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Excerpt from an official bankruptcy document filed 11/22/13:Preliminary Statement1. The Debtors were founded in 2007 with the goal of designing, assembling, and manufacturing premium plug-in hybrid electric vehicles (“PHEVs”). To facilitate these efforts, the United States Department of Energy (“DOE”) arranged for loans to the Debtors from the Federal Financing Bank (the “FFB”) in an aggregate amount of up to approximately $530 million pursuant to the Advanced Technology Vehicles Manufacturing Incentive Program.2 The Debtors drew a total of approximately $192 million on these loans and also raised significant amounts of equity financing2 The Advanced Technology Vehicles Manufacturing Incentive Program was promulgated under section 136 of the Energy Independence and Security Act of 2007, Pub. L. 110-140, 121 Stat. 1492, 42 U.S.C. § 17013.2DOCS_DE:190465.1 28353/001from a wide range of venture capital, private equity, and sovereign wealth funds. Beginning in 2007, the Debtors established a global network of vendors, suppliers, distributors, and retailers, along with an international reputation for both their award-winning Karma sedan and their innovative hybrid electric powertrain technology. The Karma sedan is the world’s first environmentally responsible luxury PHEV and was the centerpiece of the Debtors’ prepetition manufacturing and sales efforts. The Debtors sold approximately 1,800 Karma sedans to individual buyers through a global network of independent retailers and distributors.2. Despite these accomplishments, the Debtors were unable to achieve certain financial covenants and project milestones embedded in their loan agreements with DOE. In particular, the Debtors’ loan agreements with DOE originally required the Debtors to produce, manufacture, and sell 11,000 Karma sedans by February 2012. But the Debtors were obliged to delay serial production of the Karma until October 2011 for a number of reasons, including completion of vehicle and manufacturing engineering, finalizing tooling and component specifications with the Debtors’ supply chain, and completing safety and emissions testing and certifications.3. Further, once serial production of the Karma began, vehicle sales failed to meet expectations. Factors affecting sales included negative press, initial quality and performance issues, lingering effects of the global financial recession, and challenges arising from the Debtors’ supply chain. For example, the high-voltage battery packs for the Karma, an essential component for any electric vehicle, and which were manufactured exclusively by A123 Systems, Inc.3 (“A123”), exhibited a number of performance problems. The Debtors initiated a voluntary safety recall for a small number of Karma vehicles almost immediately following the Karma’s 2011 launch relating to A123’s misalignment of internal hose clamps. A123 also announced a service campaign in3 A123 Systems, Inc. has since changed its name to B456 Systems, Inc.3DOCS_DE:190465.1 28353/001March 2012 relating to a manufacturing defect that affected the durability and performance of all battery packs manufactured at A123’s Livonia, Michigan facility. Moreover, A123 suspended Karma battery production in October 2012 when it sought bankruptcy protection.4 As a result, the Debtors were left without a high-voltage battery supplier, and the Debtors have not restarted Karma vehicle production since a previously scheduled seasonal shutdown commenced in July 2012.4. The Debtors have at all times been mindful of their commitments to stakeholders, their obligation to preserve and maximize value, and the public interest at issue here. To this end, and as discussed in greater detail below, the Debtors explored a series of alternatives to obtain financing to fulfill these commitments and to maximize stakeholder value, including with respect to DOE. Among other things, the Debtors sought additional equity and debt financing to refinance the DOE loan and provide additional working capital. More recently, the Debtors engaged with financial sponsors, original equipment manufacturers (“OEMs”), and other parties regarding astrategic investment or a going concern transaction. In this process, the Debtors retained experienced investment banking, financial, and restructuring advisors to facilitate their review, analysis, and development of potential alternatives.5 The Debtors also undertook steps to minimize costs and to preserve liquidity. These steps included, among other things, the difficult determination to conduct headcount reductions and to initiate nonpaid employee furloughs in the spring of 2013. Notwithstanding these efforts, the Debtors’ cash position continued to erode.5. To preserve and maximize value, the Debtors sought to implement a sale process in connection with a chapter 11 filing. Throughout the spring of 2013, the Debtors engaged in4 As discussed more fully below, A123 ultimately rejected its exclusive supply agreement with the Debtors effective as of February 2013.5 See infra Part II.C (discussing the Debtor’s prepetition restructuring efforts).4DOCS_DE:190465.1 28353/001substantial, good faith negotiations with DOE regarding the Debtors’ consensual use of its cash collateral to help fund a chapter 11 case and sale process. Despite significant efforts by the parties, these negotiations were ultimately unsuccessful, and DOE applied the approximately $20 million of cash that it controlled to the Debtors’ outstanding indebtedness.6. Since that time, the Debtors have operated with limited junior funding provided by related parties. The Debtors’ operations have remained curtailed, and headcount reductions have continued through both additional layoffs and voluntary attrition. The Debtors have also continued to engage in discussions and negotiations surrounding various restructuring transactions in an effort to maximize stakeholder value. Meanwhile, DOE conducted a public marketing and auction process for the purchase of its interests in the DOE loan pursuant to a competitive auction process. On October 7, 2013, an affiliate of Hybrid Tech Holdings, LLC emerged as the successful bidder, and the parties closed the loan purchase on November 22, 2013.7. Recognizing that this purchase would provide the Debtors with an opportunity to move forward, the Debtors entered into extensive arm’s-length discussions with Hybrid Tech Holdings, LLC (the “Purchaser”) and its affiliates regarding the Purchaser’s potential acquisition ofcertain of the Debtors’ assets through a credit bid of all or part of the DOE loan. These discussions culminated in the parties’ entry into a purchase agreement (the “Purchase Agreement”), as more fully described herein, pursuant to which the Purchaser would acquire substantially all the Debtors assets, with the remainder of the estates’ assets to be administered through a chapter 11 plan of liquidation. The Debtors have commenced these chapter 11 cases to facilitate a timely and efficient sale and plan process that will preserve and maximize the value of the Debtors’ estates.8. To familiarize the Court with the Debtors and the relief sought at the outset of these chapter 11 cases, this Declaration is organized in three parts. Part I provides an overview of the5DOCS_DE:190465.1 28353/001Debtors’ historical operations and capital structure. Part II describes the events leading up to the commencement of these chapter 11 cases. Part III sets forth the relevant facts supporting the relief requested by the First Day Motions.Part I: The DebtorsA. Overview of the Debtors’ Corporate History and Business Operations1. The Debtors’ History and Operations13. The Debtors were formed in 2007 with the goal of designing, engineering, and manufacturing premium PHEVs. To this end, the Debtors developed an electric vehicle with extended range, which they trademarked as “EVer.” The Debtors also established an international reputation as a leading developer of premium extended range PHEVs. The Debtors’ Karma sedan is the world’s first environmentally responsible luxury PHEV, and was developed by a highly skilled team of automotive designers and engineers located in the United States. The Karma sedan was also the centerpiece of the Debtors’ operations and won awards for excellence, innovation, and environmental responsibility from Time magazine (identifying the Karma as one of the “Green Design 100” in 2009), Top Gear Magazine (identifying the Karma as “Luxury Car of the Year” in 2011), and Automobile Magazine (identifying the Karma as “Design of the Year” in 2012).Fisker Vehicle DesignsKarma Sedan Atlantic Sedan (Concept)6DOCS_DE:190465.1 28353/00114. The Karma sedans were assembled by Valmet Automotive, Inc. (“Valmet”) in Uusikaupunki, Finland. The Debtors had planned, however, to build future vehicles at a company-owned and -operated assembly facility in the United States to improve volumes and to leverage their design, engineering, and technical expertise.15. To that end, in July 2010, the Debtors acquired a manufacturing facility covering approximately 3.2 million square feet located on approximately 142 acres at 801 Boxwood Road, Wilmington, Delaware (the “Delaware Facility”). The Debtors purchased the Delaware Facilitythrough the General Motors bankruptcy proceedings for a cash purchase price of approximately $21 million. The Delaware Facility is equipped with a number of technical and utility systems for automotive manufacturing, including a paint facility, powerhouse capability, a conveyor system, a wastewater treatment facility, and an emissions abatement system. The Debtors have not conducted active operations at that location.16. The Debtors obtained components and systems for the Karma’s assembly through a number of third-party supply relationships. For example, the Debtors had a licensing and tool use agreement with a General Motors affiliate. Through this relationship, the Debtors were able to purchase parts and components directly from suppliers that also sold to General Motors and use General Motors tooling to manufacture the parts or components. In addition, the Debtors relied on a number of “single source” suppliers for particular components. One such “single source” supplier was A123, whom the Debtors contracted with in January 2010 to act as the exclusive manufacturer of the Karma sedan’s high-voltage battery pack, as discussed more fully below.17. The Debtors began delivering the Karma sedan for sale to the general public in October 2011. This milestone was the culmination of the Debtors’ four-year effort to bring the Karma sedan from design, to concept car, to finished product ready for the showroom floor. The7DOCS_DE:190465.1 28353/001Karma sedan retailed for approximately $100,000 to $120,000, subject to consumer specifications and corresponding purchase price adjustments. The Debtors assembled approximately 2,700 Karma sedans, and approximately 1,800 Karma sedans have been sold to individual customers.18. The Debtors also planned to have another platform, the “N” or “Nina Platform,” which included the prototype Atlantic sedan. The Debtors made significant progress developing the N Platform, including entering into a number of additional supply and service agreements with third-party vendors and suppliers. These agreements included an engine purchase, supply, and development agreement with Bayerische Moteren Werke Aktiengesellschaft, or BMW. The Debtors first unveiled the Atlantic sedan at the April 2012 New York Auto Show, but have not engaged in active production of the Atlantic sedan or other N Platform derivatives.2. The Debtors’ Sales Network and Customers19. The Debtors sold the Karma sedan in the United States and Canada through a network of independent retailers located throughout the United States and Canada (each, a “Retailer”). In addition, the Debtors sold the Karma sedan in Europe, the Middle East, and China through local, independent distributors (each, a “Distributor”). Typically, Retailers and Distributors would purchase vehicles from the Debtors and then hold the vehicles for sale to the general public. A “Retail Agreement” or “Distributorship Agreement” typically governed each relationship among the parties.20. The Retail Agreements and Distributorship Agreements generally provided that the Retailers and Distributors would purchase vehicles directly from the Debtors and then hold those vehicles for sale in an assigned geographic territory. In certain circumstances, these Retailers and Distributors hold the right to compel the Debtors to repurchase their vehicles. Additionally, while the Retailers and Distributors bear primary responsibility for performing warranty repairs associated with sold vehicles, these warranty repairs may be subject to reimbursement from the Debtors.8DOCS_DE:190465.1 28353/0013. The Debtors’ Employees21. The Debtors currently employ approximately 21 full-time employees, located primarily at their Anaheim, California headquarters, and primarily tasked with engineering, product development, financial, and reporting functions. None of the Debtors’ employees are subject to a collective bargaining agreement. The Debtors’ current staffing level reflects significant headcount reductions and voluntary attrition in the period prior to these chapter 11 filings.4. Fisker GmbH22. Fisker Automotive GmbH (“Fisker GmbH”), a non-Debtor in these cases, was a wholly owned subsidiary of Fisker Automotive, Inc. organized under the laws of Germany. Fisker GmbH’s office was located in Munich, Germany, and provided international sales and marketing services to the Debtors. Fisker GmbH has no active operations.B. Overview of the Debtors’ Capital Structure23. As of the Petition Date, the Debtors had approximately $203.2 million in funded debt and related obligations outstanding, consisting of the DOE Facility, the SVB Working Capital Facility, the DEDA Loan, and the Related Party Notes (each as defined herein). As of the Petition Date, the Debtors’ funded debt obligations, excluding accrued interest, are summarized as follows:$ millionsDOE Facility $168.5SVB Working Capital Facility $6.6DEDA Loan $12.5Related Party Notes $15.6Total: $203.2In addition, the Debtors have obligations under a number of contractual and vendor-related agreements, including with respect to various prepetition supply and assembly agreements. These obligations are discussed in turn.9DOCS_DE:190465.1 28353/0011. The DOE Facilitya. The DOE Facility Generally24. Fisker Automotive, Inc., as borrower (“Fisker Automotive”), Fisker Automotive Holdings, Inc. (“Fisker Automotive Holdings”), and DOE are parties to that certain Loan Arrangement and Reimbursement Agreement, dated as of April 22, 2010 (the “DOE Loan Agreement”).6Pursuant to the DOE Loan Agreement, DOE agreed to, among otherthings:(a) arrange for purchases by the FFB of notes from Fisker Automotive in an amount not to exceed $169.3 million to fund the development, commercial production, sale and marketing, and all related engineering integration of the Debtors’ Karma sedan (the “Karma Lending Facility”); and(b) arrange for purchases by the FFB of notes from Fisker Automotive in an amount not to exceed $359.4 million to fund the development, commercial production, and sale and marketing of the Debtors’ Nina model automobile, now known as the Atlantic sedan, including the establishment and construction of an assembly and production site in the United States (the “Nina Lending Facility,” and, together with the Karma Lending Facility, the “DOE Facility”).7 Fisker Automotive Holdings unconditionally guaranteed obligations arising under the DOE Facility pursuant to that certain ParentGuarantee, dated as of April 22, 2010, made by Fisker Automotive Holdings in favor of DOE, FFB, and certain holders of notes. As discussed in detail below, on November 22, 2013, DOE sold its rights under the DOE Loan Agreement and certain related agreements to an affiliate of the Purchaser.6 See The Advanced Technology Vehicles Manufacturing Incentive Program, which was promulgated under section 136 of the Energy Independence and Security Act of 2007, Pub. L. 110-140, 121 Stat. 1492, 42 U.S.C.§ 17013.7 Pursuant to that certain Program Financing Agreement, dated as of September 16, 2009, between DOE and FFB, DOE is obligated to reimburse FFB for any liabilities, losses, costs, or expenses incurred by FFB from time to time with respect to the Notes or the related Note Purchase Agreement (each as defined in the DOE Loan Agreement).10DOCS_DE:190465.1 28353/00125. As of the Petition Date, the Debtors estimate that they had approximately $168.5 million in principal outstanding under the DOE Facility. Interest on the Karma Lending Facility is payable quarterly, bears interest at a weighted average interest rate of 2.00 percent, and was scheduled to mature on April 24, 2017. The Nina Lending Facility bears interest at a weighted average interest rate of 2.60 percent and was scheduled to mature on April 22, 2026. The DOE Loan Agreement further required the Debtors to achieve certain construction, production, manufacturing, and other milestones necessary for the completion of the Karma project and the Nina project, each by certain pre-established dates.26. Obligations arising under the DOE Facility are secured by a first priority lien on substantially all the Debtors’ assets, including personal and real property, pursuant to that certain Amended and Restated Pledge and Security Agreement, dated as of July 30, 2010 (the “Pledge andSecurity Agreement”), between Fisker Automotive and PNC Bank, N.A., d/b/a Midland Loan Services, a division of PNC Bank, N.A., as successor by merger to Midland Loan Services, Inc., as collateral agent (the “Collateral Agent”).827. In particular, DOE held an exclusive, first priority security interest in a debt service reserve account established pursuant to the DOE Loan Agreement (the “DOE Debt Service Reserve Account”), which was controlled by DOE. The DOE Debt Service Reserve Account formerly held approximately $20.6 million of cash. During the spring of 2013, the Debtors engaged in substantial, good-faith negotiations with DOE regarding the Debtors’ access to funds held in the DOE Debt Service Reserve Account. However, and despite significant efforts by the parties, these8 The collateral pledged to secure obligations arising under the DOE Facility specifically excludes, among other things, the Debtors’ rights to or interests in any lease, contract, property rights, agreement, or trademark if the grant of a security interests in such property would result in (a) the cancellation or unenforceability of the Debtors’ right or interest, or (b) a breach, default, or termination of any such property (collectively, the “Excluded Assets”).11DOCS_DE:190465.1 28353/001negotiations were ultimately unsuccessful, and DOE applied the funds held in the DOE Debt Service Reserve Account to the Debtor’s outstanding indebtedness in March 2013. As of the Petition Date, approximately $0 remains in the DOE Debt Service Reserve Account.b. Business Covenants Arising Under the DOE Loan28. In addition to traditional financial reporting, fixed charge, and EBITDA covenants, the DOE Loan Agreement imposed a number of milestones and obligations with respect to the Debtors’ business plan and performance. Among other things, the DOE Loan Agreement required the Debtors to: (a) achieve Karma sales of 11,000 units by February 29, 2012; (b) achieve an average Karma selling price of not less than $87,900 by that time; and (c) obtain $270.0 million of incremental equity financing by October 2010. The covenants and milestones provided under the DOE Loan Agreement materially affected the Debtors’ ability to pursue projects or transactions not contemplated by the business plan originally submitted to DOE in 2010.2. The SVB Working Capital Facility29. Fisker Automotive, as borrower, Fisker Automotive Holdings, as obligor, and Silicon Valley Bank (“SVB”), as lender, are parties to that certain Loan Agreement dated as of July 30, 2010 (the “SVB Loan Agreement”). The SVB Loan Agreement provided for a term loan facility and an asset-based revolving credit facility in the total amount of $21.0 million (the “SVB Working Capital Facility”). As of the Petition Date, a term loan of approximately $6.6 million remains outstanding on the SVB Working Capital Facility, and SVB is no longer providing the Debtors funding under the SVB Loan Agreement. The SVB Working Capital Facility has a weighted average interest rate of 9.00 percent and was scheduled to mature on July 30, 2014.99 Pursuant to correspondence dated April 5, 2013, SVB has taken the position that an event of default occurred under the SVB Loan Agreement on account of an unpaid principal and interest payment due on April 1, 2013.12DOCS_DE:190465.1 28353/00130. Pursuant to the Pledge and Security Agreement, obligations arising under the SVB Working Capital Facility are also secured by a lien on substantially all the Debtors’ personal property.10 However, the collateral securing the SVB Working Capital Facility excludes, among other things, cash held in the DOE Debt Service Reserve Account and the Delaware Facility.3. The DEDA Agreementsa. The DEDA Loan Agreement31. Fisker Automotive, Fisker Automotive Holdings, and the Delaware Economic Development Authority (“DEDA”), a body corporate and politic constituted as an instrumentality of the State of Delaware, are parties to that certain Loan and Security Agreement dated as of December 10, 2010 (the “DEDA Loan Agreement”). The DEDA Loan Agreement provided for a$12.5 million interest-free loan (the “DEDA Loan”) to the Debtors,11 the proceeds of which were to be used to fund the Debtors’ infrastructure improvements and upgrades at the Delaware Facility.12 As of the Petition Date, approximately $12.5 million remains outstanding under the DEDA Loan, which was scheduled to mature June 1, 2015.32. Obligations arising under the DEDA Loan are secured by a security interest in substantially all the Debtors’ personal and real property, including the Delaware Facility, although such collateral excludes the cash held in the DOE Debt Service Reserve Account and the Excluded10 On July 30, 2010, Fisker Automotive, Fisker Automotive Holdings, and the Collateral Agent, on behalf of DOE and SVB, entered into that certain Amended and Restated Collateral Agency Agreement, which created certain payment priorities between the DOE and SVB with respect to proceeds from different pools of collateral securing the Debtors’ obligations to DOE and SVB.11 The DEDA Loan Agreement was entered-into by the DEDA pursuant to the Delaware Strategic Fund Program, 29 Del. C. §§ 5027–29 (the “Delaware Fund Program”).12 The DEDA Loan Agreement provides that, subject to Fisker Automotive satisfying certain conditions set forth in the DEDA Loan Agreement relating to the employment of full-time employees and capital expenditures at the Delaware Facility, on or after June 1, 2015, up to the full amount of the DEDA Loan could convert to a grant. As of the date hereof, these milestones have not been achieved.13DOCS_DE:190465.1 28353/001Assets.13 On December 10, 2010, Fisker Automotive, Fisker Automotive Holdings, and DOE entered into that certain Third Amendment to the DOE Loan Agreement (the “Third Amendment”) requiring the Debtors to establish a collateral reserve account (the “DEDA Reserve Account”) withthe Collateral Agent. DOE controls the DEDA Reserve Account and has the power to direct the Collateral Agent to disburse funds held in the DEDA Reserve Account. DOE used this power shortly after its seizure of the cash in the DOE Debt Service Reserve Account to also sweep the cash in the DEDA Reserve Account. Thus, approximately $0 remains in the DEDA Reserve Account as of the Petition Date.b. The DEDA Grant33. Fisker Automotive and DEDA are also parties to that certain Grant Agreement dated as of December 10, 2010 (the “DEDA Grant”), pursuant to which DEDA granted up to $9.0 million to Fisker Automotive under the Delaware Fund Program to be used to offset utility costs incurred while the Debtors renovated and upgraded the Delaware Facility. Payments under the DEDA Grant were disbursed to Fisker Automotive from time to time as needed to reimburse the Debtors for “Eligible Utility Costs,” which are generally defined by the DEDA Grant to cover certain utility costs incurred during the renovation of the Delaware Facility. DEDA provided approximately $7.5 million in funding pursuant to the DEDA Grant, but is no longer providing the Debtors with additional funding. All or a portion of the DEDA Grant will convert to an interest-free loan upon the occurrence of certain conditions, including the Debtors’ failure to employ at least 1,495 full-time13 As discussed more fully in the Motion of the Debtors for Entry of Interim and Final Orders (I) Authorizing Postpetition Financing, (II) Granting Liens and Providing Superpriority Administrative Expense Priority, (III) Authorizing Use of Cash Collateral, (IV) Granting Adequate Protection, (V) Modifying the Automatic Stay, and (VI) Scheduling a Final Hearing Pursuant to Sections 105, 361, 362, and 364(c) of the Bankruptcy Code and Bankruptcy Rules 2002, 4001, and 9014 (the “DIP Motion”), the DEDA Subordination Agreement (as defined therein) subordinates DEDA’s interest in the collateral to those of DOE and SVB.14DOCS_DE:190465.1 28353/001employees at the Delaware Facility on March 1, 2015, or upon the occurrence of an event of default under the DEDA Loan Agreement.4. The Related Party Notes34. Commencing on April 16, 2013, the Debtors received approximately $15.6 million in financing on an unsecured basis through a series of promissory notes and loan agreements (collectively, the “Related Party Notes”) entered into by the Debtors and certain related parties,including Ace Strength International Limited, FAH Loan Purchase Fund, LLC, GSR Principals Fund IV, L.P., GSR Special Situation I Limited, GSR Ventures IV, L.P., JR Holdings IV, Ltd., and SugarPine Kids Trust and certain of their respective Affiliates. The Related Party Notes bear interest at a fixed rate of 10% per annum and were used to fund prepetition working capital needs and for other prepetition general corporate purposes. The Related Party Notes mature on the later to occur of (a) the sale, transfer, or disposition of all or substantially all the Debtors’ assets; (b) the Debtors’ dissolution or liquidation; or (c) 12 months from the date of the applicable promissory note, unless terminated earlier pursuant to their terms.5. Other Claims35. The Debtors’ capital structure also includes certain claims that may be secured by either security agreements or statutory or possessory liens. For example, Valmet holds certain work in progress and other inventory and has asserted its right to liquidate this inventory to satisfy claims that may be owing to Valmet. The Debtors are also parties to a number of supply and assembly agreements that give rise to substantial obligations on account of such agreements, including obligations relating to accounts payable, material authorizations and suspended shipments, and obligations for the settlement of certain volume-related charges under the Valmet Agreement, although analysis of such obligations remains ongoing. In addition, the Debtors are subject to a significant level of litigation and collection proceedings pending as of the Petition Date.15DOCS_DE:190465.1 28353/0016. Equity36. The Debtors are privately held. Fisker Automotive Holdings is owned by a diverse group of venture capital, private equity, and sovereign wealth funds, as well as private individuals. The Debtors’ equity capital consists of common stock and seven series of convertible preferred stock. Fisker Automotive Holdings, in turn, owns 100 percent of the shares in Fisker Automotive.Part II: Events Leading to the Chapter 11 Cases37. Since their inception, the Debtors pursued a strategy committed to the design, development, engineering, and production of high performance and environmentally responsible PHEVs. This strategy was reflected by the Debtors’ loan agreements, through which the Debtors were obliged to, among other things, achieve sales in excess of 11,000 vehicles less than 5 years from their initial inception and to employ approximately 1,500 full-time employees in automobile manufacturing here in the United States. The Debtors’ ability to achieve their original sales and production goals, however, was limited by a combination of negative press, lingering effects of the global financial recession, unforeseen business disruptions, and liquidity shortfalls, among other factors.A. Challenging Operating Environment38. The Debtors, like most OEMs, were responsible for the overall engineering, design, and development of the Karma sedan. In this process, the Debtors leveraged the expertise of a wide range of suppliers and service providers to complete the engineering work and to manufacture the thousands of parts and components necessary to complete each Karma sedan. In addition, and as noted above, Karma assembly was contracted to Valmet under the Valmet Agreement—although, the Debtors’ business plan contemplated that assembly operations could ultimately be brought “in house.” As a result, Karma production remained dependent on the seamless interaction of suppliers located across North America, Europe, and Asia.16DOCS_DE:190465.1 28353/00139. Building the Fisker platform, supply chain, and network of Retailers and Distributors from scratch ultimately delayed the initial Karma launch from 2009 until 2011. This delay created significant challenges with respect to the Debtors’ February 2012 deadline to sell more than 11,000 Karma sedans at an average selling price of $87,900, as required by the DOE Loan Agreement.14 The Debtors further believe that sales were adversely affected by negative press with respect to Karma performance, their existing liquidity position, and the A123 battery recall.40. In particular, these challenges were exacerbated by severe complications arising from the Debtors’ relationship with A123. As noted above, A123 was formerly the exclusive high-voltage battery pack manufacturer for the Karma sedan. The Debtors encountered a number of issues with the performance of the A123 battery packs almost immediately following the Karma’s launch in October 2011. At or about that time, the Debtors conducted a voluntary safety recall to check and correct a potential misalignment of internal hose clamps within the battery packs. In March 2012, A123 announced a voluntary service campaign to replace all Karma battery packs because of a faulty manufacturing process at A123’s production facility in Livonia, Michigan, that affected the expected performance and durability of the battery packs—the problem that caused a Karma sedan to shutdown during testing by Consumer Reports.41. A123 did not complete the service campaign and later suspended its production of Karma battery packs.15 As a result, the Debtors were left with approximately a $48.7 million warranty claim against A123’s bankruptcy estate and no supply of high-voltage battery packs to14 As noted above, approximately 1,800 Karma sedans have been sold to individual customers.15 A123 sought bankruptcy protection in October 2012 and, following its acquisition by Wanxiang Group Corp. in January 2013, rejected its battery pack supply agreement with the Debtors.17DOCS_DE:190465.1 28353/001continue Karma production.16 Facing these challenges, the Debtors have not restarted Karma production following a previously scheduled seasonal shutdown that began in July 2012.42. The Debtors suffered an additional loss on October 29, 2012, when Hurricane Sandy and its related windstorms, storm surges, and floods, destroyed approximately 338 Karma sedans located at the port in Newark, New Jersey. These vehicles represented substantially all of Fisker’s then-available Karma inventory in the United States. The Debtors’ insurance carriers denied coverage for the loss. After filing suit, the Debtors settled their coverage claims for an amount far less than the approximately $30 million wholesale value of the destroyed vehicles in order to avoid the risk and cost of protracted litigation with their insurance carriers.B. Prepetition Covenant Defaults and Capital-Raising Efforts43. As noted above, the DOE Loan Agreement required the Debtors to achieve various performance milestones, including the Debtors’ obligation to sell 11,000 Fisker sedans by February 29, 2012. Fisker did not achieve certain of these milestones in light of, among other things, the performance challenges discussed above. The Debtors’ operating position was further complicated in 2011 when DOE informed the Debtors that it would not honor future disbursement requests under the DOE Facility, and since that time DOE has ceased all funding under the DOE Facility. The Debtors subsequently engaged in good faith negotiations with DOE regarding modification or waiver of certain conditions imposed by the DOE Loan Agreement, through which the Debtors agreed to raise additional equity capital to fund operations and improve the Debtors’ overall capitalization. Since DOE suspended its funding commitments in 2011, the Debtors raised16 On April 17, 2013, the United States Bankruptcy Court for the District of Delaware approved the Debtors’ stipulation with A123 settling the Debtors’ claims against A123—the approximately $48.7 million warranty claim and a $91.2 million contract damages claim—for approximately $15 million. In re A123 Sys., Inc., No. 12-12859 (Bankr. D. Del. Oct. 16, 2012) [Docket No. 1467]. The Debtors subsequently sold their warranty claim, and, pursuant to their settlement, the Debtors’ $91.2 million contract damages claim was disallowed.18DOCS_DE:190465.1 28353/001approximately $500 million of new capital in three separate equity raises while continuing negotiations with DOE.C. Prepetition Restructuring Efforts44. Commencing in early 2012, the Debtors began exploring strategic alternatives with respect to their business and operations. To facilitate this process, the Debtors retained Evercore Group L.L.C. (“Evercore”) on two separate occasions to explore strategic alliances, junior equityinvestment opportunities, or, potentially, a going-concern