“One lawyer negotiating a resolution to the multi-billion-dollar bankruptcy filed by the Boy Scouts of America billed $267,435 in a single month. Another charged $1,725 for each hour of work. New lawyers fresh out of law school have been billing at an hourly rate of more than $600,” reports Mike Baker in The New York Times U.S. Section.

“The high-stakes bankruptcy case has drawn in lawyers by the dozens, negotiating how to compensate tens of thousands of people who have filed claims of sexual abuse. Lawyers and other professionals — both those representing the Boy Scouts and some who are representing victims — have submitted fee applications with the court that have now surpassed $100 million. By August, they could reach $150 million.”

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“Bruce Matson, a prominent, longtime local bankruptcy attorney formerly of LeClairRyan, had his law license revoked last week by the Virginia State Bar after he admitted to inappropriately pocketing seven figures worth of funds from the long-dormant LandAmerica bankruptcy trust account,” reports Michael Schwartz in Richmond BizSense.

“The disbarment stems from an episode last year when it was discovered that Matson withdrew $2.8 million from the LandAmerica wind-down account and put the money into his own personal account and those of his associate Robert Smith, and their wives.”

“Matson, who has spent a portion of his nearly 40-year law career as a bankruptcy trustee, acting as the main fiduciary on often complex corporate bankruptcy cases, oversaw the untangling of LandAmerica’s collapse. The once mighty Henrico-based title insurance firm went under in a heap in 2008 as the Great Recession was beginning.”

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“Numerous reports have Guitar Center prepping for a bankruptcy filing, and many within the musical instrument industry feared the worst. Visions of music and audio gear manufacturers getting pennies on the dollar for their accounts receivables brought out the cold sweats from many of the smaller ones that might not have survived under those circumstances. Even worse would have been a contracted GC with fewer brick and mortar stores than its current 269. If all goes well, those fears can be put aside, according to several sources,” reports Bobby Owsinski in Forbes’ Hollywood & Entertainment.

“Reportedly, the plan is for the company to restructure its more than $1.3 billion debt and carry on with business as usual at the store level. Vendors and employees will continue to be paid and no stores will be closed. Of course, things could change by the time the actual filing happens, but should it go as reported, gear manufacturers and employees alike will breathe a huge sigh of relief.”

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Revlon released that enough bondholders had taken part in its debt restructuring program for the cosmetics maker to stave off bankruptcy.

The company warned that it may be forced to file for chapter 11 bankruptcy protection if a certain amount of its bonds worth $342.8 million were still outstanding by mid-November, as it would trigger the accelerated repayment of other debts.

Holders of about $236 million, or 68.8%, of the company’s outstanding bonds that mature in February had been tendered into an exchange offer by the end of Tuesday.

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“Purdue Pharma’s massive settlement over claims that it helped spark the opioid crisis is facing pushback in federal court, creating a potential stumbling block for the landmark deal,” reports Bloomberg in the Los Angeles Times’ Business.

“Purdue has agreed to plead guilty to three felonies and pay $8.3 billion to settle federal investigations of how it marketed the painkiller OxyContin. But the deal violates bankruptcy rules because it locks in details of Purdue’s future and forces the hand of other creditors, according to court papers filed by a group of U.S. states and bankruptcy professors.”

“States and cities suing Purdue have been in talks with the bankrupt pharmaceutical giant for months over how to settle thousands of opioid lawsuits. The settlement with the U.S. Department of Justice unveiled last month dictates that Purdue will be repurposed as a public trust after it emerges from bankruptcy, which creditors haven’t agreed to.”

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“The Arizona lawyer who helped an ex-mobster orchestrate the failure of a nationwide chain of Toby Keith restaurants was sentenced Monday to six months in prison,” reports Robert Anglen in azcentral’s Investigations.
“Gregory McClure also must repay $1.3 million he admitted stealing, as part of his deal to cooperate with federal prosecutors. They are going after his former employer on fraud charges.”

“McClure, during the hour-long court hearing, told Arizona U.S. District Court Judge G. Murray Snow he was ‘ashamed and embarrassed’ by his conduct.”

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“Approximately 1,000 former ITT Tech students in South Carolina were part of a $330 million settlement for debt relief after a lawsuit against the for-profit school,” reports Tony Fortier-Bensen in ABC 4 News.

“Attorney General Alan Wilson said the 1,000 South Carolina students were able to receive $8.6 million. Across the nation, 35,000 students will share $330 million.”

“According to a press release, the settlement is with PEAKS Trust, a private loan program run by the college. ITT Tech filed for bankruptcy in 2016 after investigations into their federal student aid.”

