The trustee overseeing the bankruptcy liquidation of former Richmond legal giant LeClairRyan is ready to pass the baton on trying to collect a lingering pool of millions of dollars’ worth of the law firm’s uncollected bills.
Lynn Tavenner, who’s handling the law firm’s Chapter 7 case, has struck a pending deal to sell the firm’s book of accounts receivable to collections firm Atwell, Curtis & Brooks.
The deal, which requires creditor and court approval, involves sharing a portion of whatever money is recovered between New York-based AC&B and the bankruptcy estate.
AC&B would make an initial payment to the estate of $35,000, while then keeping the first $35,000 it collects. After that, 60 percent of whatever is collected would go to the LCR estate and AC&B would keep the remaining 40 percent.
Court filings list around $2.5 million in remaining accounts receivable owed to LCR. The list includes more than 300 outstanding invoices owed to the firm, from as much as $122,000 to as little as $500.
“The debtor’s portfolio of accounts receivable, unfortunately, contained (and still contains) a large amount of smaller balances owed from individuals and entities spread across the country (and in some instances internationally),” the trustee states in court filings. “Unfortunately, there still remains a large amount of outstanding accounts receivable on the debtor’s books.”
The trustee has up to this point used a company called On-Site Associates to aid in the collection of outstanding receivables, before recently deciding to put the remaining receivables portfolio out to bid. AC&B was the highest offer, court filings state.
The collections would add to a pool of assets Tavenner is tasked with building to return to LCR’s creditors.
The once mighty downtown-based law firm collapsed into bankruptcy in September 2019, battered by a mass-attorney exodus and an allegedly botched joint venture with legal services firm UnitedLex.
Tavenner already has filed suit against UnitedLex to try to recover up to $128 million in damages. That case is pending.
Tavenner also has begun to try to recoup money from many former LCR attorneys, many of whom were shareholders of the firm.
Those include Bruce Matson, the firm’s longtime general counsel who recently reached a settlement for an undisclosed sum with Tavenner.
The deal with Matson has been the subject of other recent filings in the case, as both Tavenner and Matson seek to seal certain records related to his settlement from public view. That includes the specific financial terms of his settlement as well as sealing the transcripts from the hearings related to the settlement negotiations.
Matson has been the subject of recent scrutiny in another complex corporate bankruptcy case — that of former Henrico-based LandAmerica.
Matson served as trustee on the long-running case and admitted last year to wrongfully pocketing nearly $3 million in funds from the LandAmerica trust account. He has since returned that money but also recently paid an additional $577,000 into the LandAmerica estate for undisclosed reasons.
In explaining the reasons to seal the LCR settlement documents, Tavenner’s camp argued in court records: “If disclosed, the revelation of such information could be harmful to the estate and/or Mr. Matson in other ongoing proceedings and potentially further subject the trustee and/or estate to a claim for breaching the express terms of the settlement agreement.”
A hearing on whether to seal the information is set for 11 a.m. May 27.
It’s unclear from bankruptcy court records how much in assets the LCR trustee has managed to recover for the estate or whether there have been any distributions to creditors. Several dozen other former LCR attorneys also have reached a settlement with the estate. The financial details of those settlements also haven’t been disclosed.
Tavenner could not be reached for comment.