U.S. Bankruptcy Court for the Southern District of New York

Jeffrey Liddle, the employment lawyer known for representing finance professionals, has filed for bankruptcy and is being pursued by creditors for more than $10 million, including law firms that haven't gotten paid.

His law firm, Liddle & Robinson, hasn't filed for bankruptcy, but Liddle said in his own Chapter 11 filing last month that he did business as the firm and that he planned to file a separate case on his firm's behalf ”as soon as practicable.” More recently, he was less committal, writing in court papers in April that he was “reviewing the need to file a separate bankruptcy case” for Liddle & Robinson.

In his bankruptcy papers, filed in the Southern District of New York, Liddle said he and his firm, which now has no other lawyers, are in “severe financial distress” after Counsel Financial, an upstate New York lender that lent his firm at least $5.6 million, took steps to seize $2 million from the sale of his personal co-op apartment. He said his firm's revenues have dropped since 2015, when lawyers began leaving the firm.

Kasowitz Benson Torres also has an outstanding judgment against Liddle's firm for unpaid legal bills totaling more than $189,000 that it has sought to collect. Other firms owed money include Eisner PC, owed almost $135,000; Blank Rome, owed more than $83,000; and White & Wolnerman, owed nearly $47,000, according to Liddle's filings. According to court records, the firms defended Liddle and his firm over the years in various litigation.

In his bankruptcy papers, Liddle said he still has a stable of 30 cases and a number of other matters that could generate cash. From 1998 through 2015, he wrote, Liddle & Robinson netted about $13.5 million in revenues per year, after expenses, but business fell after five partners left from 2015 through 2016, along with an unstated number of associates. Now his only employee is an assistant, Liddle said in court papers.

Jeffrey L. Liddle of Liddle & Robinson/courtesy photo

“It is my belief and hope that under the protections granted by Chapter 11, I will be able to continue a strong practice, develop a consensual plan for creditors [or] at the very least manage an orderly disposition of my and the firm's affairs,” he wrote.

The bankruptcy case is the latest bad news for Liddle's employment law boutique, which says on its website that it has won $500 million for clients over the years. Last year, the firm was hit with a discrimination suit by former partner Andrea Paparella, who claimed she was underpaid and mistreated because of her gender. That suit is ongoing in Manhattan federal court.

Counsel Financial, based near Buffalo, New York, is the key creditor of Liddle and his firm, having lent the firm $5.6 million in 2016 at an 18 percent interest rate, according to filings in a related state court lawsuit in Erie County Supreme Court. The lender said Liddle has acknowledged owing Counsel Financial affiliates a total of some $7.8 million and said Liddle has proved to be “deceitful … nothing more than a fraudster.”

Liddle and three other attorneys at the firm were listed as guarantors on the Counsel Financial paperwork. But two of the partners said in affidavits that Liddle was to blame for defaulting on the loan, adding that they'd settled with the lender. The two partners also claimed Liddle used $1.1 million of the loan to pay his own debts to the IRS, more than the $900,000 that was allowed.

“Liddle ran the firm to the exclusion of his 'partners,'” Blaine Bortnick and James Hubbard said in their affidavits filed in the state court lawsuit brought by Counsel Financial. “In fact, Liddle made virtually every significant business and financial decision concerning the firm's business and finances without consulting his partners.”

Liddle shot back in state court that Counsel Financial charged a usurious interest rate. He has also accused the company of trying to sabotage the sale of his co-op unit and to seize a part of the proceeds that belonged to his wife.

Liddle and his lawyers at Torys in New York didn't respond to calls and email comment requests on Monday, and a phone number listed on Liddle & Robinson's website was disconnected.

David Wander of Davidoff Hutcher & Citron, who represents a Counsel Financial affiliate, struck a conciliatory tone when asked about the case.

“Our goal is to try to work constructively with the debtor and with his professionals,” he said. “Now that he's in bankruptcy, the goal is to not have scorched-earth litigation, but to work on getting everyone paid.”

As things stand, U.S. Bankruptcy Judge Sean Lane has extended the bankruptcy stay over any litigation to cover Liddle & Robinson and has ordered Liddle and his firm to stick to a budget of about $190,000 over the next two months, including salaries for an attorney and a paralegal Liddle & Robinson plans to hire.

More filings are expected in the coming weeks.