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As Skjerven Morrill winds down its operations, some of the firm’s longtime partners are facing questions about their personal liability for the firm’s debts. In particular, say Skjerven insiders, there is a possibility that certain partners could be on the hook for the three remaining years of the firm’s San Jose office lease. Since the lease was signed before Skjerven became a limited liability partnership, it’s not clear whether the partners who signed it are personally responsible for future payments. “I don’t think that’s been fully analyzed yet,” said one Skjerven partner. “We don’t know what the outcome’s going to be.” “It’s one of the many concerns we’ve got,” the partner said. Skjerven is currently in negotiations with Equity Office Properties, the landlord of its San Jose office, in addition to negotiating with three other landlords for its office space in San Francisco, Newport Beach and Austin, Texas. The firm has retained bankruptcy and insolvency boutique Murphy Sheneman Julian & Rogers to handle its dissolution. Margaret “Peggy” Sheneman, the attorney representing Skjerven, declined to comment for this story. On Friday, the last remaining attorneys and staff members in Skjerven’s San Francisco office packed their belongings and cleared out. According to Skjerven employees, Friday was the final day of operations at the San Francisco office. It is still unclear how much longer the San Jose headquarters will remain open. Bruce McDiarmid, a member of Skjerven’s seven-member wind-down committee, said the San Jose office will remain open indefinitely. Meanwhile, Citibank, the firm’s main lender, has taken a lead role in directing the firm’s affairs. According to sources familiar with the matter, Skjerven has about $5 million in debt, a good portion of it owed to Citibank. “They’re in control here,” a partner said about the bank. “They’re not letting us spend money without their approval. They’ve basically taken over all of our income stream from client payments.” According to the partner, the firm’s accounts receivables are expected to be enough to pay off Citibank and the firm’s other creditors, which are primarily vendors. That leaves the landlords. The San Jose lease may be the most crucial since it was signed seven years ago when Skjerven was still a general partnership. “When it’s a general partnership, all the partners, including all their personal assets, are on the line,” said Guy Calladine, a San Francisco malpractice attorney. But he stressed that the specific terms of the lease could negate any personal liability.

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