Brown Rudnick settles $300M malpractice suit over bankruptcy representation
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Brown Rudnick has settled a $300 million malpractice lawsuit alleging that it mishandled its work as a litigation trustee in the 2009 bankruptcy of chemical company LyondellBasell.
In a Jan. 26 order, U.S. District Judge Paul Engelmayer of the Southern District of New York said he had been advised that all claims had settled in principle, report Law360 and Law.com. Terms of the settlement were not disclosed.
Brown Rudnick had filed counterclaims in the suit, which was filed by a successor trustee.
The suit had claimed that Brown Rudnick failed to prove that a company was insolvent when it made a $300 million loan repayment, the articles report. Brown Rudnick had sought to claw back the payment on behalf of creditors but only obtained $12 million.
The suit claimed that Brown Rudnick had wrongly focused on the financial condition of holding company LyondellBasell Industries, rather than the insolvent subsidiary that made the payment.
Brown Rudnick’s countersuit alleged that the litigation trust’s advisory board had pushed for trial of the clawback case, rather than settlement. The firm also said it had recovered about $150 million in settlements for the trust.
The malpractice settlement came one day after Edward Weisfelner, the global chair of Brown Rudnick’s bankruptcy and corporate restructuring practice group, announced his retirement, according to Law.com. A law firm spokesperson told the publication that the retirement had no connection to the settlement.
Brown Rudnick did not immediately respond to the ABA Journal’s request for comment.