Key Ruling Brings Thelen Bankruptcy Closer to ConclusionNovember 21, 2014 – In The News
Yann Geron was quoted in The American Lawyer article, “Key Ruling Brings Thelen Bankruptcy Closer to Conclusion.” Full text can be found in the November 21, 2014, issue, but a synopsis is below.
A bankruptcy judge brought Thelen LLP a massive step closer to a final resolution of its Chapter 7 liquidation by ruling that partners who haven't yet settled with the bankrupt firm's estate must pay back monthly draws they received during the final year.
Thelen partners voted to dissolve the firm in November 2008 and the firm voluntarily began bankruptcy proceedings almost a year later. Since that time Thelen's bankruptcy trustee, Yann Geron, has settled or resolved claims for back pay from 240 of the firm's 250 former partners.
The current case involves the last nine partners who have fought the claims. Geron sued former equity partners for breach of contract, claiming that the draws constituted an advance on future profits under Thelen's partnership agreement. There was no profit, so they couldn't keep the money.
Rulings haven’t always been in favor of the trustee in cases involving busted law firms. In July, in a decision in an appeal by Thelen trustee's Geron, the New York Court of Appeals ended debate in the state as to whether matters billed on an hourly basis after a firm's dissolution are the property of the dissolved firm as "unfinished business," concluding that the pending fees were not fair game.
As of February, the Thelen estate had collected $19 million. The total recovery from the nine could add at least $2 million to that total, not including attorneys' fees and interest.
Geron says the money collected from the former partners will go towards the claims of hundreds of former Thelen employees. He estimates that the failed firm will make its final distribution to creditors by the end of 2015.