor, a former North Carolina governor and a Persian Gulf War hero could be nearing an end.

The trustee liquidating a defunct Charlotte-based bus company called DesignLine filed a motion this week asking a judge to approve a “global settlement” that would resolve four legal actions she brought as part of the company’s federal bankruptcy court proceedings.

In a motion filed Tuesday, trustee Elaine Rudisill said the defendants in those suits will pay $8.25 million to the bankruptcy estate, with all but $125,000 covered by directors’ and officers’ insurance. The parties will also give up $9.1 million in unsecured claims they had made against the company.

“The settlement agreement represents the mutually agreeable resolution of over two years of vigorously contested litigation,” Rudisill said in the motion.

A group led by retired Air Force Gen. Buster 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.

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 filed in 2015:

  • 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.

In Tuesday’s filing, Rudisill said the settlement will allow the trustee to pay all administrative expenses of the bankrupt company and fees associated with the liquidation. Unsecured creditors will also get 4 to 6 percent of their money back, the motion says, calling it “a remarkable result for a case” in which the sale of the company’s assets resulted in less than the company’s post-bankruptcy borrowings.

Rudisill and an attorney representing her declined to comment. Lawyers for Foxx, the Glossons and Martin could not be immediately reached.

Subject to court approval of the settlement as well as the resolution of one other case, the trustee will have resolved 115 actions that she brought, according to the motion. The four cases involved in the settlement are the most complex, with the court once calling the suit against the Glossons “likely the longest and most pervasive pleading of its type ever filed in this bankruptcy court,” the motion says.

According to the filing, the parties engaged in mediation on Sept. 26 and 27, resulting in the settlement. 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.”

Buster Glosson gained fame for directing the air campaign during the Persian Gulf War and later moved to Charlotte after retiring from the Air Force. 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 called Eagle Ltd.

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 a fire and brake issues. The airport in 2014 auctioned off its 10 DesignLine buses.

PREVIOUS: Charlotte airport sells off its troubled DesignLine shuttle buses

A hearing on the settlement motion is scheduled for Nov. 7 in bankruptcy court in Charlotte.

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