Three entities, including the trustee for the estate of the defunct law firm Dreier LLP, have filed a petition attempting to force disgraced lawyer Marc Dreier into personal bankruptcy.
Dreier's personal lawyer, Gerald Shargel, has repeatedly said his client has no plans to file for personal bankruptcy, despite the Dreier firm's filing for Chapter 11 protection shortly after Dreier himself was charged in December in a series of alleged scams to bilk as much as $380 million from the firm's clients.
The three entities who filed the involuntary Chapter 7 petition late Monday are: Sheila Gowan, the court-appointed trustee for Dreier LLP; Wachovia Bank, which has already sued Dreier, his old firm, and every former Dreier LLP attorney, alleging that the firm owes at least $9 million on a $15 million loan; and the bankruptcy estate of 360networks, a company that went bust nearly a decade ago.
As we've reported, Dreier's firm represented the unsecured creditors committee in the 360networks case. The case was set to close days before Dreier's Dec. 2, 2008 arrest in Toronto with a $38.5 million payment from Dreier's escrow account to the creditors. That payment was never made, and a former Dreier lawyer, Norman Kinel, has told the Securities and Exchange Commission that there is now "substantially less" than $38.5 million left in Dreier's escrow account.
Willkie, Farr & Gallagher advised 360networks during the initial bankruptcy, but Curtis, Mallet-Provost, Colt & Mosle is listed as the company's counsel in the current Dreier matter. McCarter & English represents Wachovia in both the Chapter 7 case and the civil proceeding, and Diamond McCarthy represents Gowan.
The three entities say their combined claims against Dreier total $88.5 million.
Lawyers representing the three creditors did not immediately return calls. Shargel was not immediately available for comment.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.