John W. Costello

Jack Costello is a partner in the Business Transactions Department of Wildman Harrold. Jack has over 30 years of extensive experience in corporate restructurings involving the airline, retail store, transportation, railroad, smoke stack, and real estate industries. He has represented corporate debtors, creditors’ committees, and unsecured and secured creditors in reorganization proceedings across numerous industries. In addition, Jack has served as an examiner in a large ponzi scheme. He has also participated in numerous out-of-court reorganizations, compositions, and assignments for the benefit of creditors. He is knowledgeable about lender liability issues and is skilled at company reorganization, loans negotiation, loan amendments, cash collateral orders, and plans of reorganization. He has litigated many fraudulent conveyance, preference, and plan of reorganization issues as well as numerous other commercial controversies relating to insolvencies. He also has extensive experience in structuring securitized loans, and has drafted numerous legal opinions on various substantive consolidation issues.

Representative Experience:

Currently serves as the Litigation Trustee of and counsel to the Comdisco Litigation Trust created pursuant to the plan of reorganization of Comdisco Inc. As Litigation Trustee, he has filed 65 lawsuits in state and federal court seeking the enforcement of more than $74 million in promissory notes executed by senior management. The notes were executed in connection with a Comdisco employee stock option plan. The defendants have raised numerous substantive and procedural defenses to the claims, including fraud and fraud in the inducement. A number of the issues have already been appealed.
Represented Doctors Hospital of Hyde Park, Inc. in a liquidating Chapter 11 proceeding. After liquidating the hospital’s physical assets, counsel investigated numerous pre-petition transfers to owners, related parties, and secured lenders, and then filed a multi-count complaint to void transfers of millions of dollars and the granting of liens to owners, related parties, and secured lenders. The litigation has resulted in a substantial settlement with the owners and related parties which has been appealed and is currently pending in the Seventh Circuit Court of Appeals. The actions against the lenders resulted in a recently concluded eight-day bench trial which is awaiting verdict. One of the key issues is whether the hospital was insolvent at the time when the lien transfers occurred approximately three years prior to the filing of the bankruptcy. The resolution of the question implicated substantial issues of insolvency and valuation, as well as the use of extensive expert testimony, legal analysis and argument on these issues. The matter also involved numerous issues relating to alter ego and substantive consolidation.
Represented Bahamian professionals as liquidators of MJ Select Global Ltd., an off shore investment vehicle. Counsel filed ancillary bankruptcy proceedings to ensure an orderly liquidation and to prevent and enjoin the race to, and dissipation of, the assets of MJ Select in previously filed state and federal litigation asserting a ponzi scheme and various types of securities fraud. Counsel conducted numerous examinations and other discovery under the Federal Rule of Bankruptcy Procedure 2004 and commenced litigation against numerous parties to recover transfers and damages for wrongful conduct. Counsel also assisted the liquidator in connection with related investigations, fact gathering, and evidentiary proceedings in foreign jurisdictions. In addition, counsel represented the liquidators and intervened in federal securities fraud litigation. Recently, counsel negotiated a settlement with the majority of the litigants in the federal court litigation. This engagement tested the limits of the enforceability and recognition of foreign insolvency proceedings in American bankruptcy courts as well as the extent to which Bahamian insolvency law would take precedence over rights and remedies available under American Law.
In separate matters, represented a doctor and a lawyer faced with the entry of multi-million dollar jury verdicts against them. Both were confronted with their inability to satisfy the respective verdicts and impending bankruptcy. Counsel analyzed the exempt and non-exempt assets of the defendants in multiple districts, the effect of indemnities and insurance, and the bankruptcy amendments of 2005 on individuals and exemptions; counsel also participated in the negotiations with the plaintiffs. Both matters were settled for substantially less than the face amount of the judgments, and both avoided bankruptcy.

Professional Associations:

Chicago Bar Association

Illinois State Bar Association

American Bar Association

The American Bankruptcy Institute

Turnaround Management Association

Bar Admissions:

Illinois, 1972

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