Seyfarth Shaw has lost its bid to immediately dismiss a $157 million legal malpractice suit brought by a bankrupt restaurant company. A New York bankruptcy judge on Tuesday allowed the malpractice case to proceed.

Blue Dog at 399 Inc., which planned to open a restaurant at 399 Park Ave., filed for Chapter 11 in 2015 to prevent its landlord from repossessing its space. Seyfarth was eventually hired to represent Blue Dog in its suit against the landlord, a Boston Properties entity. Blue Dog alleges the law firm failed to file expert reports and complete discovery in a timely manner, leading key evidence to be excluded.

The restaurant, represented by Pittsburgh lawyer Scott Michael Hare, had an earlier adversary proceeding against Seyfarth thrown out. But the latest complaint was allowed to move forward Wednesday, with U.S. Bankruptcy Judge Michael Wiles of the Southern District of New York referring to his statements at a hearing the day before. A transcript wasn’t immediately available.

The underlying landlord dispute, in which one of Blue Dog’s experts pegged its damages at $4.5 million, appears to have been settled last year for $300,000. Those funds, and the claim against Seyfarth, are more or less the estate’s only assets.

The restaurant pegs its damages in the malpractice case at a far greater amount than the landlord paid to settle. They rose, in Seyfarth’s telling, from a “groundless” $40.5 million in Blue Dog’s earlier adversary complaint to the “preposterous” sum of $157 million in its current iteration.

In its motion to dismiss the complaint, Seyfarth said it had managed to strike a deal with Boston Properties that would have allowed Blue Dog to move forward with its plans to run a restaurant. That deal fell through after Blue Dog’s owner, Elizabeth Slavutsky, backtracked, the firm said, and any potential damages are so tenuously related to its conduct that the suit shouldn’t have been allowed to advance.

Blue Dog’s lawyer said in its court papers that such arguments were premature, however. It said Seyfarth’s liability could be figured out at summary judgment.

James Peck, senior of counsel at Morrison & Foerster, who represents Seyfarth, declined to comment on the decision, as did Hare, Blue Dog’s attorney.