LeClairRyan bankruptcy trustee targets $10M management insurance policy in asset hunt

LeClairRyan’s padlocked former Richmond office. (BizSense file)

Former top brass of LeClairRyan look to be next in line to face a legal battle with the collapsed Richmond law firm’s bankruptcy estate.

Lynn Tavenner, the trustee overseeing LCR’s Chapter 7 liquidation case, told the bankruptcy court last week that she expects to pursue claims against the firm’s management, with a particular focus on an insurance policy that would cover those executives and directors for allegations of liability.

“I possess claims against certain of the directors and officers of the Debtor, under a Management Liability (D&O) insurance policy. That policy has limit of $10 million,” Tavenner said.

Previous court filings state that Tavenner, with the help of special counsel from law firm Foley & Lardner, would pursue claims in the case related to “fraudulent transfers, excessive compensation, breaches of fiduciary duty and/or unjust enrichment.”

Rules of the LCR bankruptcy laid out earlier in the case require the trustee to first send demand letters to potential defendants prior to filing any litigation. The respondents then have the right to request mediation. If mediation does not resolve the matter, the trustee then may file her complaint.

Court filings do not indicate whether demand letters have been sent to the former insiders, nor has it been stated exactly which directors or officers might be targeted. Tavenner’s firm, Tavenner & Berran, does not comment on ongoing cases.

The forthcoming battle follows the first major shot across the bow in the case last week, when Tavenner sued ULX Partners and UnitedLex for $128 million in damages. ULX was a failed back-office outsourcing joint venture between LCR and UnitedLex, a sizable legal services company based in Kansas.

Tavenner claims the defendants conspired to siphon millions out of the 30-year-old law firm as it was teetering toward collapse.

That complaint followed an unsuccessful mediation session between the trustee and ULX and UnitedLex in September, court records show. Peter Barrett, a seasoned bankruptcy attorney from Kutak Rock in Richmond, served as the mediator.

Said she expects the various pursuits to provide a distribution to LCR’s unsecured creditors and to cover administrative expenses.

Judge Kevin Huennekens is presiding over the LCR bankruptcy, which is playing out in federal court in Richmond.

Founded in Richmond in 1988, LeClairRyan at its peak had 385 attorneys at 25 offices. It fell into bankruptcy in September 2019 in the face of a complicated mix of over-expansion, mass attorney exodus and declining revenues.

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments