Robert McDonnell. July 9, 2013.
Robert McDonnell. July 9, 2013. (Photo: vastateparksstaff via Wikimedia Commons)

Rock Creek Pharmaceuticals Inc. and two subsidiaries filed for bankruptcy in Delaware last week, owing nearly $3.7 million to lawyers from more than 20 firms, including at least eight from the Am Law 200.

Big firms make up half of Rock Creek’s 20 largest unsecured creditors, including legal giants like Chadbourne & Parke; Crowell & Moring; Foley & Lardner; K&L Gates; McGuireWoods; Morgan, Lewis & Bockius; Skadden, Arps, Slate, Meagher & Flom; and Steptoe & Johnson.

The Sarasota, Florida-based biopharmaceutical company, once known for its ties to a scandal-plagued Virginia governor under its former name Star Scientific Inc., is being advised by Delaware’s Ciardi Ciardi & Astin in its Chapter 7 case, a process that usually results in the liquidation of a debtor. John “Jack” McLaughlin Jr., a Ciardi partner advising Rock Creek, did not respond to a request for comment about his client’s outstanding legal bills.

Court records show that Ciardi received $50,005 on Sept. 14 for its services to Rock Creek, while the company paid another $10,000 to SmithAmundsen in Chicago between June and September of this year. Rock Creek’s Chapter 7 petition lays bare the rest of its legal debts, which are listed in descending order below by firm name and office owed the money.

McGuireWoods (Richmond, Virginia): $1.38 million

Steptoe & Johnson (Washington, D.C.): $464,897

Skadden (White Plains, New York): $259,043.75

K&L Gates (Dallas): $246,930.91

Chadbourne (New York): $243,654.90

Foley & Lardner (Tampa): $214,729.67

Morgan Lewis (Washington, D.C.): $179,527.89

Crowell & Moring (Baltimore): $163,437.50

Banner & Witcoff (Washington, D.C.): $162,423.87

Jaffe & Asher (New York): $94,799.66

Covington & Burling (San Francisco): $41,263.36

Miles & Stockbridge (Baltimore): $32,064.62

Kelley Drye & Warren (New York): $20,000

Paul Hastings (Washington, D.C.): $17,987.36

Bryan Cave (St. Louis): $17,834.50

Hyman, Phelps & McNamara (Washington, D.C.): $15,733.18

DiMuro Ginsberg (Alexandria, Virginia): $14,661.24

Caulkins & Bruce (Arlington, Virginia): $9,804.81

Proctor Heyman Enerio (Wilmington, Delaware): $2,481

Jennison & Shultz (Arlington, Virginia): $1,900

Rock Creek also owes money in legal fees for former board members Sam Duffy ($25,000), David Foulke ($5,165) and Sunitha Chundru Samuel ($70,000). The company moved in 2014 from Glen Allen, Virginia, to the Florida coast as Rock Creek sought to develop drugs to treat neurological diseases like Alzheimer’s and certain inflammatory and behavioral health conditions.

Federal court filings show that K&L Gates and Kelley Drye have both handled litigation for Rock Creek when it was known as Star Scientific, although the $20,000 debt to Kelley Drye in Rock Creek’s bankruptcy case is listed as for “lender legal fees.”

In 2012, K&L Gates and Crowell & Moring took the lead for the company in patent litigation with cigarette giant R.J. Reynolds Tobacco Co. over a method for curing tobacco. After the end of that decade-long dispute, K&L Gates defended Star Scientific in a flurry of shareholder suits.

Chadbourne was hired in 2013 by Star Scientific to conduct an internal investigation in response to subpoenas from the U.S. attorney’s office for the Eastern District of Virginia. In January 2014, federal prosecutors indicted former Virginia Gov. Robert McDonnell and his wife, Maureen, on charges of illegally accepting gifts, loans and payments from ex-Star Scientific CEO Jonnie Williams Sr. in exchange for promoting dietary supplements made by the company. (The U.S. Supreme Court overturned McDonnell’s corruption conviction this summer and last month the U.S. Department of Justice dropped its charges against him.)

Star Scientific, which adopted the Rock Creek name in the aftermath of the McDonnell case, subsequently struggled to remake itself as a drug developer in Florida. Securities filings show that Rock Creek reached a memorandum of understanding with Williams in May 2015 to satisfy its former CEO’s “indemnification rights for reimbursement of legal expenses” incurred by McGuireWoods and Steptoe & Johnson.

The company agreed to pay $1.6 million to McGuireWoods (against an invoiced amount of $1.93 million) and $437,000 to Steptoe & Johnson (against an invoiced amount of $629,897). In order to pay down those fees, Rock Creek said that each month it would pay $45,000 to McGuireWoods and another $15,000 to Steptoe & Johnson, according to securities filings.

Foley & Lardner has done corporate work for Rock Creek, while Banner & Witcoff has handled IP matters for the company and predecessor Star Scientific. Jennison & Shultz has done trademark work for both entities, according to public records, while Hyman Phelps handled regulatory matters for Star Scientific. Proctor Heyman Enerio, Miles & Stockbridge, DiMuro Ginsberg and Caulkins & Bruce have represented Star Scientific in derivative litigation with shareholders.

Paul Perito, a former Paul Hastings partner who served as president, COO and senior counsel for legal and regulatory affairs at Star Scientific before stepping down with Williams in late 2013, is listed in bankruptcy filings as being owed $312,500 in severance from Rock Creek. Perito’s initial severance agreement with Star Scientific in early 2014 reportedly called for him to receive $2.5 million from the company. (Perito testified against McDonnell at trial.)

In their Chapter 7 filing last week, Rock Creek and subsidiaries RCP Development and Star Tobacco reported collective assets of $548,736 against $85.4 million in liabilities.