The private equity firms were accused of engaging in a fraudulent transaction when they split off Mervyn's valuable real estate assets and later sold them without compensating Mervyn's for the loss of its property. The private equity owners were also accused of breaching their fiduciary duties to Mervyn's and its creditors by requiring Mervyn's to pay them a dividend at a time when the department store chain was essentially insolvent. All of this despite the fact that it is illegal for owners to strip a company they own of assets and resources and drive it into bankruptcy. <Read more>
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