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“Some 1,700 employees of a bankrupt coal mining company would get up to $17.3 million in back pay under a proposed class-action settlement,” was reported in The Cheyenne Post.

“The former employees of Milton, West Virginia-based Blackjewel in Wyoming and Appalachia could get checks early next year depending on the outcome of bankruptcy court hearings this fall, said Ned Pillersdorf, an attorney for the employees.”

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“The trustee overseeing the bankruptcy liquidation of Richmond law firm LeClairRyan is starting to dig a little deeper,” reports Michael Schwartz in Richmond Bizsense.

“Lynn Tavenner, who has led the hunt for assets for creditors since the once mighty firm collapsed last year, will question and gather information from a lengthy list of LeClairRyan’s former attorneys, management and others it did business with over the years.”

“Tavenner sought and received court approval last month to begin the so-called 2004 examination process, which would give her the ability to push for the turning over of documents and conducting of depositions, including via subpoena if necessary.”

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“The U.S. Bankruptcy Court for the District of Delaware approved … a $1.7 million settlement agreement in the bankruptcy case of Springdale-based nanotechnology manufacturer NanoMech Inc. that will clear its former CEO of any wrongdoing,” reports Jeff Della Rosa in Talk Business & Politics.

“U.S. Bankruptcy Judge John Dorsey approved the agreement between NanoMech, its directors and officers and New York-based lender Michaelson Capital Partners. The directors and officers in the agreement include all existing and former directors and officers of NanoMech, including former chairman and CEO Jim Phillips, Ajay Malshe, Deborah Wince-Smith, Michael Easterly, Arpana Verma, Wyatt Watkins and Ben Waisbren.”

“NanoMech’s directors and officers will have their insurer pay $1.7 million to NanoMech, and the company will pay $1.68 million to Michaelson, the agreement shows. Also, NanoMech will release all pending claims against Phillips and Conner & Winters LLP, and they will be dismissed with prejudice.”

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“The recent decision of the Bankruptcy Court for the Southern District of New York in In re AAGS Holdings LLC, Case No. 19-13029 (SMB) (Bankr. D. Del. Nov. 12, 2019), underscores the ability of debtors — and specifically, for purposes of this client alert, parties to real property purchase contracts — to take advantage of the Bankruptcy Code’s 60-day tolling period to get more time to close on a purchase despite a “time of the essence” (TOE) closing deadline. The SDNY Bankruptcy Court … held that a debtor’s bankruptcy petition is not filed in bad faith when the petition is filed in order to obtain a statutory 60-day extension of a TOE closing deadline. The decision underscores the need for sellers to consider the effect of this automatic bankruptcy extension when negotiating with buyers over the terms of a consensual closing extension (e.g., fees and increased deposits) even if the contract does not have a financing contingency.” warn Adam C. Rogoff, Daniel Ross Berman and Caroline Gange in Kramer Levin’s Perspectives.

“The court found that the term “Closing Date” as defined in the PSA was, in fact, ambiguous.”

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Sedgwick, the dissolved law firm, filed for bankruptcy Tuesday in federal bankruptcy court in San Francisco, reports the ABA Journal.

“The firm generally estimates its liabilities at up to $50 million and says in a declaration that there are about $32.6 million in claims from the termination of office leases as well as about $9.2 million owed in accounts payable. The firm had assets of about $1.56 million in cash and recoverable accounts receivable of about $1.5 million, the declaration says.”

“The firm is analyzing whether it has clawback claims against former partners.”

“Sedgwick had its best year in 2012 with $212 million in gross revenue … According to the bankruptcy declaration, Sedgwick ‘established a well-deserved reputation for high-end insurance work and as one of the pre-eminent product liability firms in the country.’”

Read the ABA Journal article.

A federal judge in Los Angeles ruled in favor of O’Melveny & Myers in a case alleging the Biglaw firm was conflicted in its representation a decade ago of a now-defunct investment firm Aletheia Research and Management, reports Bloomberg Law.

The ruling let stand an arbitrator’s August finding that O’Melveny didn’t commit legal malpractice, noting that “only in very unusual circumstances” does this occur and the investment firm’s trustee didn’t meet this standard, according to Bloomberg’s Melissa Heelan Stanzione.

A Chapter 7 estate trustee for Aletheia had argued that the law firm’s failure to recommend that Aletheia hire independent counsel to review the company’s relationship with its founders contributed to the company’s ultimate downfall.

Read the Bloomberg Law article.

Haynes and Boone reports that there has been an uptick in the number of North American oil and gas producer bankruptcies so far this year, with 33 filings as of the end of September. And 27 of those files have come since the beginning of May.