sale transaction with one or more parties with respect to the Debtors’ business. Evercore’s initial efforts led to the exchange of several letters of intent between the Debtors and a major automotive OEM with a respect to a potential strategic alliance. Despite substantial negotiations, including meetings with the Debtors’ management, the parties were ultimately unable to agree to a transaction and terminated further discussions in July 2012.45. The Debtors then reengaged Evercore in December 2012 to search more broadly, and in early 2013 Evercore engaged a worldwide universe of more than 50 prospective strategic and financial investors through a structured process designed to publicize the opportunity and induce interest in a transaction. Again, management was actively involved with discussions with potentially interested parties, and approximately thirteen parties executed non-disclosure agreements and accessed an extensive electronic data room. Of these parties, two submitted preliminary non-binding proposals; however, the Debtors were again unable to reach definitive agreements with any of the potential purchasers, due to the Debtors’ inability to, among other things: (a) secure additional financing to fund a potential sale transaction; (b) reach an agreement with DOE regarding the consensual use of cash collateral to fund a potential chapter 11 case; and (c) secure third-party financing to fund a potential chapter 11 sale process.19DOCS_DE:190465.1 28353/00146. The Debtors then sought to market their assets for sale in three discrete groups, with the goal of reaching agreements with one or more bidders that would serve as stalking horses for a sale process in chapter 11 that would be funded by either DOE or third parties. Based on information gleaned from their interactions in the prior processes, Evercore re-solicited interest on this basis from fifteen parties. Again, however, the Debtors were unable to reach definitive agreements with any parties, again, largely due to funding issues.47. In addition to these efforts to locate a transaction partner, the Debtors also took substantial additional steps over the past year to address their liquidity position and preserve operational stability as much as reasonably possible. The Debtors engaged financial advisors that facilitated the Debtors’ efforts to preserve liquidity, while permitting executive management to continue to focus on the Debtors’ overall business plan and strategic alternatives. The financial advisors, in conjunction with the Debtors’ management team and Evercore, continued to negotiate with DOE to provide for the Debtors’ continued access to liquidity on a prepetition basis. Similarly, the Debtors implemented a cash preservation plan that facilitated the Debtors’ efforts to maintain liquidity as they continued to explore strategic alternatives.48. Despite their extensive efforts to preserve cash and execute on a restructuring transaction outside a chapter 11 process, no transaction with investors or purchasers materialized, and the Debtors’ liquidity position continued to deteriorate. As a result, the Debtors made the difficult decision to implement nonpaid employee furloughs and a series of headcount reductions, including voluntary attrition, beginning during the spring of 2013.49. The Debtors continued to explore potential strategic alternatives, but were unsuccessful until their universe of available restructuring alternatives materially shifted in mid-2013 when DOE commenced a marketing and auction process for its interests under the DOE20DOCS_DE:190465.1 28353/001Loan Agreement. The DOE auction process commenced on September 17, 2013, when DOE publicized its plan to sell its interests through a competitive auction. The Debtors actively facilitated diligence and engaged with DOE throughout this process, and it is my understanding that DOE received over twenty written expressions of interest in performing due diligence and participating in the auction process. I further understand that those expressing interest were contacted by DOE’s financial advisor, Houlihan Lokey Capital, Inc. (“Houlihan”), and over half of the potentiallyinterested parties executed non-disclosure agreements with DOE and the Debtors. Approximately half of these potentially interested parties that executed non-disclosure agreements ultimately submitted binding bids before the October 7, 2013 bid deadline, and I further understand that Houlihan conducted the final, live phase of the auction on October 11, 2013. An affiliate of the Purchaser was the successful bidder, and the parties closed the loan purchase on November 22, 2013.50. Recognizing that the DOE marketing and auction process would provide the Debtors with an opportunity to move forward with their restructuring process, the Debtors entered into extensive arm’s-length discussions with the Purchaser regarding the Purchaser’s potential acquisition of certain of the Debtors’ assets through a credit bid of all or part of the DOE loan. These discussions culminated in the parties’ entry into the Purchase Agreement described below.D. The Proposed Sale51. Contemporaneously herewith, the Debtors filed a motion (the “Sale Motion”) seeking authorization of a sale, pursuant to the Purchase Agreement, of substantially all of the Debtors’ assets to the Purchaser free and clear of all claims, liens, and other encumbrances pursuant to section 363 of the Bankruptcy Code in exchange for, among other things: (a) $75 million in the form of a credit bid of claims owned by the Purchaser under the DOE loan; (b) the Purchaser’s agreement to waive $4 million of claims held by the Purchaser or its affiliates under the Debtors’21DOCS_DE:190465.1 28353/001proposed postpetition financing;17 and (c) the assumption of customary liabilities in accordance with the Purchase Agreement. In addition, the Purchaser has committed to support the Debtors’ proposed chapter 11 plan by, among other things, funding up to $725,000 in creditor distributions pursuant to the Plan, each as set forth more fully in the Purchase Agreement.52. In evaluating the benefits and issues associated with another marketing process, the Debtors determined that a sale to a third party other than the Purchaser was highly unlikely to generate greater value than the Debtors’ proposed sale transaction or advisable under the facts and circumstances of these chapter 11 cases. Specifically, as the Debtors’ senior secured lender, the Purchaser holds approximately $168.5 million in claims secured by substantially all of the Debtors’ assets. As a result, I believe the Purchaser holds an overwhelming advantage in any prospective sale process. Thus, given that a competitive auction process or pursuing a potential transaction with an entity other than the Purchaser would be highly unlikely to increase value for the Debtors’ estates—particularly given the extensive prepetition marketing efforts conducted by both the Debtors and DOE prior to the date hereof—the Sale Motion seeks approval of a private sale. The Debtors believe that a private sale will maximize value for the benefit of all creditors and clear the way for the Debtors to expeditiously complete these chapter 11 cases.E. Chapter 11 Plan Process53. The Debtors intend to file their proposed chapter 11 plan promptly after the commencement of these cases. Generally, the Debtors seek to utilize proceeds from the Purchase Agreement, the Purchaser’s additional undertakings to fund creditor recoveries, and their remaining assets to administer these chapter 11 estates, fund creditor recoveries, and bring these chapter 1117 As set forth more fully in the DIP Motion, the Purchaser is also an affiliate of the Debtors’ proposed DIP lender.22DOCS_DE:190465.1 28353/001cases to a prompt conclusion. The Debtors further anticipate seeking approval of their related disclosure statement and plan confirmation in the near term.

Our boy Trump has spent a lot of time and money in and out of court. The following very long and ongoing list of court cases won and lost, is compliments of Wikipedia:Trump and his businesses have been involved in 3,500 legal cases in U.S. federal courts and state court, an unprecedented number for a U.S. presidential candidate.[1]Of the 3,500 suits, Trump or one of his companies were plaintiffs in 1,900; defendants in 1,450; and bankruptcy, third party, or other in 150.[1]Trump was named in at least 169 suits in federal court.[2]Over 150 other cases were in the Seventeenth Judicial Circuit Court of Florida (covering Broward County, Florida) since 1983.[3]In about 500 cases, judges dismissed plaintiffs' claims against Trump. In hundreds more, cases ended with the available public record unclear about the resolution.[1]Where there was a clear resolution, Trump won 451 times, and lost 38.[4]The topics of the legal cases include contract disputes, defamation claims, and allegations of sexual harassment. Trump's companies have been involved in more than 100 tax disputes, and on "at least three dozen" occasions the New York State Department of Taxation and Finance has obtained tax liens against Trump properties for nonpayment of taxes.[1]On a number of occasions, Trump has threatened legal action but did not ultimately follow through.[5]Of Trump's involvement in the lawsuits, his lawyer Alan Garten said in 2015 that this was "a natural part of doing business in [the United States]",[5][6]and in the real estate industry, litigation to enforce contracts and resolve business disputes is indeed common.[5]Trump has, however, been involved in far more litigation than fellow real-estate magnates; the USA Today analysis in 2016 found that Trump had been involved in legal disputes more than Edward J. DeBartolo Jr., Donald Bren, Stephen M. Ross, Sam Zell, and Larry Silverstein combined.[1]The Trump lawsuits[5][6]have attracted criticism from Trump's opponents, who say that this is not a trait that conservatives should support.[5]James Copland, director of legal policy at the conservative-leaning Manhattan Institute, states that "Trump clearly has an affinity for filing lawsuits, partly because he owns a lot of businesses" and has sometimes used litigation as a "bullying tactic".[5]Although Trump has said that he "never" settles legal claims, Trump and his businesses have settled with plaintiffs in at least 100 cases (mostly involving personal injury claims arising from injuries at Trump properties), with settlements ranging as high as hundreds of thousands of U.S. dollars[1]and recently as high as tens of millions of dollars.[7]Among the most well-known Trump legal cases was the Trump University litigation. Three legal actions were brought alleging fraud, one by the New York State Attorney General and the others by class action plaintiffs.[8]In November 2016, Trump agreed to pay $25 million to settle the litigation.[7]In 1985, New York City brought a lawsuit against Trump for allegedly using tactics to force out tenants of 100 Central Park South,[17]which he intended to demolish together with the building next door. After ten years in court, the two sides negotiated a deal allowing the building to stand as condominiums.[18]In 1988, the Justice Department sued Trump for violating procedures related to public notifications when buying voting stock in a company related to his attempted takeovers of Holiday Corporation and Bally Manufacturing Corporation in 1986. On April 5, 1988, Trump agreed to pay $750,000 to settle the civil penalties of the antitrust lawsuit.[19]In late 1990, Trump was sued for $2 million by a business analyst for defamation, and Trump settled out of court.[20]Briefly before Trump's Taj Mahal opened in April 1990, the analyst had said that the project would fail by the end of that year. Trump threatened to sue the analyst's firm unless the analyst recanted or was fired. The analyst refused to retract the statements, and his firm fired him for ostensibly unrelated reasons.[21]Trump Taj Mahal declared bankruptcy in November 1990, the first of several such bankruptcies.[22]After, the NYSE ordered the firm to compensate the analyst $750,000; the analyst did not release the details of his settlement with Trump.[23]In 1991, Trump sued the manufacturers of a helicopter that crashed in 1989, killing three executives of his New Jersey hotel casino business.[24]The helicopter fell 2,800 feet after the main four-blade rotor and tail rotor broke off the craft, killing Jonathan Benanav, an executive of Trump Plaza, and two others: Mark Grossinger Etess, president of Trump Taj Mahal, and Stephen F. Hyde, chief executive of the Atlantic City casinos.[25][26][27]One of the defendants was owned by the Italian government, providing a basis for removing it to federal court, where the case was dismissed. The U.S. Court of Appeals for the Third Circuit upheld the dismissal in 1992, and the Supreme Court denied Trump's petition to hear the case in the same year.[28]In 1991, Trump Plaza was fined $200,000 by the New Jersey Casino Control Commission for moving African American and female employees from craps tables in order to accommodate high roller Robert LiButti, a mob figure and alleged John Gotti associate, who was said to fly into fits of racist rage when he was on losing streaks.[29]There is no indication that Trump was ever questioned in that investigation, he was not held personally liable, and Trump denies even knowing what LiButti looked like.[29]In 1991, one of Trump's casinos in Atlantic City, New Jersey, was found guilty of circumventing state regulations about casino financing when Donald Trump's father bought $3.5 million in chips that he had no plans to gamble. Trump Castle was forced to pay a $30,000 fine under the settlement, according to New Jersey Division of Gaming Enforcement Director Jack Sweeney. Trump was not disciplined for the illegal advance on his inheritance, which was not confiscated.[30]In 1993, Donald Trump sued Jay Pritzker, a Chicago financier and Trump's business partner since 1979 on the Grand Hyatt hotel. Trump alleged that Pritzker overstated earnings in order to collect excessive management fees.[31]In 1994, Pritzker sued Trump for violating their agreement by, among other ways, failing to remain solvent.[32]The two parties ended the feud in 1995 in a sealed settlement, in which Trump retained some control of the hotel and Pritzker would receive reduced management fees and pay Trump's legal expenses.[33]In 1993, Vera Coking sued Trump and his demolition contractor for damage to her home during construction of the Trump Plaza Hotel and Casino.[34]In 1997, she dropped the suit against Trump and settled with his contractor for $90,000.[35]Coking had refused to sell her home to Trump and ultimately won a 1998 Supreme Court decision that prevented Atlantic City from using eminent domain to condemn her property.[36][37]In 1996, Trump was sued by more than 20 African-American residents of Indiana who charged that Trump reneged on promises to hire 70% of his work force from the minority community for his riverboat casino on Lake Michigan. The suit also charged that he hadn't honored his commitments to steer sufficient contracts to minority-owned businesses in Gary, Indiana. The suit was eventually dismissed due to procedural and jurisdiction issues.[38][39]In the late 1990s, Donald Trump and rival Atlantic City casino owner Stephen Wynn engaged in an extended legal conflict during the planning phase of new casinos Wynn had proposed to build. Both owners filed lawsuits against one another and other parties, including the State of New Jersey, beginning with Wynn's antitrust accusation against Trump.[40][41]After two years in court, Wynn's Mirage casino sued Trump in 1999 alleging that his company had engaged in a conspiracy to harm Mirage and steal proprietary information, primarily lists of wealthy Korean gamblers. In response, Trump's attorneys claimed that Trump's private investigator dishonored his contract by working as a "double agent" for the Mirage casino by secretly taping conversations with Trump. All the cases were settled at the same time on the planned day of an evidentiary hearing in court in February 2000, which was never held.[42]Personal and sexualIn 1992, Trump sued ex-wife Ivana Trump for not honoring a gag clause in their divorce agreement by disclosing facts about him in her best-selling book. Trump won the gag order.[43][44][45]The divorce was granted on grounds that Ivana claimed Donald Trump's treatment of her was "cruel and inhuman treatment".[46][47]Years later, Ivana said that she and Donald "are the best of friends".[48]A sexual assault claim from 1994 for child rape was filed against Trump on October 14, 2016,[49]a case that was dropped and refiled, remaining in suspension as of November 4, 2016.[50]In April 1997, Jill Harth Houraney filed a $125,000,000 lawsuit against Trump for sexual harassment in 1993, claiming he "'groped' her under her dress and told her he wanted to make her his 'sex slave'". Harth voluntarily withdrew the suit when her husband settled a parallel case. Trump has called the allegations "meritless".