LeClairRyan, Lender Reach Deal on Firm's Liquidation
A federal bankruptcy judge signed off on an agreement to convert the bankruptcy next Friday, over the objections of the acting U.S. trustee.
September 27, 2019 at 02:36 PM
2 minute read
Photo: Rrraum/Shutterstock.com
Defunct law firm LeClairRyan has worked out an agreement with its primary lender to put its bankruptcy in the hands of a court-appointed liquidator.
At a Thursday hearing in Richmond, Virginia, U.S. Bankruptcy judge Kevin R. Huennekens of the Eastern District of Virginia signed off on the arrangement to move the matter from Chapter 11 into Chapter 7 at noon Oct. 4, over the opposition of the acting U.S. trustee for the region.
The agreement gives LeClairRyan another week to use cash on hand to support its unwinding, during which it will specifically focus on handling client files that it still retains, either by returning them to clients or disposing of them.
The judge also signed off on the budget for the firm's final week in Chapter 11, after which a liquidating trustee will take over the matter.
U.S. Trustee John Fitzgerald III, the acting trustee for Virginia, the District of Columbia and three other southeastern states, made the initial motion to move the bankruptcy into Chapter 7. He later received support from the firm's primary lender, ABL Alliance LLLP, which was owed $6.8 million out of a $15 million loan at the start of the bankruptcy.
While ABL was willing to work out an arrangement to delay the conversion, the U.S. trustee insisted on an immediate conversion, but lost that fight in court. The assistant U.S. trustee, who argued the matter Thursday, did not respond to a request for comment.
Attorneys for both LeClairRyan and ABL declined to speak on the record. LeClairRyan is being represented by attorneys from Hunton Andrews Kurth, while ABL is being represented by a team from McGuireWoods.
The firm's other secured creditor—ULX Partners. the joint venture the firm launched with UnitedLex to handle support services—did not weigh in on the conversion battle.
LeClairRyan's largest unsecured creditors, meanwhile, include a mix of landlords and service providers.
Read More
LeClairRyan Bankruptcy Could Keep Creditors, Partners Busy for Years
How LeClairRyan's Grand Plans Unraveled
Rivals Scoop Up LeClairRyan Lawyers as Clock Ticks on Dissolution, Insurance Coverage
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