Back when she was still running scores of companies (that she no longer owned) into the ground, Lynn Tilton had an ironclad rule. You might even call it Tilton’s Law: “You pay me first, payroll second, and then I don’t care who else you pay.” And Tilton’s law has a corollary: “If you pay anyone else”—for instance any creditors—“before you pay me, I will sue you, because shame has no meaning to me. And also because I, like you, am bankrupt.”
Through affiliates, Ms. Tilton has filed lawsuits in New York against metal refiner Libertas Copper LLC, employment agency Snelling Holdings LLC, shower-curtain maker Glenoit Universal Ltd., game-controller maker FSAR Holdings Inc. and 11 other companies that she had managed for years….
The Zohar funds have been trying to sell the businesses to recoup more than $1.7 billion that they say they are owed. The funds are seeking a bankruptcy-court order halting the lawsuits against the businesses, saying they are interfering with efforts to sell the companies…. “Ms. Tilton’s conduct is only getting worse by the day,” the filing said, adding that her claims to be owed millions of dollars in fees and indemnification are disputed and in some instances undocumented.