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Tobias,
I am writing to report on yesterday's hearing before Judge Calloway and to provide our analysis and recommendations regarding next steps. I am copying Alison and Douglas so that the Ridgeline team has full visibility.
**1. February 12, 2024 Hearing — Summary**
Yesterday was the return date on Judge Calloway's January 22, 2024 Order to Show Cause why Vantor's claims should not be dismissed for failure to prosecute. Nikolai Vantorovich, CEO and Founder of Vantor Holdings Corp., appeared before Judge Calloway pro se — that is, without counsel. Vantorovich requested a 90-day extension to retain new counsel, representing to the Court that he has had difficulty finding a firm willing to take the case.
Judge Calloway granted a 60-day extension — not the full 90 days requested — and set a new deadline of **April 12, 2024** for Vantor to have new counsel enter an appearance.
Patrick Gallagher attended the hearing on behalf of Stonefield. Consistent with standard practice and judicial expectations at this stage, we did not oppose the extension request. Patrick did, however, place on the record that Stonefield has been prejudiced by the extended delay and that all discovery and dispositive motion deadlines have remained stayed since the October 18, 2023 withdrawal order.
As you will recall, this is the **second** opportunity the Court has given Vantor. The first 60-day deadline expired on December 17, 2023 without any counsel appearance, which prompted our January 8, 2024 letter to the Court and ultimately led to the January 22 Order to Show Cause.
**2. Legal Analysis — Corporate Pro Se Limitation in Federal Court**
A critical legal point bears emphasis: a corporation cannot appear pro se in federal court. Vantor Holdings Corp. is a New York corporation and must be represented by a licensed attorney to prosecute its claims in the Southern District of New York. Vantorovich's personal appearance yesterday does not cure this deficiency. While he appeared individually to address the Court, he cannot represent the corporate entity going forward. The same rule applies to Vantor Transport Services LLC — as a limited liability company, it likewise cannot appear pro se.
If Vantor fails to retain counsel by April 12, 2024, the Court has strong grounds to dismiss the case for failure to prosecute under Federal Rule of Civil Procedure 41(b). Judge Calloway's tone at the hearing suggested she is inclined to do so if the deadline passes again without action. Importantly, a dismissal under Rule 41(b) operates as an adjudication on the merits — i.e., with prejudice — unless the Court specifies otherwise. That is the outcome most favorable to Stonefield.
**3. Practical Assessment — Likelihood Vantor Retains Counsel**
I want to provide a candid assessment: we believe it is unlikely that Vantor will successfully retain substitute counsel within the 60-day window, for several reasons:
- **Fee dispute history.** Vantor's former counsel, Caldwell Royce & Shapiro LLP, withdrew in October 2023 citing "irreconcilable differences." The withdrawal motion and supporting papers indicated approximately $870,000 in unpaid legal invoices, suggesting a significant fee dispute. Any new firm would almost certainly require a substantial upfront retainer given this history.
- **Steep learning curve and complex record.** A new firm would need to come up to speed on a complex case with a substantial discovery record — over 75,000 documents produced between the parties, multiple depositions taken, and expert reports already exchanged. This is not a case a firm can pick up quickly.
- **Unfavorable case posture for Vantor.** discovery has been damaging to Vantor's claims. The Milescu November 12, 2021 email showed that VTS intentionally pulled 85 tractors off Stonefield dedicated lanes. Deposition testimony from Pruitt and Milescu included key admissions. Our rebuttal expert, Dr. Evelyn Rosser of Kensington Analytics Group LLC, has opined that maximum damages — even under the most plaintiff-favorable assumptions — are $8.2 million, a fraction of the $95.4 million claimed. Any competent firm evaluating the case would recognize these challenges.
- **Vantor's weakened financial position.** Vantor's FY 2022 revenue declined to approximately $310 million, reflecting in part the loss of the Stonefield contract, which further limits its ability to fund continued litigation.
- **Vantorovich's own representations to the Court.** Vantorovich indicated that he had approached "several firms" but none had agreed to take the case. This suggests that the combination of unpaid bills, weak case posture, and the complexity of the record is actively deterring prospective counsel.
While we cannot guarantee that Vantor will fail to find representation, the practical obstacles are significant and, in our experience, cases in this posture more often than not end in dismissal.
**4. Recommended Next Steps**
Our primary recommendation is to **continue monitoring through the April 12, 2024 deadline** and conduct quarterly docket checks per our existing protocol. No affirmative filings are needed at this time — the Court's own Order to Show Cause process is in place, and Judge Calloway has set a hard deadline.
If April 12 passes without a new counsel appearance, we will **promptly file a renewed motion to dismiss for failure to prosecute under FRCP 41(b)**. We have already prepared a draft of this motion, which has been held in reserve since January 15, 2024, and can be filed on short notice.
As an alternative or supplement, we should also consider **reaching out to Vantorovich directly** to explore whether Vantor would agree to a voluntary dismissal with prejudice — potentially in exchange for a mutual release and walk-away, with no payment by Stonefield. A voluntary dismissal with prejudice would eliminate any risk that the Court might dismiss without prejudice, which, while unlikely given the procedural history, is a possibility we should account for. I would welcome your and the Ridgeline team's views on whether to pursue this approach and, if so, the appropriate timing.
In the event the case is somehow revived — for example, if Vantor does retain new counsel — we will keep our **summary judgment roadmap** (dated September 15, 2023) and all underlying work product preserved so that we can move swiftly to file our dispositive motion. For reference, the original CMO deadlines (fact discovery: September 29, 2023; expert discovery: January 12, 2024; dispositive motions: March 1, 2024) remain stayed. If new counsel appears, we would expect the Court to set a revised schedule, and we would be well-positioned to proceed promptly.
**5. Budget and Billing**
Our costs during this monitoring period are minimal — quarterly docket checks by our paralegal Helen Tsao, periodic correspondence, and maintaining readiness. We do not anticipate significant additional spend during the monitoring period.
For context, total fees and costs incurred through approximately October 2023 were approximately **$4.42 million** ($3.8 million in fees plus approximately $620,000 in costs and disbursements, including expert fees, eDiscovery hosting through Pinnacle Forensics, deposition costs, and travel).
If the case proceeds to dismissal, the additional cost would be modest and limited to motion practice. If the case instead proceeds to summary judgment, we would provide an updated budget estimate at that time.
**6. Next Steps and Lender Notification**
I am happy to discuss any of the foregoing by phone at your convenience and will keep the team apprised of any docket activity. Our next scheduled docket check is on or about the week of April 15, 2024, immediately after the deadline.
One administrative item: Stonefield's quarterly litigation update to Lakeshore National Bank (Catherine Devereaux, SVP, Loan Administration) should reflect these developments, consistent with the notification requirements under Section 6.03(b) of the Credit Agreement (Ref. LNB-SLG-2017-CA-4402). Patrick Gallagher will prepare a draft update for your review, Tobias, and will circulate it within the next two weeks.
Best regards,
Samuel Eklund Partner Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166 Tel: (212) 555-4100 seklund@calderwoodharkness.com