Heller Creditors Team Up to Target Banks Blamed for Firm's Demise
The Heller Ehrman estate and its creditors have reportedly circled the wagons around the banks that are being blamed for the firm’s bankruptcy.
The creditors, with the full support of the firm’s estate, asked a federal bankruptcy judge Friday for standing so they can sue Bank of America and Citibank to get back $50 million Heller paid them in the months leading up to its bankruptcy in December, the Recorder reports.
“The resolution of this claim is the silver bullet to a plan, and everybody wants to get there except the banks,” John Fiero of Pachulski Stang Ziehl & Jones, who represents the Heller estate, reportedly told a bankruptcy judge.
Fiero argued at the hearing that the banks are just trying to confuse and delay by objecting to the creditors’ motion.
Judge Dennis Montali of the U.S. Bankruptcy Court for the Northern District of California didn’t rule on the motion.
The Recorder notes that “because of what the banks claimed was a ‘clerical error’ in 2007, the banks failed to secure their loan with Heller. Bank of America, the main lender, attempted to correct the error in October, but both that action and the $50 million in payments fall in the 90-day ‘preference’ period before the bankruptcy and can be tossed out by the judge.”
At issue is whether the banks were secured or unsecured. Once that’s decided, the parties can reportedly nail down a liquidation plan.
