Five Mile Capital Partners LLC is accusing MSR Hotels & Resorts Inc. of using its chapter 11 case to shield its directors from possible liability for their alleged misconduct and wants an independent trustee to take charge of the company, Dow Jones reported yesterday. Five Mile, an investment firm, said that last week millions of dollars are on the line in connection with the legal claims against MSR's directors, which include breach of fiduciary duty, and it wants the company to pursue them. However, Five Mile said MSR's management has decided not to pursue the litigation, which Five Mile said is a clear conflict of interest. The investment firm said that is why it is asking a bankruptcy judge to remove MSR from chapter 11 protection and move it into chapter 7 liquidation. In chapter 7, an independent bankruptcy trustee would take charge of MSR and could evaluate whether to pursue the legal claims, which the company disputes.