[51][52]Lawsuits 2000–2009[edit]In 2000, Donald Trump paid $250,000 to settle fines related to charges brought by New York State Lobbying Commission director David Grandeau. Trump was charged with circumventing state law to spend $150,000 lobbying against government approval of plans to construct an Indian-run casino in the Catskills, which would have diminished casino traffic to Trump's casinos in Atlantic City.[53][54]From 2000 on, Trump tried to partner with a German venture in building a "Trump Tower Europe" in Germany. The company founded for this, "TD Trump Deutschland AG" was dissolved in 2003, several lawsuits following in the years thereafter.[55]In 2001, the U.S. Securities and Exchange Commission brought a financial-reporting case against Trump Hotels & Casino Resorts Inc., alleging that the company had committed several "misleading statements in the company's third-quarter 1999 earnings release". Trump Hotels & Casino Resorts Inc. consented to the Commission's cease-and-desist order, said the culprit had been dismissed, and that Trump had personally been unaware of the matter.[56][57][58]Trump sued Leona Helmsley,[59]and Helmsley counter-sued Trump[60]due to contentions regarding ownership and operation of the Empire State Building. In 2002, Trump announced that he and his Japanese business partners, were selling the Empire State Building to partners of his rival Leona Helmsley.[61][62]In 2003, the city of Stuttgart denied TD Trump Deutschland AG, a Trump Organization subsidiary, the permission to build a planned tower due to questions over its financing. Trump Deutschland sued the city of Stuttgart, and lost. In 2004 Trump's German corporate partner brought suit against the Trump Organization for failure to pay back a EUR 200 million pre-payment as promised. In 2005, the German state attorney prosecuted Trump Deutschland and its partners for accounting fraud.[63][64][65]In 2004, Donald Trump sued Richard T. Fields in Broward County Circuit Court (in Florida); Fields was once Trump's business partner in the casino business, but had recently become a successful casino developer in Florida apart from Trump. Fields counter-sued Trump in Florida court. Trump alleged that Fields misled other parties into believing he still consulted for Trump, and Fields alleged improprieties in Trump's business.[66]The two businessmen agreed in 2008 to drop the lawsuits when Fields agreed to buy Trump Marina in Atlantic City, New Jersey, for $316 million,[67]but the deal was unsettled again in 2009 because Trump resigned his leadership of Trump Entertainment after Fields lowered his bid.[68]Fields never bought the company, which went into bankruptcy about the same time and was sold for $38 million.[69][70]Trump's lawsuit was dismissed after a hearing in 2010.[71]In 2004, the Trump Organization partnered with Bayrock Group on a $200 million hotel and condo project in Fort Lauderdale Beach, to be called Trump International Hotel & Tower. After proceeding for five years, real estate market devaluation stymied the project in 2009 and Trump dissolved his licensing deal, demanding that his name be removed from the building. Soon after this, the project defaulted on a $139 million loan in 2010.[72]Investors later sued the developers for fraud. Trump petitioned to have his name removed from the suit, saying he had only lent his name to the project. However his request was refused since he had participated in advertising for it.[73]The insolvent building project spawned over 10 lawsuits, some of which were still not settled in early 2016.[74]In 2006, the Town of Palm Beach began fining Trump $250 per day for ordinance violations related to his erection of an 80-foot-tall (24 m) flagpole flying a 15 by 25 feet (4.6 by 7.6 m) American flag on his property. Trump sued the town for $25 million, saying that they abridged his free speech, also disputing an ordinance that local businesses be "town-serving". The two parties settled as part of a court-ordered mediation, in which Trump was required to donate $100,000 to veterans' charities. At the same time, the town ordinance was modified allowing Trump to enroll out-of-town members in his Mar-a-Lago social club.[75]Trump International Hotel and Tower in ChicagoAfter the 2008 housing-market collapse, Deutsche Bank attempted to collect $40 million that Donald Trump personally guaranteed against their $640 million loan for Trump International Hotel and Tower in Chicago. Rather than paying the debt, Trump sued Deutsche Bank for $3 billion for undermining the project and damage to his reputation.[76]Deutsche Bank then filed suit to obtain the $40 million. The two parties settled in 2010 with Deutsche Bank extending the loan term by five years.[77]In 2008, Trump filed a $100 million lawsuit for alleged fraud and civil rights violations[78]against the California city of Rancho Palos Verdes, over thwarted luxury home development and expansion plans upon part of a landslide-prone golf course in the area, which was purchased by Trump in 2002 for $27 million.[78]Trump had previously sued a local school district over land leased from them in the re-branded Trump National Golf Club, and had further angered some local residents by renaming a thoroughfare after himself.[78]The $100 million suit was ultimately withdrawn in 2012 with Trump and the city agreeing to modified geological surveys and permit extensions for some 20 proposed luxury homes (in addition to 36 homes previously approved).[79][80]Trump ultimately opted for a permanent conservation easement instead of expanded housing development on the course's driving range.[81]In 2009, Donald Trump sued a law firm he had used, Morrison Cohen, for $5 million for mentioning his name and providing links to related news articles on its website. This lawsuit followed a lawsuit by Trump alleging overcharging by the law firm, and a countersuit by Morrison Cohen seeking unpaid legal fees.[82]The suit was dismissed in a 15-page ruling by Manhattan Supreme Court Justice Eileen Bransten, who ruled that the links to news articles concerned "matters of public interest."[83]In 2009, Trump was sued by investors who had made deposits for condos in the canceled Trump Ocean Resort Baja Mexico.[84]The investors said that Trump misrepresented his role in the project, stating after its failure that he had been little more than a spokesperson for the entire venture, disavowing any financial responsibility for the debacle.[85]Investors were informed that their investments would not be returned due to the cancellation of construction.[84]In 2013, Trump settled the lawsuit with more than one hundred prospective condo owners for an undisclosed amount.[86]Lawsuits 2010–presentConstruction and property law matters[edit]In 2011, Donald Trump sued Scotland, alleging that it built the Aberdeen Bay Wind Farm after assuring him it would not be built. He had recently built a golf course there and planned to build an adjacent hotel. Trump lost his suit, with the Supreme Court of the United Kingdom unanimously ruling in favor of the Scottish government in 2015.[87][88]In 2013, 87-year-old Jacqueline Goldberg alleged that Trump cheated her in a condominium sale by bait-and-switch when she was purchasing properties at the Trump International Hotel and Tower.[89]In 2015, Trump initiated a $100 million lawsuit against Palm Beach County claiming that officials, in a "deliberate and malicious" act, pressured the FAA to direct air traffic to the Palm Beach International Airport over his Mar-a-Lago estate, because he said the airplanes damaged the building and disrupted its ambiance.[90]Trump had previously sued the county twice over airport noise; the first lawsuit, in 1995, ended with an agreement between Trump and the county; Trump's second lawsuit, in 2010, was dismissed.[90]Trump is suing the town of Ossining, New York, over the property tax valuation on his 147-acre (59 ha) Trump National Golf Club Westchester, located in Briarcliff Manor's portion of the town, which Trump purchased for around $8 million at a foreclosure sale in the 1990s and to which he claimed, at the club's opening, to have added $45 million in facility improvements.[91]Although Trump stated in his 2015 FEC filing that the property was worth at least $50 million, his lawsuit seeks a $1.4 million valuation on the property, which includes a 75,000-square-foot clubhouse, five overnight suites, and permission to build 71 condominium units,[91]in an effort to shave $424,176 from his annual local property tax obligations.(91A) Trump had to pay nearly $300,000 in attorney’s fees in Doral painter’s lawsuit related to unpaid bills brought by a local paint store against the Trump National Doral Miami golf resort, ordered the billionaire politician’s company to pay the Doral-based mom-and-pop shop nearly $300,000 in attorney’s fees. All because, according to the lawsuit, Trump allegedly tried to stiff The Paint Spot on its last payment of $34,863 on a $200,000 contract for paint used in the renovation of the home of golf’s famed Blue Monster two years prior.[92]Trump filed the action after separately being sued by Briarcliff Manor for "intentional and illegal modifications" to a drainage system that caused more than $238,000 in damage to the village's library, public pool, and park facilities during a 2011 storm.[92]In October 2016, the Ontario Court of Appeal ruled that Trump, together with two principals of a connected developer, could be sued for various claims, including oppression, collusion and breach of fiduciary duties, in relation to his role in the marketing of units in the Trump International Hotel and Tower in Toronto, Canada.[93]A subsequent application for leave to appeal was dismissed by the Supreme Court of Canada in March 2017.[94]Also in October 2016, JCF Capital ULC (a private firm that had bought the construction loan on the building) announced that it was seeking court approval under the Bankruptcy and Insolvency Act to have the building sold in order to recoup its debt, which then totaled $301 million.[95]The court allowed for its auction[96]which took place in March 2017, but no bidders, apart from one stalking horse offer, took part.[97]Defamation mattersAlso in 2011, an appellate court upheld a New Jersey Superior Court judge's decision dismissing Trump's $5 billion defamation lawsuit against author Timothy L. O'Brien, who had reported in his book, TrumpNation: The Art of Being the Donald (2005), that Trump's true net worth was really between $150 and $250 million. Trump had reportedly told O'Brien he was worth billions and, in 2005, had publicly stated such.[98]Trump said that the author's alleged underestimation of his net worth was motivated by malice and had cost him business deals and damage to his reputation.[99]The appellate court, however, ruled against Trump, citing the consistency of O'Brien's three confidential sources.[100]In 2014, the former Miss Pennsylvania Sheena Monnin ultimately settled a $5 million arbitration judgment against her, having been sued by Trump after alleging that the Miss USA 2012 pageant results were rigged. Monnin wrote on her Facebook page that another contestant told her during a rehearsal that she had seen a list of the top five finalists, and when those names were called in their precise order, Monnin realized the pageant election process was suspect, compelling Monnin to resign her Miss Pennsylvania title. The Trump Organization's lawyer said that Monnin's allegations had cost the pageant a lucrative British Petroleum sponsorship deal and threatened to discourage women from entering Miss USA contests in the future.[101]According to Monnin, testimony from the Miss Universe Organization and Ernst & Young revealed that the top 15 finalists were selected by pageant directors regardless of preliminary judges' scores.[102]As part of the settlement, Monnin was not required to retract her original statements.[101]On January 17, 2017, Summer Zervos, represented by attorney Gloria Allred, filed a defamation suit against President-Elect Donald Trump for claiming that she had lied in her public sexual assault allegations against him.[103]Financial mattersIn July 2011, New York firm ALM Unlimited filed a lawsuit against Trump, who ended payments to the company in 2008 after nearly three years. ALM was hired in 2003 to seek offers from clothing companies for a Trump fashion line, and had arranged a meeting between Trump and PVH, which licensed the Trump name for dress shirts and neckwear. ALM, which had received over $300,000, alleged in the lawsuit that Trump's discontinuation of payments was against their initial agreement. In pre-trial depositions, Trump and two of his business officials – attorney George H. Ross and executive vice president of global licensing Cathy Glosser – gave contradictory statements regarding whether ALM was entitled to payments. Trump, who felt that ALM had only a limited role in the deal between him and PVH, said "I have thousands of checks that I sign a week, and I don't look at very many of the checks; and eventually I did look, and when I saw them (ALM) I stopped paying them because I knew it was a mistake or somebody made a mistake."[104]In January 2013, a judge ordered that the case go to trial, after Trump and ALM failed to settle the lawsuit.[105]During the trial in April 2013, Trump said that ALM's role in the PVH agreement was insubstantial, stating that Regis Philbin was the one who recommended PVH to him. Trump's attorney, Alan Garten, said ALM was not legally entitled to any money.[105][106][107]The judge ruled in favor of Trump later that month because a valid contract between him and ALM was never created.[107]Trump University litigationMain article: Trump University § Allegations of impropriety and lawsuitsIn 2013, in a lawsuit filed by New York Attorney General Eric Schneiderman, Trump was accused of defrauding more than 5,000 people of $40 million for the opportunity to learn Trump's real estate investment techniques in a for-profit training program, Trump University, which operated from 2005 to 2011.[108][109][110]Trump ultimately stopped using the term "University" following a 2010 order from New York regulators, who called Trump's use of the word "misleading and even illegal"; the state had previously warned Trump in 2005 to drop the term or not offer seminars in New York.[111][112][113]Although Trump has claimed a 98% approval rating on course evaluations, former students recounted high-pressure tactics from instructors seeking the highest possible ratings, including threats of withholding graduation certificates,[114]and more than 2,000 students had sought and received course refunds before the end of their paid seminars.[114]In a separate class action civil suit against Trump University in mid-February 2014, a San Diego federal judge allowed claimants in California, Florida, and New York to proceed;[115]a Trump counterclaim, alleging that the state Attorney General's investigation was accompanied by a campaign donation shakedown, was investigated by a New York ethics board and dismissed in August 2015.[116]Trump filed a $1 million defamation suit against former Trump University student Tarla Makaeff, who had spent about $37,000 on seminars, after she joined the class action lawsuit and publicized her classroom experiences on social media.[85]Trump University was later ordered by a U.S. District Judge in April 2015 to pay Makaeff and her lawyers $798,774.24 in legal fees and costs.[85][117]Breach of contract matters2013]In 2013 Trump sued comedian Bill Maher for $5 million for breach of contract.[118]Maher had appeared on The Tonight Show with Jay Leno and had offered to pay $5 million to a charity if Trump produced his birth certificate to prove that Trump's mother had not mated with an orangutan. This was said by Maher in response to Trump having previously challenged Obama to produce his birth certificate, and offering $5 million payable to a charity of Obama's choice, if Obama produced his college applications, transcripts, and passport records.[119][120]Trump produced his birth certificate and filed a lawsuit after Maher was not forthcoming, claiming that Maher's $5 million offer was legally binding. "I don't think he was joking," Trump said. "He said it with venom."[119]Trump withdrew his lawsuit against the comedian after eight weeks.[121]2014[edit]In 2014, model Alexia Palmer filed a civil suit against Trump Model Management for promising a $75,000 annual salary but paying only $3,380.75 for three years' work. Palmer, who came to the US at age 17 from Jamaica under the H-1B visa program in 2011,[122]claimed to be owed more than $200,000. Palmer contended that Trump Model Management charged, in addition to a management fee, "obscure expenses" from postage to limousine rides that consumed the remainder of her compensation. Palmer alleged that Trump Model Management promised to withhold only 20% of her net pay as agency expenses, but after charging her for those "obscure expenses", ended up taking 80%.[123]Trump attorney Alan Garten claimed the lawsuit is "bogus and completely frivolous".[124][125]Palmer filed a class-action lawsuit against the modeling agency with similar allegations.