Former federal prosecutor Patrick Collins was replaced as trustee of the A&O life settlement funds' bankruptcy case after a group of A&O's creditors objected to Collins' lack of experience in bankruptcy court and to his fees.

Collins, a partner at Chicago law firm Perkins Coie, was appointed in September as trustee of the A&O bankruptcy case in the U.S. Bankruptcy Court in Chicago.

More than 700 creditors are owed approximately $92 million from seven separate life settlement funds that filed for Chapter 11. Collins has alleged that the original principals of the funds fraudulently transferred money.

The Houston law firm of Johnson, Trent, West & Taylor, which represents many of the investors, had objected to Collins. Attorney Deborah Fritsche has said that Collins has no previous experience in bankruptcy court. She said she was also concerned that his legal fees would eat up investors' money. Johnson, Trent supported the appointment of Jeffrey Marwil, a partner with the law firm of Proskauer Rose, as trustee.

Marwil defeated Collins in an election by A&O's creditors, held in November. Judge A. Benjamin Goldgar confirmed Marwil's election today after rejecting Collins' arguments that the vote was invalid.

Collins had challenged the election, arguing that the Johnson, Trent law firm had a conflict of interest because the firm did not disclose to creditors that a former partner at the firm, John Spalding, owned a company with his wife that did business with the A&O entities. The Spaldings are also creditors, which was disclosed to other creditors in a letter from Johnson, Trent. Collins also said the creditors' proxies were improperly solicited by the law firm. A hearing on Collins' objections was held in January.

"The scant evidence adduced at the January hearing did not begin to meet the objecting parties' burden of proving the objections to Marwil's election," Judge Goldgar said in his ruling.

He said some of the proxies were improperly solicited. But excluding them from the election did not change the election results.

Source: Court Order