So this issue
may have been settled, and Russell Cohen is not liable for the obligations incurred by Adamas Corp. It always seemed
that the people in charge of Finlay were just pressing ahead with this lawsuit
out of their obligation to get every last cent for the creditors; if someone doesn’t
want to buy something, and lacks the resources to do it, it’s hard to force
them to. In any case, it is a huge shame the plan to revive Carlyle never came to be, and it is
certainly disappointing that Rolex never got on board. Excerpts from court ruling
Russell Cohen impressed the Court
as a sincere and candid witness. He wanted to resurrect a business that had
been founded by his grandfather in 1922 and that has been a fixture of his own
business identity for his entire life. …
Partly for this reason [former CEO]
Art Reiner of Finlay seems to have a warm spot in his heart for the Adamas bid.
It was a bid that would have allowed at least certain of the Carlyle stores to
survive under new ownership and provide employment opportunities for
individuals who had worked with the company for many years. Perhaps for that
reasons, Finlay did not make demands on Adamas that it might have made if
someone other than Russell Cohen had been behind the proposed new venture.
Inexplicably, Finlay conducted none
of the diligence regarding Adamas that a prudent seller ordinarily would
perform. [Former chief restructuring officer] David Coles confirmed that Finlay
qualified Adamas as a bidder without requesting or reviewing any financial
information and accepted the Adamas bid without a deposit. The apparent reason
was that Russell Cohen was well known to everyone at Finlay, enjoyed an
excellent reputation, and was thought to have the financial ability to perform
due to funds received from the sale of Carlyle to Finlay in 2005 …
Rolex, however, for reasons of its
own, was not satisfied with [the new company’s] structure and elected not to do
business with the new company. A disappointed Russell Cohen thereafter wrote a
heartfelt communication expressing regret that he was unable to achieve the
dream of reigniting the spark that had been Carlyle.
Taken as a whole, the evidence
reflects a transaction that may have been flawed from the outset due to the
lack of firm financing commitments and the lack of a binding commitment form
Rolex to provide products to the stores. But the transaction did not lack good
faith or very substantial sweat equity.
The evidence does not support a
finding that Russell Cohen is personally liable for the obligations of Adamas Partners.
He was the principal of the entity; of that there was no doubt. But his control
did not amount to complete domination of the entity. He always wanted partners
and his efforts were dedicated to that objective. Moreover, he did not commit a
wrong through the use of the entity. He simply tried to make a deal that would
work. Ultimately, he failed in achieving that goal.