Judge Doubles Back on Requirement for Providing Steves With Sneak Peek at Advisors

August 11th, 2021 by Drew Vass

After a court-appointed Special Master raised concerns about sharing certain information with Steves and Sons Inc. (Steves) amid a court-ordered divestiture process, U.S. District Judge Robert E. Payne rescinded those requirements last week. At the urging of Special Master and former U.S. District Judge Lawrence F. Stengel, Judge Payne agreed that Steves shouldn’t be given advanced notice for who Stengel selects as advisers in the divestiture process for one of Jeld-Wen Inc.’s manufacturing plants. The divestiture order results from an antitrust lawsuit against Jeld-Wen in which Steves was the plaintiff. Steves is now expected to be a potential buyer in the process.

The decision by Judge Payne follows an announcement by Jeld-Wen last week that the company will forgo any further appeal of a court order requiring divesture of its door skins plant in Towanda, Pa., instead proceeding with the ordered sale.

After reviewing the request by Stengel, and statements of position filed by Jeld-Wen and Steves, “both parties agreed that the notice requirement … could be waived, at least at this time and for the purpose of enabling the Special Master to retain the two advisors referred to in the Letter Requests,” Judge Payne’s memorandum said.

Meanwhile, after Steves expressed concerns that Jeld-Wen may have “an incentive to have the divestiture process fail in its entirety so that it can retain Towanda,” those concerns should be alleviated now that Jeld-Wen has agreed to forgo appeal, the memo said. “Whatever may have been the basis for that aspect of Steves’ concern before Jeld-Wen announced that it will not appeal … that announcement by Jeld-Wen would seem to ameliorate Steves’ concern respecting Jeld-Wen’s interest in having a divestiture process that fails,” the Judge added.

Regarding additional concerns posited by Steves suggesting that Jeld-Wen may have economic incentives to pursue a buyer that will fail to post significant competition (the point of divestiture), and that the prior waiver would deprive Steves of the right to object to the retention of certain advisors, “On that score, Steves is correct,” Judge Payne said. But those concerns, he added, are best addressed by assuring that the Special Master has done a proper job in ensuring that advisors, or anyone associated with them, have no prior history or interests in doing business with Jeld-Wen or Steves. “Further, at this stage of the proceedings, it would seem unnecessary that Steves be provided with the identity of the two advisors assuming that the conflict clearance outlined above is effectuated by the Special Master,” he said. The time will come when the identities of advisors will be disclosed, at which time Steves is entitled to express objection, Judge Payne declared. In developing a plan for divestiture, the Special Master is best equipped to assure that neither company is allowed to influence development of a plan, his memo concluded.

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