[126]The case was dismissed from U.S. federal court in March 2016, in part because Palmer's immigration status, via H1-B visa sponsored by Trump, required labor complaints to be filed through a separate process.[123][127]2015[edit]In 2015, Trump sued Univision, demanding $500 million for breach of contract and defamation when they dropped their planned broadcast of the Miss USA pageant. The network said that the decision was made because of Trump's "insulting remarks about Mexican immigrants".[128]Trump settled the lawsuit with Univision CEO Randy Falco out of court.[129]In July 2015, Trump filed a $10 million lawsuit in D.C. Superior Court for breach of contract against Spanish celebrity chef José Andrés, claiming that he backed out of a deal to open the flagship restaurant at Trump International Hotel in Washington, D.C.[130][131]Andrés replied that Trump's lawsuit was "both unsurprising and without merit"[132]and filed an $8 million counterclaim against a Trump Organization subsidiary.[131][133]Also in July 2015, Chef Geoffrey Zakarian also withdrew from the Washington, D.C., project with Andrés in the wake of Trump's comments on Mexican illegal immigrants, and is expected to lose his own $500,000 restaurant lease deposit as a result.[132]Trump denounced and then sued Zakarian in August 2015 for a sum "in excess of $10 million" for lost rent and other damages.[134]Trump's lawsuit called Zakarian's offense at his remarks "curious in light of the fact that Mr. Trump's publicly shared views on immigration have remained consistent for many years, and Mr. Trump's willingness to frankly share his opinions is widely known".[134][135]Disputes with both chefs were eventually settled in April 2017.[136]In 2015, restaurant workers at Trump SoHo filed a lawsuit that from 2009 to at least the time of the filing, gratuities added to customers' checks were illegally withheld from employees. The Trump Organization has responded that the dispute is between the employees and their employer, a third-party contractor. Donald Trump has been scheduled to testify in court on September 1, 2016.[137][138]2018[edit]In 2018, Noel Cintron, the personal driver for Donald Trump before he became the President of the United States, filed a lawsuit Cintron v Trump Organization LLC with the Supreme Court of the State of New York (Manhattan). The lawsuit claims that during his 25-year employment by Trump, he was not compensated for overtime and the second time his salary was raised he was induced to surrender his health insurance, an action which saved Trump approximately $17,866 per year.[139]The lawsuit seeks $178,200 of overtime back pay, plus $5,000 in penalties that are seen under the New York State Labor Law.[140]Assault claims[edit]In September 2015, five men who had demonstrated outside of a Trump presidential campaign event at Trump Tower in New York City sued Donald Trump, alleging that Trump's security staff punched one of them. They also allege that Trump's security guards had been advised by city police that they were permitted to protest there. Several people videotaped the incident.[141][142]In June 2015, the Culinary Workers Union filed charges with the National Labor Relations Board (NLRB), alleging that the owners of Trump Hotel Las Vegas "violated the federally protected rights of workers to participate in union activities" and engaged in "incidents of alleged physical assault, verbal abuse, intimidation, and threats by management".[143]In October 2015, the Trump Ruffin Commercial and Trump Ruffin Tower I, the owners of Trump Hotel Las Vegas, sued the Culinary Workers Union and another union, alleging that they had knowingly distributed flyers that falsely stated that Donald Trump had stayed at a rival unionized hotel, rather than his own non-unionized hotel, during a trip to Las Vegas.[5][143]Poll watching controversy[edit]On October 31, 2016, a New Jersey federal judge, John Michael Vazquez, ordered the Republican National Committee (RNC) to hand over all communications with the Trump campaign related to poll watching and voter fraud. He asked for testimony and documents relating to Kellyanne Conway, RNC officials Ronna Romney McDaniel of Michigan, and Rob Gleason from Pennsylvania.[144]It is claimed Gleason, McDaniel, and Roger Stone recruited poll watchers to check for voter fraud. The state Democratic parties of Nevada, Pennsylvania, Arizona, and Ohio filed lawsuits against Trump for encouraging illegal voter intimidation. The states' Democratic parties are also suing their respective Republican party counterparts, along with Roger Stone, who is allegedly recruiting poll watchers and organizing ballot security efforts in a number of states. Stone runs the group "Stop the Steal." It claims Trump supporters yelled at voters outside Las Vegas area polling places when they said they weren't voting for the Republican nominee, and that Stone is asking supporters to conduct an illegitimate "exit polling" initiative aimed at intimidating voters of color.Pat McDonald, the director of Cuyahoga County Board of Elections in Ohio, reported that "Trump supporters have already visited the county elections board identifying themselves as poll observers, even though they did not appear to be credentialed as poll observers as required under Ohio law." Election officials have expressed concern about "instability on Election Day," one lawsuit claims, and discussed the possibility of bringing police to polling sites to address conflicts. In Clark County of Nevada, a lawsuit claims: "A Trump supporter harassed and intimidated multiple voters outside of the Albertson's supermarket early voting location on Lake Mead Boulevard, repeatedly asking voters for whom they were voting, and then yelling at them belligerently and attempting to keep them from entering the voting location when they stated they were not voting for Donald Trump." When poll staffers told the Trump supporters to stop harassing voters, "the Trump supporter told poll workers that he had 'a right to say anything he wanted to the voters.'" Poll staffers called police, and the Trump supporter left. The lawsuit also claims similar incidents took place in neighboring Nye County as well. In Pennsylvania, Murrysville City Councilman Josh Lorenz supposedly posted instructions for the way Clinton supporters could vote online, even though there is no online voting in Pennsylvania. Eight registered electors, mostly from the Philadelphia area, challenged the portion of the state Election Code that prevents poll watchers from observing elections outside of the counties where they live.[145][146][147]In Pompano Beach, Florida, police asked two poll watchers to leave a polling site. Two precinct clerks were also fired for not adhering to policy and training. No arrests were made. No other incidents were reported in South Florida.[148][149]Nevada early voting Latino turnout controversy[edit]On November 8, 2016, Trump filed a lawsuit claiming early voting polling places in Clark County, Nevada, were kept open too late. These precincts had high turnout of Latino voters. Nevada state law explicitly states that polls are to stay open to accommodate eligible voters in line at closing time. Hillary Clinton campaign advisor Neera Tanden says the Trump campaign is trying to suppress Latino voter turnout. A political analyst from Nevada, Jon Ralston tweeted that the Trump lawsuit is "insane" in a state that clearly allows the polls to remains open until everyone in line has voted. Former Nevada Secretary of State Ross Miller, posted the statute that states "voting must continue until those voters have voted". Miller said: "If there are people in line waiting to vote at 7 pm, voting must continue until everyone votes.... We still live in America, right?"[150]A Nevada judge denied Trump's request to separate early voting ballots. Judge Gloria Sturman, of the District Court for Clark County Nevada, ruled that County Registrar of Voters Joe P. Gloria was already obligated by state law to maintain the records that the Trump campaign is seeking. Sturman said: "That is offensive to me because it seems to go against the very principle that a vote is secret."[151][152]Diana Orrock, the Republican National Committeewoman for Nevada and a vocal Trump ally, said she was unaware of the lawsuit before Politico contacted her. "I know that the [Clark County] registrar was on TV this morning saying that anybody who's in line was allowed to participate in the voting process until all of them came through," she said. "If that's what they did, I don't have a problem with that ... I don't know that filing a suit's going to accomplish anything." Orrock doubts the lawsuit will have any impact.[153]Lawsuit for inciting violence at March 2016 campaign rally[edit]During a campaign rally on March 1, 2016 in Louisville, Kentucky, Trump repeatedly said "get 'em out of here" while pointing at anti-Trump protesters as they were forcibly escorted out by his supporters. Three protesters say they were repeatedly shoved and punched while Trump pointed at them from the podium, citing widely shared video evidence of the events. They also cited previous statements by Trump about paying the legal bills of supporters who got violent, or suggesting a demonstrator deserved to be "roughed up."[154][155][156][157]The lawsuit accuses Donald Trump of inciting violence against protesters in Louisville, Kentucky. The plaintiffs are Kashiya Nwanguma (21), Molly Shah (36) and Henry Brousseau (17). The suit is against Trump, his campaign, and three Trump supporters (Matthew Heimbach, Alvin Bamberger and an unnamed defendant). One defendant, Bamburger, who was wearing a Veteran's uniform in the video, apologized to the Korean War Veterans Association immediately after the event, writing that he "physically pushed a young woman down the aisle toward the exit" after "Trump kept saying 'get them out, get them out."[154]Trump's attorneys requested to get the case dismissed, arguing he was protected by free speech laws, and wasn't trying to get his supporters to resort to violence.[156][158]They also stated that Trump had no duty to the protesters, and they had assumed the personal risk of injury by deciding to protest at the rally.[154]On Friday, April 1, 2017, Judge David J. Hale in Louisville ruled against the dismissal of a lawsuit, stating there was ample evidence to support that the injuries of the protesters were a "direct and proximate result" of Trump's words and actions. Hale wrote, "It is plausible that Trump's direction to 'get 'em out of here' advocated the use of force," and, "It was an order, an instruction, a command." Hale wrote that the Supreme Court has ruled out some protections for free speech when used to incite violence.[159]Defendant Heimbach requested to dismiss the discussion in the lawsuit about his association with a white nationalist group, and also requested to dismiss discussion of statements he made about how a President Trump would advance the interests of the group. The request was declined, with the judge saying the information could be important for determining punitive damages because they add context.[154]Hale also declined to remove the allegation that Plaintiff Nwanguma, who is African-American, was victim to ethnic, racial and sexist slurs at the rally from the crowd. The judge stated that this context may support claims by the plaintiffs' of incitement and negligence by Trump and the Trump campaign. The judge wrote, "While the words themselves are repulsive, they are relevant to show the atmosphere in which the alleged events occurred."[154]The judge stated that all people have a duty to use care to prevent foreseeable injury. "In sum, the Court finds that Plaintiffs have adequately alleged that their harm was foreseeable and that the Trump Defendants had a duty to prevent it." The case was referred a federal magistrate, Judge H. Brent Brennenstuhl, who will handle preliminary litigation, discovery and settlement efforts.[160]Heimbach filed a separate counterclaim in April 2017, arguing that Trump was "responsible for any injuries" he [Heimbach] "might have inflicted because Mr. Trump directed him and others to take action". Heimbach, "a self-employed landscaper", and a member of the Traditionalist Youth Network, "which advocates separate American 'ethno states', "spends much of his time" online writing "against Jews, gays and immigrants and urging whites to stand up for their race." He wrote his own lawsuit which requested that Trump pay Heimbach's "legal fees, citing a promise Mr. Trump made at an earlier rally to pay legal costs of anyone who removed protesters."[161]Heimbach's "counterclaim" against Trump has "probed the limits of free speech and public protest while confronting the courts with a unique legal argument".[161]On May 5, Trump's lawyers submitted legal filings that argue that Heimbach's "indemnity claim should be dismissed on the same grounds". According to a University of Virginia law professor, Leslie Kendrick, this indemnity or "impleader" case is "highly unusual."[161]New York University's Samuel Issacharoff, a professor of constitutional law, argued that care must be taken to not allow speech, in the "context of a political rally" to be "turned into something that is legally sanctionable."[161]Payments related to alleged affairs[edit]See also: Stormy Daniels–Donald Trump scandal and Karen McDougal § Alleged affair with Donald TrumpAdult film actress Stormy Daniels has alleged that she and Trump had an extramarital affair in 2006, months after the birth of his youngest child.[162]Just before the 2016 presidential election Daniels, whose real name is Stephanie Clifford, was paid $130,000 by Trump's attorney Michael Cohen as part of a non-disclosure agreement (NDA), through an LLC set up by Cohen; he says he used his own money for the payment.[163]In February 2018, Daniels filed suit against the LLC asking to be released from the agreement so that she can tell her story. Cohen filed a private arbitration proceeding and obtained a restraining order to keep her from discussing the case.[164]According to White House Press Secretary Sarah Huckabee Sanders, Trump has denied the allegations.[165]On March 6, 2018, Daniels sued Trump in California Superior Court, claiming among other things that the NDA never came into effect because Trump did not sign it personally.[166]On March 16 Cohen, with Trump's approval, asked for Daniels' suit to be moved from state to federal court, based on the criteria that the parties live in different places and the amount at stake is more than $75,000; Cohen asserted that Daniels could owe $20 million in liquidated damages for breaching the agreement.[167]The filing marked the first time that Trump himself, through his personal attorney, had taken part in the Daniels litigation.[168]In early April 2018, Trump said that he did not know about Cohen paying Daniels, why Cohen had made the payment or where Cohen got the money from.[169]On April 30, Daniels further sued Trump for defamation.[170]In May 2018, Trump's annual financial disclosure revealed that he reimbursed Cohen in 2017 for expenditures related to the Daniels case.[171]In August 2018, Cohen pleaded guilty to breaking campaign finance laws, admitting paying hush money of $130,000 and $150,000 "at the direction of a candidate for federal office", to two women who alleged affairs with that candidate, "with the purpose of influencing the election". The figures match sums of payments made to Stormy Daniels and Playboy model Karen McDougal.[172][173]American Media, Inc. had reportedly in 2016 bought for $150,000 the rights to a story by McDougal alleging an affair with a married Trump from 2006 which lasted between nine months to a year.[174][175][176]David Pecker (AMI CEO/Chairman and friend of Trump), Dylan Howard (AMI chief content officer) and Allen Weisselberg (chief financial officer of The Trump Organization) were reportedly granted witness immunity in exchange for their testimony regarding the illegal payments.[177][178]In response, Trump said that he only knew about the payments "later on"; Trump also said regarding the payments: "They didn't come out of the campaign, they came from me."[179]The Wall Street Journal reported on November 9, 2018 that federal prosecutors have evidence of Trump’s "central role" in payments to Stormy Daniels and Karen McDougal that violated campaign-finance laws.[180][181]Special Counsel investigation[edit]Main article: Special Counsel investigation (2017–present)The Special Counsel investigation is a United States law enforcement investigation of Donald Trump's 2016 presidential campaign and any Russian (or other foreign) interference in the election, including exploring any possible links or coordination between Trump's campaign and the Russian government, "and any matters that arose or may arise directly from the investigation."