Related Party Transactions

9 Months Ended

Sep. 30, 2013

Related Party Transactions

Related Party Transactions

23. Related Party Transactions

Capstone — May 2013

On May 31, 2013, the Board of Directors appointed Christopher J. Kearns of Capstone as the Company’s Chief Restructuring Officer and Chief Executive Officer, and the Company entered into an agreement with Capstone (and Mr. Kearns) for various services.  During the three and nine months ended September 30, 2013, the Company incurred approximately $0.9 million and $1.6 million, respectively in connection with this agreement.

RangeMark Acquisition — November 2012

In connection with the Company’s acquisition of certain assets and assumption of certain liabilities of RangeMark on November 7, 2012, the Company agreed to pay to the selling parties $2.5 million of purchase consideration, payable in four installments commencing on September 30, 2013 through March 31, 2015.  In connection with the Company’s exit from its Fixed Income businesses, during the second quarter of 2013, the Company exercised its right to transfer ownership of software-related intellectual property assets back to RangeMark, and was released of its payment and other obligations.

Gleacher Acquisition — June 2009

During the third quarter of 2009, the Company received a Notice of Proposed Tax Adjustments from the New York City Department of Finance for underpayment by Gleacher Partners, LLC of Unincorporated Business Tax.  The Company has an off-setting claim against former pre-acquisition Gleacher stockholders for any pre-acquisition tax liabilities, which is partially collateralized by shares of its common stock held in an escrow account that was established at the closing of the Company’s acquisition of Gleacher Partners, Inc. to satisfy any indemnification obligations.  The Company does not believe, in any event, that the open tax years or other pre-acquisition tax matters will have a material adverse effect on its financial position or results of operations.  The Company’s receivable for this indemnification claim at September 30, 2013 and December 31, 2012 was $1.5 million.

In connection with the acquisition of Gleacher Partners, Inc., the Company agreed to pay $10 million to the selling parties over five years after closing the transaction, subject to acceleration under certain circumstances.  During the year ended December 31, 2012, the Company paid $4.4 million of this obligation ($4.9 million was paid during the year ended December 31, 2010 and no payments were made during the year ended December 31, 2011).  The Company’s remaining obligation is recorded as a liability within the Company’s Consolidated Statements of Financial Condition.

Details on the amounts receivable from or payable to related parties are below:

(In thousands of dollars)	September 30, 2013		December 31, 2012
Receivables from related parties
Former stockholders of Gleacher Partners, Inc.	$	1,546	$	1,474
Payables to related parties
Former owners of RangeMark	$	—	$	2,350
Former stockholders of Gleacher Partners, Inc.	594		594
Capstone	431		—
Payables to related parties - total	$	1,025	$	2,944

Other Matters

During the three months ended September 30, 2013, the Company reimbursed MatlinPatterson for approximately $1.1 million for costs incurred in connection with the preparation, distribution and solicitation of their proxy materials associated with the Company’s 2013 Annual Meeting of Stockholders.  This request for reimbursement was evaluated by the Company’s Audit Committee and approved on August 2, 2013.  In doing so, the Audit Committee determined that under the circumstances:  (i) the amount of reimbursement sought by MatlinPatterson was reasonably incurred; (ii) such amount was not disproportionate to, and was justified by, the benefit received by the Company and its stockholders as a result of MatlinPatterson’s actions; and (iii) in its good faith judgment, reimbursement by the Company of the specific expenses would be in, or would not be inconsistent with, the best interests of the Company and its stockholders.  In making such determinations, the Audit Committee considered, among other things, the fact that the Company’s former Committee on Directors and Corporate Governance had made no nominations of its own, that four members of that committee had stated, and later confirmed, that such members would not stand for reelection when their respective terms of office expired at the 2013 Annual Meeting of Stockholders, and that a fifth incumbent director, the Company’s then-Chief Executive Officer, had waived his right to be nominated for reelection to the Board.