Morgan & Finnegan’s Accounts Frozen; Severance Checks Bounce
A judge has issued an injunction barring Morgan & Finnegan from selling or transferring assets in a suit claiming the dissolved law firm defaulted on its loan agreement.
JPMorgan Chase contends Morgan & Finnegan owes it more than $4 million, the American Lawyer reports. Above the Law reported on the suit yesterday and said the firm had bounced severance checks as a result.
New York Judge Richard Lowe has appointed a receiver and is requiring the law firm to identify all its assets, including partner capital accounts, the American Lawyer story says.
JPMorgan agreed to give the law firm a $2 million revolving line of credit and a letter of credit for nearly $4.97 million to pay for a lease at Three World Financial Center, according to details of the suit summarized by the American Lawyer. The lender secured its interest in the loan in March 2008. By December, Finnegan & Morgan was talking to Locke Lord Bissell & Liddell, which agreed to hire more than 30 of its lawyers.
The firm dissolved last month, but Locke Lord is occupying the leased premises under a cross-licensing agreement with Morgan & Finnegan, encumbering the bank’s collateral, the complaint says (PDF posted by the American Lawyer). JPMorgan contends the firm missed its February rent, causing the landlord to seek the full $4.9 million under the letter of credit.
Locke Lord is not a party to the suit.