[182]Since May 2017, the investigation has been led by a United States Special Counsel, Robert Mueller, a former Director of the Federal Bureau of Investigation(FBI). Mueller's investigation took over several FBI investigations including those involving former campaign chairman Paul Manafort and former National Security Advisor Michael Flynn.It has been noted that Trump has experienced a high turnover with respect to the attorneys handling this matter, as well as a large number of prominent lawyers and law firms publicly declining offers to join Trump's legal team.[183][184]Attorneys known to have been approached include Robert S. Bennett of Hogan Lovells,[185]Paul Clement and Mark Filip, both with Kirkland & Ellis,[186][186]Robert Giuffra Jr. of Sullivan & Cromwell,[185]Theodore B. Olson of Gibson, Dunn & Crutcher,[187]and Brendan V. Sullivan Jr. of Williams & Connolly.[186]Other firms with attorneys who have decided not to represent Trump include Quinn Emanuel Urquhart & Sullivan,[188]Steptoe & Johnson,[188]and Winston & Strawn.[citation needed]Former U.S. Attorney Joseph diGenova and his wife Victoria Toensing were briefly slated to join Trump's legal team, but withdrew their services from Trump in March 2018, citing conflicts of interest.[189]In an article describing the "unique circumstance" of Rudy Giuliani's unpaid leave of absence from Greenberg Traurig while representing Trump, possibly because of "potential conflicts", Christine Simmons said some other law firms may have turned down representing Trump in the Russia case due to "public relations headaches or business and recruitment concerns".[190]Trump has called such views a "Fake News narrative".[191][192]In a National Law Journal article, Ryan Lovelace described how white-collar lawyers must weigh the "risks" and "stigma" of joining the Trump team. He quoted a prominent defense attorney's concerns about "the constant shuffle of attorneys in and out of the president's legal team", and the possibility that an attorney could invest resources and reputation in such representation "only to find yourself on the sidelines a short time later because the president saw someone he liked better on Fox News".[192]The quoted attorney also noted "a stigma to being linked to this president" that might impact business with other clients.[192]A list of other reasons for not wanting to represent Trump is provided by Jill Abramson for The Guardian:The problem for the white-collar defense bar's crème de la crème is that Donald Trump is so blatantly the client from hell. He won't listen. He won't obey instructions. He is headstrong. He is a bully. Sometimes, he doesn't pay his bills. Most of all, it's possible that he isn't capable of discerning fact from fiction. This last foible could get any lawyer who represents him into very deep legal hot water. No one wants to get disbarred for the fame and fortune of representing President Trump. Then there's the justifiable concern over all the unforced legal errors that the defense side, led by Trump himself, has already committed.[193]An Above the Law article states that some law firms have refused to represent the President of the United States because "Donald Trump has somehow turned POTUS into a dog of a client self-respecting lawyers do not want to touch", expressing concern that "[i]f all the good attorneys — the ones with reputations to preserve and ethics to uphold — refuse to represent the president, what's left are the 'bad' attorneys. The ones who don't have the slightest idea what a moral and ethical principle is".[194]Allegations of business links to organized crime[edit]Journalists David Cay Johnston and Wayne Barrett, the latter of whom wrote an unauthorized 1992 Trump biography, have claimed that Trump and his companies did business with New York and Philadelphia families linked to the Italian-American Mafia.[195][196]A reporter for The Washington Post writes, "he was never accused of illegality, and observers of the time say that working with the mob-related figures and politicos came with the territory."[197]Trump helped a financier for the Scarfo family get a casino license, and constructed a casino using firms controlled by Nicodemo Scarfo.[198]Trump also bought real estate from Philadelphia crime family member Salvatore Testa, and bought concrete from companies associated with the Genovese crime family and the Gambino crime family.[195][196][197]Trump Plaza paid a $450,000 fine leveled by the Casino Gaming Commission for giving $1.6 million in rare automobiles to Robert LiButti, the acquaintance of John Gotti already mentioned.[29]Starting in 2003, the Trump Organization worked with Felix Sater, who had a 1998 racketeering conviction for a $40 million Mafia-linked stock fraud scheme, and who had then become an informant against the mafia.[199]Trump's attorney has said that Sater worked with Trump scouting real estate opportunities, but was never formally employed.[200]Use of bankruptcy laws[edit]Trump has never filed for personal bankruptcy, but hotel and casino businesses of his have been declared bankrupt four times between 1991 and 2009 to re-negotiate debt with banks and owners of stock and bonds.[201][202]Because the businesses used Chapter 11 bankruptcy, they were allowed to operate while negotiations proceeded. Trump was quoted by Newsweek in 2011 saying, "I do play with the bankruptcy laws – they're very good for me" as a tool for trimming debt.[82][203]According to a report by Forbes in 2011, the four bankruptcies were the result of over-leveraged hotel and casino businesses in Atlantic City: Trump's Taj Mahal (1991), Trump Plaza Hotel (1992), Trump Hotels and Casino Resorts (2004), and Trump Entertainment Resorts (2009).[204][205]Trump said "I've used the laws of this country to pare debt.... We'll have the company. We'll throw it into a chapter. We'll negotiate with the banks. We'll make a fantastic deal. You know, it's like on The Apprentice. It's not personal. It's just business."[206]He indicated that many "great entrepreneurs" do the same.[204]1991[edit]In 1991, Trump Taj Mahal was unable to service its debt and filed Chapter 11 bankruptcy.[206]Forbes indicated that this first bankruptcy was the only one where Trump's personal financial resources were involved. Time, however, maintains that $72 million of his personal money was also involved in a later 2004 bankruptcy.[207]1992[edit]On November 2, 1992, the Trump Plaza Hotel filed Chapter 11 bankruptcy, and Trump lost his 49 percent stake in the luxury hotel to Citibank and five other lenders.[208]In return Trump received more favorable terms on the remaining $550+ million owed to the lenders, and retain his position as chief executive, though he would not be paid and would not have a role in day-to-day operations.[209]1994[edit]Trump Plaza Hotel and Casinoclosed in 2014By 1994, Trump had eliminated a large portion of his $900 million personal debt through sales of his Trump Taj Mahal and Trump Plazaassets,[210]and significantly reduced his nearly $3.5 billion in business debt. Although he lost the Trump Princess yacht and the Trump Shuttle (which he had bought in 1989), he did retain Trump Tower in New York City and control of three casinos in Atlantic City, including Trump's Castle. Trump sold his ownership of West Side Yards (now Riverside South, Manhattan) to Chinese developers including Hong Kong's New World Development, receiving a premium price in exchange for the use and display of the name "Trump" on the buildings.[211]2004[edit]Donald Trump's third corporate bankruptcy was on October 21, 2004, involving Trump Hotels & Casino Resorts, the publicly-traded holding company for his three Atlantic City casinos and some others.[212]Trump lost over half of his 56% ownership and gave bondholders stock in exchange for surrendering part of the debt. No longer CEO, Trump retained a role as chairman of the board. In May 2005[213]the company emerged from bankruptcy as Trump Entertainment Resorts Holdings.[214]In his 2007 book, Think BIG and Kick Ass in Business and Life, Trump wrote: "I figured it was the bank's problem, not mine. What the hell did I care? I actually told one bank, 'I told you you shouldn't have loaned me that money. I told you the goddamn deal was no good.'"[215]2009[edit]Trump's fourth corporate bankruptcy occurred in 2009, when Trump and his daughter Ivanka resigned from the board of Trump Entertainment Resorts; four days later the company, which owed investors $1.74 billion against its $2.06 billion of assets, filed for Chapter 11 bankruptcy. At that time, Trump Entertainment Resorts had three properties in Atlantic City: Trump Taj Mahal, Trump Plaza Hotel and Casino (closed in 2014), and Trump Marina (formerly Trump's Castle, sold in 2011). Trump and some investors bought the company back that same year for $225 million. As part of the agreement, Trump withdrew a $100 million lawsuit he had filed against the casino's owners alleging damage to the Trump brand. Trump re-negotiated the debt, reducing by over $1 billion the repayments required to bondholders.[216][217]In 2014, Trump sued his former company to remove his name from the buildings since he no longer ran the company, having no more than a 10% stake; he lost the suit.[218]Trump Entertainment Resorts filed again for bankruptcy in 2014[219]and was purchased by billionaire philanthropist Carl Icahn in 2016, who acquired Trump Taj Mahal in the deal.[220]Campaign contributions[edit]According to a New York state report, Trump circumvented corporate and personal campaign donation limits in the 1980s – although he did not break any laws – by donating money to candidates from 18 different business subsidiaries, rather than giving primarily in his own name.[197][221]Trump told investigators he did so on the advice of his lawyers. He also said the contributions were not to curry favor with business-friendly candidates, but simply to satisfy requests from friends.[197][222]Donald J. Trump Foundation[edit]During the 2016 U.S. presidential election, media began reporting in detail on how the Donald J. Trump Foundation was funded and how Donald Trump used its funds. The Washington Post in particular reported several cases of possible mis-use, self-dealing and possible tax evasion.[18] [19] [20]Regarding the various irregularities in the Trump Foundation, former head of the Internal Revenue Service's Office of Exempt Organizations Division Marc Owens told The Washington Post: "This is so bizarre, this laundry list of issues.... It's the first time I've ever seen this, and I've been doing this for 25 years in the IRS, and 40 years total.[21]When interviewed for the Post's article, Trump spokesperson Boris Epshtein said that Trump did not knowingly violate any tax laws.[18]The office of New York State Attorney General Eric Schneiderman investigated the foundation "to make sure it's complying with the laws governing charities in New York."[22]Controversy over tax returns[edit]In October 2016, The New York Times published some tax documents from 1995. These documents indicate that Trump might have evaded paying taxes on as much as 916 million dollars in income at one time. Trump likely gave some of his creditors shares of his failing businesses to avoid taxes on hundreds of millions of dollars he was given in debt relief, which is illegal. Legal scholar Edward Kleinbard of the University of Southern California believes Trump forged tax documents. Trump claimed on his tax returns that he lost money, but did not recognize it in the form of canceled debts. He likely avoided paying 425 million dollars in taxes, says Steven M. Rosenthal, an attorney at the Tax Policy Center. Rosenthal claims he "borrowed other people's money and spent it in spectacular fashion." Trump might have performed a stock-for-debt swap. This would have allowed Trump to avoid paying income taxes for at least 18 years. An audit of Trump's tax returns for 2002 through 2008 was "closed administratively by agreement with the I.R.S. without assessment or payment, on a net basis, of any deficiency." Tax attorneys believe the government may have reduced what Trump was able to claim as a loss without requiring him to pay any additional taxes.[223][224]It is unknown whether the I.R.S. challenged Trump's use of the swaps because he has not released his tax returns. Trump's lawyers advised against Trump using the equity for debt swap, as they believed it to be potentially illegal.[225]Marc Kasowitz, name partner of the Kasowitz, Benson, Torres & Friedman firm, wrote a letter threatening The New York Times over publication of the 1995 documents. Kasowitz's action drew attention to the fact that the biglaw firm had done extensive legal work for Donald Trump and his businesses since at least 2001 including also bankrupt casino restructuring.[226]In early 2017, firm member and former Connecticut Senator Joe Lieberman introduced Pres.-elect Trump's nominee for Secretary of Education Betsy DeVos to the Senate Health, Education, Labor and Pension committee.[227]Destruction of documents[edit]In June 2016, a USA Today article reported that Donald Trump and his companies have been deleting emails and other documents on a large scale,[228]including evidence in lawsuits, sometimes in defiance of court orders and under subpoena since as early as 1973.[229][230][231]In October 2016, Kurt Eichenwald published new research findings in Newsweek. The findings were first published by Paul Singer[232]on June 13, 2016[233]and gained larger attention[234][235]after a new report in Newsweek on October 31, 2016. According to Newsweek, Trump and his companies "hid or destroyed thousands of documents" involving several court cases from as early as 1973."Over the course of decades, Donald Trump's companies have systematically destroyed or hidden thousands of emails, digital records and paper documents demanded in official proceedings, often in defiance of court orders.... In each instance, Trump and entities he controlled also erected numerous hurdles that made lawsuits drag on for years, forcing courtroom opponents to spend huge sums of money in legal fees as they struggled—sometimes in vain—to obtain records."— Kurt Eichenwald, Donald Trump's Companies Destroyed Emails in Defiance of Court Orders Newsweek, October 31, 2016In 1973 Trump, his father and their company were in court for civil charges for refusing to rent apartments to African Americans. After their lawyers had delayed court requests for documents for several months, Trump, then being under subpoena, said his company had destroyed corporate records of the past six months "for saving space". In a court case beginning in 2005 against Power Plant Entertainment, LLC, an affiliate of real estate developer Cordish Cos., it was revealed that Trump's companies had deleted the data requested by court.[236]Cordish Cos. had built two American Indian[237]casinos in Florida under the Hard Rock brand and Donald Trump accused them of cheating him out of that deal. Nonetheless, Trump's lawyers had refused to instruct workers to keep all records related to the case during litigation.[229]Trump had established a procedure to delete all data from their employees' computers every year at least since 2003,[234]despite knowing at least since 2001 that he might want to file a lawsuit. Even after the lawsuit was filed, Trump Hotelsdisposed of a computer of a key witness without having made a backup of the data. A former general counsel of the Trump casino unit confirmed that all data were deleted from nearly all companies' computers annually. Trump and his lawyers claimed they were not keeping records and digital data although it was revealed that Trump had launched his own high-speed internet provider in 1998 and an IBM Domino server had been installed for emails and digital files in 1999.[229][235]

