Four firms’ efforts to overturn a contentious and problematic bankruptcy doctrine hit a roadblock Monday.
U.S. Bankruptcy Judge Dennis Montali sided with the Heller Ehrman estate on four key liability issues in a ruling Monday, advancing its efforts to recover profits from four of the firms Jones Day; Davis Wright Tremaine; Orrick, Herrington & Sutcliffe; and Foley & Lardner that scooped up Heller partners as the firm cratered in 2008. Heller’s partners had agreed to waive their right to pursue so-called Jewel claims in order to facilitate orderly moves to new law firms. But Montali said claims allowed under Jewel v. Boxer a decades-old First District case dealing with the break-up of a four-lawyer firm can’t be waived in such circumstances. He agreed with the Heller estate that the waivers transferred property from Heller to the defendants without returning anything of value to the defunct firm at a time when it was insolvent.