The firm’s Oil Patch Bankruptcy Monitor reports:

“Since our August 12 report, an additional 7 producers have filed bankruptcy with an aggregate amount of total debt in excess of $2.0 billion. This increase in year-over-year filings indicates that the reverberations of the 2015 oil price crash continue to be heard in the industry.”

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Although Purdue Pharma LP is based in Connecticut and incorporated in Delaware, the company at the center of the opioid crisis filed for bankruptcy in New York, in a court where its case would be assigned to the only judge who works there, reports The Washington Post.

Bankruptcy Judge Robert Drain, on the bench since 2002, has long experience with complicated bankruptcy cases. On Friday he heard arguments over whether to take the unusual step of halting action in about 25 lawsuits brought by various states against Purdue and members of the Sackler family, which owns the company.

The Post article quoted Lynn M. LoPucki, a professor at the UCLA School of Law: “Of course Purdue strategically picked White Plains over all other courts. That’s like asking whether a chess master has a strategy or just makes moves randomly.”

According to The New York Times, the judge on Friday cited mounting costs of litigation that are siphoning funds that could otherwise go to abate the opioid crisis and ordered a pause in legal action by states against Purdue Pharma and its owners, the Sacklers.

Read the Post article.

After experiencing dramatic declines in gross revenue and profitability and an exodus of lawyers in recent years, the Virginia-based legal giant LeClairRyan has filed for bankruptcy, reports the Richmond Times-Dispatch.

The firm filed the petition Tuesday morning in the U.S. Bankruptcy Court in Richmond, writes Gregory J. Gilligan of the Times-Dispatch.

At its peak, the 30-year-old firm had 25 offices nationwide and almost 400 lawyers.

The firm listed between $10 million and $50 million in estimated assets and liabilities, bankruptcy court documents show.

Read the  Times-Dispatch article.

In a much-awaited and pivotal decision in the PG&E chapter 11 proceeding, the U.S. Bankruptcy Court for the Northern District of California held that it not only has exclusive jurisdiction over the rejection of wholesale power-purchase agreements, but that the Federal Energy Regulatory Commission has no such jurisdiction and any determinations by FERC to the contrary would be void, according to Holland & Hart.

“While the decision might not be surprising to most bankruptcy practitioners, the proposition that FERC has no jurisdiction over the breach or modification of a power-purchase agreement is not only shocking to energy practitioners, but contrary to well-established authority in the energy arena,” the firm said on its website.

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When arbitration awards resolving contract claims are not based on the actual provisions of the relevant contracts, but rather on an individual arbitrator’s personal sense of “justice” and “public policy,” they can be successfully challenged, and vacated by the courts, points out Robert J. Kaler in a post for Holland & Knight.

He discusses a case in which an arbitration award purported to remedy an alleged breach of and “failure of consideration” for the owner’s underlying network operator agreement with the plaintiff’s subsidiary by rewriting that agreement so as to materially change its financial requirements.

A court subsequently vacated the award, finding that the arbitrator exceeded his powers by voiding the guaranty of the parent company while re-writing the terms of the operating agreement.

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When  you prepare, review and/or sign settlement agreements you sometimes pay less attention than you should to the details of those “standard” releases, writes Charles Sartain in Gray Reed’s Energy & the Law blog.

He explains that Acme Energy Services, d/b/a Big Dog Drilling v. Staley et al. provide the lesson: Beware the boilerplate; before signing, consider what you actually are trying to accomplish.

“Lake Hills contracted to provide materials and services on oil and gas leases owned by Heritage. Big Dog and other subcontractors provided work and materials and invoiced Lake Hills,” Sartain explains. “Heritage stopped paying Lake Hills and Lake Hills stopped paying the subs, who then recorded statutory mineral property liens against Heritage, its leases, and the well. Each subcontractor sued Heritage to foreclose and for personal liability.”

He lists the five rules the court considered in the case and discusses the ruling.

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Image by NY Photographic

The United States Bankruptcy Court for the Northern District of Texas issued an opinion holding that an unintentional, duplicate obligation remaining under a contract can render the contract executory, even if perhaps in contravention of the plain language of the contract.

Writing for Weil, Gotshal & Manges’ Bankruptcy blog, David Li discusses In re TM Village, Ltd.:

The TM Village opinion framed the issues as whether the parties’ prepetition settlement agreement was an executory contract, and if so, whether the debtor could reject it in its business judgment (the court held in the affirmative on both issues).  The court reaffirmed that the plain language of a contract may be read in a broader context to avoid an “unreasonable, inequitable and oppressive outcome.” The case serves as a cautionary tale that even a simple clerical error may have unintended and prolonged consequences.

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