Heller Asserts Banks’ Clerical Error Cost Them $57M in Preferred Payments
Two lenders who contend Heller Ehrman still owes them nearly $6 million are fighting a contention that they no longer have a security stake in the law firm because of a mistaken 2007 filing under the Uniform Commercial Code.
Heller has already paid the banks $51 million since announcing its dissolution in late September, money that may have to be returned if the law firm wins its argument, the Recorder reports. The lenders, Bank of America and Citibank, filed a “correction statement” a week after the announced dissolution calling the 2007 filing a “clerical error,” according to the article.
Bankruptcy law provides a 90-day window for the return of payments to unsecured creditors. Heller’s outside counsel, Greenberg Traurig partner Leslie Corwin, told the Recorder that the window is “precisely the reason we had to file for bankruptcy” on Dec. 28. “Not because we ran out of money, not because the dissolution committee was not effective in carrying out its tasks.”
In a previous Recorder story, Corwin also blamed the bankruptcy filing on Heller’s San Francisco landlord. The landlord obtained a “ridiculous” writ of attachment making it a secured creditor for $48 million on Dec. 19, Corwin told the publication. “That also spooked the banks,” Corwin said, and they refused to release money to pay a settlement that had been negotiated with the landlord.
Heller also hopes to negate the landlord’s security interest, the article says. If the law firm is successful in its arguments, unsecured creditors would benefit, including employees seeking wages.