Ireland is a common law jurisdiction in which the courts are bound by the decisions of superior courts in the court structure.2Almost 227,000 civil law cases were commenced in the Irish courts during 2018, while some 178,000 were resolved in that time.3Commercial disputes are predominantly dealt with in the Irish High Court. A party bringing a claim in respect of a commercial contract should be aware that a limitation period of six years applies from the date of breach (or 12 years if the contract is executed under seal).4The Commercial Court (a division of the High Court) judicially manages commercial disputes with a monetary value in excess of €1 million. Since the introduction of the Commercial Court in 2004, Ireland has been a forum of choice for commercial disputes and is recognised internationally as an efficient platform for the determination of substantial commercial disputes with approximately 90 per cent of cases decided within one year.Although the courts remain the ultimate forum for the resolution of commercial disputes, there is a growing trend towards the use of alternative dispute resolution (ADR), in particular mediation and arbitration. The recently enacted Mediation Act 2017 regulates and promotes the settlement of disputes by way of mediation.II CONTRACT FORMATIONIn Ireland, there are four prerequisites that must be satisfied before a contract comes into being: offer, acceptance, consideration and an intention to create legal relations. Other factors that the courts will look at before enforcing a contract include the terms of the contract, the capacity and authority of the parties and whether the contract is illegal or contrary to public policy.Generally, commercial contracts are in writing; however, the Irish courts also recognise oral contracts. In certain circumstances, statute requires contracts to be performed in a specific format: in the form of a deed in writing or evidenced in writing. By way of example, the Land and Conveyancing Law Reform Act 2009 requires commercial contracts transferring an interest or right in property be executed as a deed. The introduction of the Electronic Commerce Act 2000 allows for contracts to be formed via email and also allows for e-signatures.i OfferAn offer to contract, whether oral or written, must be unequivocal, unconditional, and express all terms and conditions. An offer expires on acceptance, the making of a counter-offer or rejection.ii Acceptance or intention to create legal relationsAs acceptance of an offer constitutes the creation of legal relations, parties to commercial contracts often include expressions such as 'subject to contract', 'agreement in principal', 'provisional agreement' or 'non-binding heads of terms' during negotiations to distance themselves from this. In commercial contracts, it is presumed that the parties intend to create legally binding contracts unless otherwise stated.An issue can arise in trading relations known as 'battle of the forms', with each party trying to incorporate its own terms and conditions into the contract. Disputes can arise as to whether the terms and conditions have been accepted by both parties or whether they constitute no more than a counter-offer.In resolving disputes relating to battle of the forms, two approaches can be taken:there is no agreement between the parties as the offer has not been accepted; andthere is an agreement whereby the terms of the last form apply.The Supreme Court5has held that a party cannot be bound by terms and conditions that are not contained in a signed contractual document or by terms and conditions that have not been provided to a party. Significantly, the Supreme Court also held that including a reference in a contractual document to terms and conditions being 'available on request' was not sufficient for such terms to be incorporated into the contract.iii ConsiderationWhere an offer is accepted and sufficient consideration has passed between the parties, a contract will be deemed to be in existence. Consideration can take any form once it has legal value and is not illegal, vague or impossible to perform. However, consideration in commercial contracts generally takes the form of payment.iv ProofThe creation of legal relations can be delayed or denied by the input of conditions precedent and conditions subsequent.Conditions precedent suspend the coming into existence of a contract until a specific event has occurred. Examples include the renewal of leases, the production of documents or obtaining the relevant consents from a regulatory authority.Conditions subsequent arise after a contract has been executed, but the contract is not enforceable until a specific event has occurred.v Privity of contractThe effect of the doctrine of privity of contract is that only the parties to a contract can enforce its terms, even where a third party stands to benefit from the contract. Specifically, this means that:a person is unable to enforce any rights under a contract to which such a person is not a party;a person who is not a party to a contract will not have any contractual liabilities imposed on them; andcontractual remedies are only available to compensate parties to a contract and not third parties.Certain exceptions to the rule have developed over time, to include agency, collateral contracts and assignments.In 2008, the Law Reform Commission published a final report recommending reform in this area with the introduction of the Contract Law (Privity of Contract and Third Party Rights) Bill 2008. The Bill is similar to the United Kingdom's Contract (Rights of Third Parties) Act 1999 and provides for three instances where a third party should be entitled to enforce a contract:where the intention of the parties was to give the third party a right to enforce;where the contract expressly states that the third party has a right of enforcement; andwhere the contract permits a third party to rely on exclusions or limitations on liability.However, 10 years on from the Law Reform Commissions' recommendation, the Bill has yet to be proposed by the government.vi Modifications to contractsIn certain circumstances, modifications to contracts are necessary (e.g., to extend the contract's duration or to change terms such as payment, delivery or receipt of the product). Commercial contracts normally contain a variation clause that restricts amendments to the contract unless it is in writing and signed by all parties. The English Court of Appeal had found that parties were free to agree to vary the terms of a contract orally or by conduct and not solely by writing as per the variation clause included in the contract.6However, most recently the UK Supreme Court declined to give effect to an oral modification to a contract and held that any amendments should be agreed in accordance with the terms of the terms of the contract.7It was unanimously accepted that there was a limit on enforcement of variation clauses in certain circumstances, albeit that 'something more' would be required than reliance on an informal, oral promise. While this ambiguity allows future courts to consider the matter on a case by case basis, it remains to be seen whether this decision will be followed by the Irish courts.III CONTRACT INTERPRETATIONi Governing law principlesGenerally, parties will include a governing law clause in their contracts. If not, if both parties are resident in Ireland, the governing law of the contract is Ireland, but may be changed with the consent of both parties.However, disputes often arise where one party is not resident in Ireland. Where there is an express absence of a choice of law provision, the European Union regulation (EC) 593/2008 of June 2008 (Rome I) applies to contracts entered into on or after 17 December 2009.8The governing law, according to Rome I, is the law of the country where the party who is to perform the contract has its habitual residence or its central administration. Rome I applies where one of the parties is Irish resident, regardless of where in the world the other party is resident.ii InterpretationIrish case law stresses that contract interpretation involves broad principles rather than strict rules. The test is an objective one and the classic approach is to construe the plain and ordinary meaning of the words contained in it. However, recent case law suggests that the courts will not only look at the plain and ordinary meaning of the words (textualism) but will also look at the factual matrix and the circumstances in which the contract was drafted (contextualism), particularly where contracts are ambiguous.9The UK Supreme Court has recently confirmed that textualism and contextualism are not conflicting paradigms and should both be used as tools where appropriate in the circumstances of a particular contract to ascertain the objective meaning of the language used in the contract.10Parol evidence may be admissible to explain the subject matter and construction or correct a mistake in commercial contracts. It will not, however, be used to explain or prove the validity of a contract.The contra proferentem rule provides that where a contractual clause is ambiguous, it should be construed strictly against the party who provided the wording. The Supreme Court recently stressed that there must be an element of ambiguity in respect of the relevant clause for the rule to apply.11iii Implied termsWhere a contract lacks any of the essential requirements such as offer, acceptance, consideration and intention to create legal relations, the courts, having regard to the overall context of the agreement, may imply terms into the contract. Implied terms are provided for by case law and certain statutes, such as the Sale of Goods Acts 1893–1980.In a recent Court of Appeal decision, the court held that in implying terms into a commercial contract, the terms must:be necessary to give business efficacy;be so obvious that it is implied; andgive effect to the parties intentions.12This followed on from an earlier decision where the court found that an agreement was so imprecise and lacking in substance it fell short of business efficacy.13IV DISPUTE RESOLUTIONi ThresholdsWhen parties decide to litigate contractual disputes, they will typically commence proceedings in the High Court, which has jurisdiction to hear claims with a monetary value in excess of €75,000.14The Commercial Court is a division of the High Court and is a specialised court that deals with commercial disputes with a monetary value in excess of €1 million. The Commercial Court is designed to provide an efficient and effective mechanism through close case management for dealing with commercial litigation cases.ii JurisdictionIrish courts will generally uphold an exclusive jurisdiction clause, where the clause is valid and has been freely entered into, unless there are compelling circumstances to the contrary. Ireland is bound by Article 25 of the Brussels I Recast Regulation15and by the Hague Choice of Forum Convention implemented by the Choice of Court (Hague Convention) Act 2015. Exclusive jurisdiction clauses are generally also enforced at common law.iii ArbitrationArbitration clauses have become commonplace in commercial contracts. Irish arbitrations continue to be governed by the Arbitration Act 2010 (the 2010 Act), which applies Option 1 of Article 7 of the UNCITRAL Model Law to the requirements of a valid arbitration agreement. The 2010 Act strengthens the effectiveness of the arbitral mechanism by restricting the basis for appealing awards and decisions and reduces the potential for court intervention.16Once the arbitrator has been appointed and the parties have agreed to refer their dispute for the arbitrator's decision, their decision is binding on the parties involved. The main legal requirement for a valid clause or agreement is that it is in writing, and this requirement is interpreted broadly. As a result, electronic communications can satisfy this requirement. Arbitration is extensively used for commercial contracts disputes, particularly in the fields of construction, insurance and holding contracts.Thee Irish courts are very supportive of arbitration agreements. Under the 2010 Act, the possibility of appeal is limited (for instance, Article 34 of the 2010 Act sets out the very limited circumstances where a court can set aside an award) and the courts have displayed a strong policy of staying court proceedings in favour of agreements to arbitrate.iv MediationEqually significant in terms of ADR is the recent enactment of the Mediation Act 2017 (the 2017 Act), which came into effect on 1 January 2018. Of particular importance for practitioners is the introduction of an obligation to advise clients to consider mediation as an alternative to court proceedings. Should a client elect not to proceed to mediation before litigating, a solicitor must give a statutory declaration confirming that the client has been advised as to the option of mediation.Where parties elect to go to mediation, they will usually sign an agreement to mediate, which appoints the mediator and sets out the agreed framework for the mediation. Signing this agreement effectively stops the clock for bringing claims under the statute of limitations until 30 days after termination of the mediation.17As the 2017 Act only came into force at the beginning 2018, it remains to be seen whether it will lead to an increase in mediation and a reduction in litigation. Of note is that very little difference was seen in the number of civil claims commenced before the Irish courts in 2018, as compared to 201718 (some 228,000 in 2017 as opposed to 226,000 in 2018). A comparison of the 2018 and 2019 figures (when available), may be telling in this regard.V BREACH OF CONTRACT CLAIMSi Breach of contractA breach of a contract may occur if a party fails to perform as agreed, does something that it has agreed not to do, or if either party has prevented further performance of its obligations under the contract without legal excuse. The level of liability resulting from a breach of contract normally depends on the consequences of the breach.ii Proof of breachIn order to permit recovery of damages from a defendant or equitable relief for breach of contract, three basic elements of the claim must be proven:the existence of a legally enforceable contract between the claimant and the defendant;a failure by the defendant to adhere to the requirements, terms and conditions of the contract; andthe suffering of a loss by the plaintiff a result of the non-adherence.The main element of a breach of contract cause of action is the non-fulfilment of one or more of the defendants' obligations under the legally enforceable contract. This may occur through an action or an omission.Whether a particular act or omission constitutes a breach and the entitlements flowing therefrom will depend on the terms of the contract and the nature of the obligations arising thereunder. The materiality of the breach will depend on the individual contract, with some contracts applying an obligation to exercise due care and skill and others a standard of absolute or strict liability.iii Specific performanceAn order of specific performance is an equitable remedy to a breach of contract and compels a party to perform its obligations under the contract. As specific performance is based on the duty to perform a contract, a prior breach of contract is not required as a prerequisite to an order. Failure to obey an order for specific performance can result in the offending party being in contempt of court.An order for specific performance is at the discretion of the court to grant it. Examples of where an order will not be granted include:where damages are an adequate remedy;contracts that require ongoing supervision; andopen contracts.It is important that a plaintiff considers whether an order for specific performance is appropriate to a particular contract as compelling performance from an unwilling counterparty may increase the risk of defective performance. Additionally, where an order is not granted, damages may be awarded against the party seeking relief.iv Right to terminate in the event of a breachA breach of an innominate or intermediate term does not automatically entitle the innocent party to terminate the contract.A right to terminate arises where there has been:a fundamental breach – a breach so serious that it terminates the rights and obligations of the innocent party;a repudiatory breach – a breach so serious it terminates the contract immediately;19 anda statutory breach – a breach provided for under statute.In order to rely on a statutory breach, any preconditions set in statute must be complied with. An example of this is the Sale of Goods Act 1893, which imports terms relating to title, description and merchantability into commercial contracts.The most common form of breach in commercial contracts arises where there has been a fundamental breach, a principle that was developed by the courts with a view to limiting the operation of exemption clauses, the rationale being that no party could exclude or restrict his or her liability for such a breach.VI DEFENCES TO ENFORCEMENTParties to commercial contracts continuously try to find ways to circumvent contractual obligations. The legal arguments advanced are broad and vary from arguments that no contract was formed to doctrines of impossibility or impractically. Common defences to enforcement include the following.i Duress or undue influenceAs agreements are based on consent, an agreement that is reached as a result of threats or undue influence (usually by the counterparty) is liable to be set aside. This argument has arisen in a number of cases involving the enforcement of guarantees. The principles in relation to what measures a bank should take in cases of undue influence previously outlined by the High Court20 are only relevant where actual undue influence has arisen. In a 2016 Court of Appeal decision,21 the court found that key factor for the court to consider in determining whether undue influence has occurred is whether the guarantor in question had any material interest or involvement in the business or derived a commercial benefit therefrom. In the High Court in 2018, in the case of Barry v. Ennis Property Finance DAC and Others, the court set out a useful list of the type of questions which claimants should address when seeking to establish whether undue influence has taken place, including the commercial experience possessed by the claimant, the relationship that it is alleged gave rise to the undue influence and the nature of the events which led to this influence being alleged.22ii Duty to ensure independent legal adviceAs an ancillary