The litigation trust established in the 2009 bankruptcy of chemical giant LyondellBasell is blaming a Brown Rudnick attorney for a tactical blunder that allegedly cost the trust $300 million.

In a malpractice suit filed in New York federal court Tuesday, the trust alleged that the firm had failed to demonstrate that a Lyondell subsidiary was insolvent when it paid back $300 million in credit to billionaire Leonard Blavatnik, just months before the Chapter 11 filing.

While the firm represented the trust in a 2016 trial against Blavatnik, it fell short in its bid to recoup the $300 million, winding up with only $12 million in breach of contract damages.

"In short, Brown Rudnick botched the insolvency analysis by valuing the wrong debtor and using financial projections from the wrong date," the trust argued in a complaint penned by attorneys at plaintiffs firm Reid Collins & Tsai.

Blavatnik, an American multibillionaire, bought Lyondell in 2007, combining it with his chemicals business, Basell. Saddled with massive debt, the combined company collapsed amidst the financial crisis and filed for bankruptcy protection in 2009.

In the case tried in 2016 and decided in a 177-page 2017 opinion, Brown Rudnick attorney Edward Weisfelner, appointed by the bankruptcy court as litigation trustee of the LB Litigation Trust, went after Blavatnik and his company Access Industries on behalf of creditors, alleging fraud and other misdeeds.

That lawsuit included a claim that Lyondell should be able to claw back the $300 million in credit that it repaid to Blavatnik's Access Industries, in a series of transfers that occurred within 90 days of the company's bankruptcy.

That claim failed, according to Tuesday's complaint, because Weisfelner and Brown Rudnick focused on the finances of holding company LyondellBasell Industries, not subsidiary Lyondell Chemical Co., the debtor that actually made the transfers to Access.

"Brown Rudnick shockingly never instructed the Trust's expert to value Lyondell, the debtor that made the transfers to Access," the trustee argued.

Reid Collins partner Bill Reid declined to comment on the suit when reached Tuesday.

Weisfelner was forced out as the trustee in May after he refused to agree to an amendment to the trust agreement allowing the trust to pursue a malpractice suit against his own firm, according to the complaint. He did not immediately respond to a request for comment Tuesday.

"We believe this lawsuit was filed in response to our demand for payment of our legal fees. It has absolutely no merit and we will vigorously defend," a spokesman for Brown Rudnick said.

The trust said that it initiated the malpractice action against Brown Rudnick via arbitration in October, based on the engagement letter that it had with Weisfelner as trustee. But before an arbitrator was selected, the firm said that the arbitration clause in the engagement letter only pertained to fee disputes and did not extend to malpractice claims.

"I don't remember a situation where a firm had a choice and chose open court," said Schoeman Updike Kaufman & Gerber partner Larry Fox, who lectures on professional responsibility at Yale Law School and formerly served as managing partner at Drinker Biddle & Reath. "My experience is most firms would prefer to have the matter adjudicated within their own home."

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