Telecommunications company 360 Networks and a representative of its creditors have settled their claims against the estate of defunct law firm Dreier LLP, whose founder, Marc S. Dreier, pleaded guilty in 2009 to running a massive Ponzi scheme. 360 Networks had retained Dreier LLP as its counsel while it was in bankruptcy. Part of the firm’s role was to hold money recovered from preference actions in escrow. After Mr. Dreier’s arrest, it was revealed that no money was held in escrow. The newly reorganized 360 Networks filed a claim against Dreier LLP’s estate for the amount that should have been in its account—more than $38 million. A court-appointed representative of 360 Networks’ creditors filed a claim for over $85 million.
Sheila M. Gowan of Diamond McCarthy, the trustee in charge of liquidating the estate, in turn filed a preference action against 360 Networks, which received over $11 million from Dreier accounts in the 90 days before the firm’s bankruptcy. Last week, Ms. Gowan filed a motion in the U.S. Bankruptcy Court for the Southern District, In re: Chapter 11 Dreier LLP, 08-15051, asking for court approval of a settlement of both claims. Under the settlement, 360 Networks will drop its claim against the estate and will pay the trustee $2.875 million in cash.
