The bankruptcy filing by The Weinstein Co. Holdings LLC this week isn't the only Chapter 11 case to leave law firms holding the bag on unpaid legal bills.

Citing fictitious subsidiaries and potential fraud, health services company Constellation Healthcare Technologies Inc. and its subsidiaries filed for bankruptcy on March 16 in Central Islip, New York, owing nearly $4 million to four law firms.

DLA Piper and Thomas Califano, U.S. co-chair of the global legal giant's restructuring practice, are advising the debtor in its Chapter 11 case. The collapse of the medical billing company comes a little more than a year after it was taken private following a $309.4 million sale to its founder Parmjit “Paul” Parmar and CC Capital Management LLC, a private investment firm started in 2015 by Chinh Chu, a former top dealmaker at buyout giant The Blackstone Group LP.

Constellation, which on its website lists a headquarters in Houston but in bankruptcy court filings states it is based in Middletown, New Jersey, also does business as Orion Healthcorp Inc. The debtor lists assets of between $1 million and $10 million, according to bankruptcy court records, which show Constellation's liabilities at between $100 million to $500 million.

According to a list of Constellation's 75 largest unsecured creditors, the company owes $3 million to Winston & Strawn; $475,000 to New York's Robinson Brog Leinwand Greene Genovese & Gluck; $225,000 to Delaware's Young Conaway Stargatt & Taylor; and $42,900 to McGuireWoods.

“The debtors are the victims of a large, complex and brazen fraud that was subject to a complex and deliberate concealment effort perpetrated by their former management that was years in the making,” said FTI Consulting Inc. senior managing director Timothy Dragelin, who is serving as CEO and chief restructuring officer of Constellation unit Orion Healthcorp, in a declaration filed in support of the company's Chapter 11 petition.

The story of Constellation's bankruptcy begins back in 2013 when Parmar, a private equity investor known for his opulent lifestyle, and Southport Lane Asset Management, a private equity firm, founded the investment vehicle that a year later acquired Orion, a health care services company that provides outsourced business services to physicians. The deal resulted in Constellation, now the holding company of Orion, being listed on the London Stock Exchange's AIM submarket.

Constellation quickly formed several vehicles to hold its various interests and completed more than $60 million in secondary offerings to streamline operations. In late 2016, Chu, the former Blackstone financier, purchased Constellation through his newly-established CC Capital fund in the hopes of reorganizing the company and re-listing it on a U.S. stock exchange.

According to a proxy statement for that deal, Winston & Strawn represented CC Capital in the merger, while McGuireWoods served as independent outside counsel to a special committee formed by Constellation's board of directors. Robinson Brog and British law firm DWF served as outside counsel to Constellation itself.

Not long after that ill-fated transaction, things began to fall apart. Constellation's board of directors eventually learned that there were discrepancies in its stated and actual earnings.

In 2017, the FBI began looking into Constellation, seizing around $20 million held by the company's former lawyer at Robinson Brog that investigators believed were connected to merger proceeds paid by Parmar-controlled entities, according to a report by the Financial Times' Alphaville website.

Dragelin alleges in his declaration that many of Constellation's subsidiaries, such as MDRX, Northstar and Phoenix, “are fictitious, in that they have no business operations, employees, customers, or revenue.”

In filing for bankruptcy, Constellation is looking to market and sell its assets, wind down certain portions of its businesses and “ultimately pursue claims against the individuals that put the debtors in this position for the benefit of all their creditors,” Dragelin said.

Winston & Strawn is Constellation's largest unsecured creditor, with the firm listed as being owed $3 million for “transaction-related” services. The $475,000 owed to Robinson Brog is for “professional services,” with the $225,000 and $42,900 owed to Young Conaway and McGuireWoods, respectively, listed as “transaction-related,” according to court filings.

None of the law firms listed as unsecured creditors of Constellation immediately returned requests for comment about their work on behalf of the debtor. Nor did Moshe “Mark” Menachem Feuer, a New York lawyer and founder of Beechwood Capital Group, who serves as a member of Constellation's board of directors.

Winston & Strawn has continued to do work for CC Capital's Chu, who in 2016 launched a specialty purpose acquisition company called CF Corp. through a $600 million initial public offering, a listing that securities filings show generated $500,000 in legal fees and expenses for the firm. Winston & Strawn then counseled CF Corp. last year on its $1.84 billion all-cash buy of Fidelity & Guaranty Life Insurance Co.

DLA Piper, for its part, has not yet filed billing statements with the bankruptcy court detailing its work for Constellation. New York Network Management, another Constellation subsidiary, is not included in the company's Chapter 11 case, although in a statement Constellation said that it will be included in a future asset sale.