Bankruptcy Law
Heller Creditors Seek $150M from Partners of Failed Law Firm
Posted Oct 29, 2009, 11:08 am CST
By Martha Neil
Contending that Heller Ehrman, in effect, fraudulently conveyed $150 million to partners after the law firm had become insolvent, creditors are seeking full reimbursement from the former partners of the now-defunct firm.
In a confidential brief prepared for a mediation hearing tomorrow in U.S. Bankruptcy Court for the Northern District of California, the creditors cite, among other evidence of Heller's financial condition, a September 2007 e-mail to partners from the law firm's chairman that described a $9.3 million partner payout late that year as an "overdistribution," reports the Recorder.
However, 89 Heller partners who have banded together to fight the claims say in their own confidential brief that "threats to bring fraudulent transfer claims against the former Heller shareholders rests on wishful lawyering, not credible evidence or viable legal theories," the legal publication recounts. They cite clean audits by the firm's accountants and banks' willingness to continue lending Heller money at the same time that the creditors contend the firm was insolvent.
Earlier coverage:
ABAJournal.com: "Heller Creditors May Sue Accountant Over Its ‘07 Audit of Law Firm"
ABAJournal.com: "Ex-Heller Chair Denies That Partners Were Paid $9M in Phony Profits"
ABAJournal.com: "Lesson Taught By Fall of Heller & Others: Banks Rule"
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