argument to undue influence, parties to finance agreements frequently argue that lenders are under an obligation to ensure that they receive independent legal advice. The argument was recently considered by the Court of Appeal in a case that involved a father who guaranteed the debts of his son who subsequently defaulted and was subject to enforcement proceedings.23 The father argued that there was an arguable defence to the claim against him under the guarantee as the creditor had been on notice of the familial relationship between him and the debtor and the creditor was under a duty to ensure that he got independent legal advice. He had received advice from his son's solicitor in this case, and not a separate solicitor. The court found that in circumstances where no evidence was presented by the guarantor to support an argument that he had been subject to undue influence, there was no positive duty on the lender to ensure that he obtained independent legal advice or otherwise ensured that he had freely entered into the guarantee.iii Public policy and illegalityContracts that are contrary to public policy are unenforceable. The Supreme Court24 has recently confirmed the modern criteria that the court will consider when deciding whether or not to enforce contracts tainted with a degree of illegality by virtue of statutory breaches.25 Members of the Quinn family and companies within the Quinn group had given guarantees in respect of loans by Irish Bank Resolution Corporation (IBRC) to other companies within the same group. The Quinn family argued that they should not be liable for the guarantees on the loans because of regulatory and statutory breaches on the part of IBRC. The court noted that in certain cases a finding of illegality may result in an unjust windfall for a party. The court considered whether or not the public policy aspect of an illegal activity should automatically render a contract unenforceable. In this instance, it was held that the contracts in question were enforceable notwithstanding issues of illegality affecting them.iv Force majeure clauseForce majeure clauses exist to exclude liability where exceptional, unforeseen events beyond a party's control prevent the performance of its obligations. As there is no doctrine of force majeure in Irish law, it is at the contractual parties' discretion whether they wish to rely upon force majeure and can do so by inserting a provision in their contract.v FrustrationThe Supreme Court has held that frustration arises where a supervening event occurs without the default of either party, and for which the contract makes no provision.26 The event must so significantly change the nature of the outstanding contractual rights and obligations from what the parties could reasonably have contemplated, so as to make holding them to its stipulations unjust.Frustration takes place only after a contract has been entered into, and means that the contract ceases to have effect from a particular date onwards. As such, it discharges an otherwise valid contract.VII FRAUD, MISREPRESENTATION AND OTHER CLAIMSi MisrepresentationMisrepresentation claims are common in Ireland, particularly in relation to commercial contracts in the financial services industry. Much of the recent case law on this topic arises in the context of mis-selling of financial products, mismanagement of investment funds and allegations of reckless lending.In order to be actionable, a misrepresentation must be a false statement of fact, not of opinion or future intention or law. A misrepresentation may be fraudulent, negligent or innocent. The plaintiff will not succeed unless he or she can show that the misrepresentation was made with the object and had the result of inducing him or her to enter the contract.A fraudulent misrepresentation is established where it is found:that a party has made a representation knowing that it is not true or with reckless indifference as to whether it is true or not; anda counterparty relies on such representation in deciding to enter into a contract.Notwithstanding carefully drafted contracts, it is not generally possible to exclude liability for fraudulent misrepresentation.ii Covenant of good faith and fair dealingUnder Irish law, there is no implied covenant of good faith and fair dealing in the context of commercial contracts. A 2017 Court of Appeal decision27 confirmed this in a case concerning a dispute regarding the acquisition and sale of shares in a company and the contractual interpretation of a shareholders' agreement. The court held that the shareholders' agreement was not the type of contract to which a general duty of good faith applies in accordance with established Irish authority. The court did, however, accept that there could be certain types of commercial agreement to which such a duty applies, such as partnership agreements and insurance contracts.In order to circumvent the common law position, parties to commercial contracts can insert clauses that expressly provide for a duty of good faith and such contracts are enforceable by virtue of the parties having deliberately contracted to include the duty.iii Promissory estoppelPromissory estoppel operates to prevent a party to a contract from relying on his or her strict legal rights where a representation has been made that they will not be relied upon and the counterparty relies upon the representation to his or her detriment. The High Court28 recently reaffirmed that the doctrine of promissory estoppel has no application to pre-contract negotiations in advance of the creation of any legal rights.iv Duty to discloseA duty to disclose requires the parties to a contract to make full disclosure of all material facts during contractual negotiations. The Court of Appeal,29 in recent months, confirmed that as a matter of ordinary contract law, there is no general duty to disclose. However, the court held that where a statement had been made containing an implied representation that no surcharge interest would be charged, the defendant was estopped from later charging surcharge interest on the basis of that implied representation.VIII REMEDIESi DamagesThe most common remedy awarded in breach of contract litigation is damages (monetary compensation). A contractual claim based on breach of a contractual term is aimed at putting the plaintiff in the position he or she would have occupied if the term had been properly adhered to. Punitive damages are generally regarded as inappropriate in contractual claims.In terms of measuring damages, a court will consider the following:expectation interest – putting the plaintiff in the same situation as if the contract had been performed; andreliance interest – where the plaintiff may have changed his or her position in reliance on the defendant's performance of the contract. Reliance damages are recoverable in cases where it is not possible to estimate the profit the plaintiff could have made had the contract been performed.In deciding whether to award damages, the court will have regard to the remoteness of damages (i.e., whether the damages arise naturally as a result of the breach of contract) and whether they ought to have been reasonably foreseeable by the parties to the contract in contemplation of a breach of the contract. Only net losses are recoverable and there is a duty to mitigate loss. Reasonable costs incurred in mitigation are also recoverable.The Supreme Court30 recently reaffirmed the general position that damages for breach of contract do not include damages for distress, upset and inconvenience subject to a limited number of exceptions where peace of mind is the object of the contract. However, where both a breach of contract and a tortious cause of action arise, punitive damages can be awarded in respect of the tortious element of the claim.ii Limitation of liabilityExclusion clauses can act to limit liability and can operate through a financial cap on liability or exclude certain heads of liability completely. In considering an exemption clause contained in terms and conditions available to a party 'on request', the Supreme Court31 has held that the clause in question had not been successfully incorporated into the contract and therefore could not be relied upon.iii Equitable remediesEquitable remedies can be granted in circumstances where a breach of contract occurs and damages are not an appropriate remedy. The most common forms of relief in relation to commercial contracts are specific performance, rectification and injunctive relief.An order for specific performance compels the party in breach to fulfil the terms of the contract. Because specific performance is a discretionary remedy, the court will bear in mind the broader justice of the case before granting it.Rectification involves rectifying any error made in a written contract that does not reflect the intentions of what the parties agreed to. The party seeking rectification must establish a 'common continuing intention' in relation to a particular provision of the contract agreed between the parties up to the point of execution of the formal contract, which was not subsequently reflected in the contract. A contract can also be rectified on the basis of unilateral mistake where there has been sharp practice on the part of one of the parties giving rise to that mistake.32Restitution (as an accompanying remedy to rescission – see below), in the sense of the restoration to the innocent party of benefits conferred under the contract, may be used where a contract has been performed in whole or in part by the innocent party, but has been rescinded ab initio. Equally, the innocent party must also return what has been transferred under the contract that has been rescinded.Rescission is a contractual and equitable remedy aimed at undoing the effects of the transaction and can be coupled with restitutionary remedies (see above).Both mandatory and prohibitory injunctive relief can also be sought in respect of breaches of contract.IX CONCLUSIONSThe law of contract in the context of commercial contracts in this jurisdiction has been relatively well-settled in most areas, with little divergence between the law of contract in the United Kingdom and in Ireland. Ireland benefits from the Brussels Recast Regulation and Rome Regulation for cross-border contractual disputes in the European Union more generally. This provides a degree of certainty to contracting parties and lends itself to creating a hospitable environment for companies in Ireland, particularly those with trade links across the European Union.Given the ongoing Brexit negotiations, companies are advised to take steps to 'future-proof' any new contracts during the course of drafting, particularly in choice of law or jurisdictional clauses.Separately, and in line with the continued increase in the influence of technology within the area of commercial disputes, and in particular in the context of complex commercial litigation, the High Court recently conducted its first ever fully 'paperless' electronic trial for a large, complex financial services dispute utilising an electronic trial platform.33 During the trial, the court and parties worked from laptops, removing the need for volumes of paper, and any document referred to by counsel was immediately displayed onscreen in the courtroom. This trial demonstrates the willingness of the Irish courts to embrace technology and the Courts Service of Ireland has indicated its desire to develop and expand its digital offering in the near future.Trading in, and profiting from, litigation currently falls foul of Ireland's maintenance and champerty laws34 on the basis that it is contrary to public policy, a view upheld by the Supreme Court. There have been three significant Supreme Court decisions in the area of litigation funding in recent times.35 However, the Supreme Court has said legislation needs to be urgently enacted to address mounting difficulties with securing access to justice in the civil courts, particularly in the context of complex commercial litigation. The Chief Justice said that if a point is reached where it is clear the legislature is making 'no real effort' to address the problems, the courts may have to fashion a solution, 'undesirable and all as unregulated change might be'.36 More recently, Moorview Development Limited & Ors v. First Active Plc & ors,37 a decision of the Supreme Court, delivered in late July of last year, clarified that the provision of funding by a third party funder with a legitimate interest in the litigation is lawful. However, third party funders with a legitimate interest may find themselves subject to a costs order, even if not a party to the proceedings, where the party to the litigation that they are funding is not a good mark for costs.Footnotes1 Julie Murphy-O'Connor, Claire McLoughlin and Karen Reynolds are partners at Matheson.2 The court structure in Ireland is made up of the lower courts (the district and circuit courts) along with, in order of increasing supremacy, the High Court (which includes the Commercial Court), the Court of Appeal and the Supreme Court.3 Courts Service Annual Report 2018, available online at http://www.courts.ie/Courts.ie/library3.nsf/(WebFiles)/C2B4BFC1AFEC7B098025842D00473F25/$FILE/Courts%20Service%20Annual%20Report%202018.pdf.4 Section 11 of the Statute of Limitations 1957.5 Noreside Construction Limited v. Irish Asphalt Limited [2014] IESC 68.6 Globe Motors, Inc v. TRW Lucas Varity Electric Steering Limited and Another [2016] EWCA 396.7 Rock Advertising Limited v. MWB Business Exchange Centres Limited [2018] UKSC 24.8 Contracts that are entered into before 17 December 2009 are subject to the Contractual Obligations (Applicable Law) Act 1991. Under the Contractual Obligations Act 1991, the governing law of a contract is that of the country in which the principal place of the business of the party performing the contract is situated.9 Law Society v. The Motor Insurers' Bureau of Ireland [2017] IESC 31.10 Wood v. Capita Insurance Services Ltd [2017] UKSC 24.11 McMullan Brothers Ltd v. McDonagh [2015] IESC 19.12 Tolan v. Connacht Gold Co-operative Society Ltd [2016] IECA 131.13 Cadbury Ireland Ltd v. Kerry Co-operative Creameries Limited [1982] ILRM 77.14 The Circuit Court has jurisdiction to hear claims with a monetary value of not more than €75,000. The District Court has jurisdiction hear claims with a monetary value of not more than €15,000.15 Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.16 The Insurance and Reinsurance Law Review 2019 – 'Ireland'.17 Section 18 of the 2017 Act.18 Courts Service Annual Report 2018 & 2017.19 In the recent High Court case of Kirby v. Friends First Life Assurance Company Limited [2018] IEHC 796, the High Court held that an insurance company was entitled to repudiate an income protection policy entered into with the plaintiff where the plaintiff had failed to disclose certain of his medical history, which amounted to failing to disclose 'material information', which would have affected the mind of the reasonably prudent insurer.20 Ulster Bank v. Roche & Buttimer [2012] IEHC 66.21 Ulster Bank (Ireland) Limited v. Walter DE Kretser and Gillian Fox [2016] IECA 371.22 Barry v. Ennis Property Finance DAC and Others [2018] IEHC 766.23 ACC Loan Management v. Connolly [2017] IECA 119.24 Quinn v. IBRC Ltd [2015] IESC 29.25 The statutory breaches in this instance were under Section 60 of the Companies Act 1963 (now section 82 of the Companies Act 2014) in relation to the prohibition of the giving of financial assistance by a company for the purpose of an acquisition of any shares of the company and the Market Abuse Regulations (Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse).26 Neville Sons Ltd v. Guardian Builders [1994] IESC 4.27 Flynn & Anor v. Breccia & Anor [2017] IECA 74.28 Allied Irish Banks plc v. Kennedy & Anor [2018] IEHC 381 (note: an appeal has been lodged in respect of this decision).29 Sheehan v. Breccia & Ors [2018] IECA 286.30 Murray v. Budds & Ors [2017] IESC 4.31 James Elliott Construction Limited v. Irish Asphalt Limited [2014] IESC 74.32 Slattery v. Friends First [2015] IECA 149.33 Defender Limited v. HSBC Institutional Trust Services (Ireland) Limited and Ors [2018] IEHC 70634 Maintenance and Embracery Act 1634.35 In Persona Digital Telephony Ltd v. The Minister for Public Enterprise [2017] IESC 27, the Supreme Court upheld the decision of the High Court and Court of Appeal, finding that a litigation funding agreement between the plaintiff and a professional third party funder from the United Kingdom is unlawful by reason of the Maintenance and Embracery Act 1634. In a landmark judgment delivered in July 2018, the Supreme Court ruled that the assignment of a claim to an unconnected third party with the possibility or profit is trading in claims and such an assignment is unenforceable in Irish law. (SPV Osus Limited v. HSBC Institutional Trust Services (Ireland) Limited & Ors [2018] IESC 44.)36 SPV Osus Limited v. HSBC Institutional Trust Services (Ireland) Limited & Ors [2018] IESC 44.37 Moorview Development Limited & Ors v. First Active Plc & ors [2018] IESC 33.