It's over: Genesco-Finish Line feud in hands of Judge Lyle

Market-moving trial ends late Tuesday with attorneys' final closing remarks

Email | Print By Walker Duncan

After more than a week, the closely watched trial between Genesco and its remorseful suitor Finish Line came to a close early Tuesday evening with closing arguments from both sides.

Following remarks by Genesco attorney Jim Denvir, NashvillePost.com was obliged to leave the courtroom to post its initial item earlier in the afternoon, missing remarks from lead local attorney Overton Thompson of Bass, Berry & Sims.

According to Dow Jones News Service, however, Thompson emphasized to the judge that Finish Line knew what it was getting into when it offered to buy Genesco. Its offer came after Foot Locker Inc, a rival of both companies, made an offer on Genesco in April 2007.

Finish Line, Thompson asserted, ought not to be released from the agreement just because of personal relations that it had helped to sour.

"It's the same as a child killing their parents and then asking for mercy because they're an orphan," Thompson was quoted as saying.

Finish Line attorney Bob Walker — a former Bass Berry litigator, now with his own local firm of Walker Tipps and Malone — offered his closing arguments to Chancellor Ellen Hobbs Lyle later Tuesday.

The main thrust of Walker’s remarks pertained to the assertion that Genesco was coming to court with what he called ‘unclean hands.’ While he conceded that the pressures of closing the merger were considerable, Walker was clear in insisting that Finish Line was not given the full picture of Genesco's financial status prior to the signing of the merger agreement.

Primarily at issue were the May 2007 numbers, which, Genesco execs admitted earlier in the trial to withholding in lieu of quarterly and full-year projections, which, they said, made up for the shortfall. The willful omission of these results, Walker claimed, was a material factor in the lead-up to the signing of the agreement.

Admitting that executives are always under a great deal of stress to get mergers such as this one closed, he offered that the conduct of Genesco executives “doesn’t make these people bad people,” but, he continued, “it’s wrongful conduct [the withholding of May results] and these people [Genesco] should be held accountable.”

Finishing his remarks Walker said simply that without the May results the picture shown to Finish Line was incomplete; “It ain’t the same deal it was before.”

On behalf of UBS, Manhattan attorney Joseph Frank followed, echoing Walker's assertions that an attempt was made on Genesco’s part to mask the May shortfall with full-year projections which tried to make up for the loss.

Because of the omission, both Frank and Walker asserted that Genesco was coming to court with “unclean hands” which should preclude the company from receiving the relief it seeks — a consummated buyout.

In his remarks, Frank again revisited testimony from Genesco CFO Jim Gulmi, who admitted that he felt it was the “right thing to do” to disclose the May results. Nevertheless, those results were not disclosed prior to the signing of the merger agreement.

Taking the podium last for the defense was local UBS attorney John Hicks of Baker Donelson.

Like Walker and Frank before him, Hicks made an issue of the "clean hands" issue in opposition to any ruling asking for specific performance. And, he pointed out, the finding of Genesco’s “unclean hands” does not require the finding of fraud by Lyle. The withholding of the May’s results alone serves to sully Genesco’s good faith in the eyes of UBS and Finish Line.

Additionally Hicks spent time discussing, with Lyle, the alleged unconscionableness of the withholding of the May results.

Following those remarks, Bass Berry attorney Thompson closed the day offering brief remarks in rebuttal to the UBS and Finish Line closing arguments.

In response to Hicks' argument, Thompson said bluntly: "The only unconscionable thing in this trial is the fact that these men [Genesco’s top execs] have had their names drug through the mud.”

All this, he said, so that UBS can walk away from a deal it previously agreed to.

The trial ended with the simple assertion from Thompson that, “a deal is a deal.”

Following the close of today’s proceedings, Chancellor Lyle said with an exasperated chuckle that she will not rule from the bench on this matter.

There was no word today when her highly anticipated decision will come.