Bankruptcy

Bankruptcy Trustee Sues Law Firm For $1.2 Billion For Client Taking Too Long To Go Into, Then Out Of, Bankruptcy

By Scott Riddle

From Law.com -

The 75-page complaint, filed Monday in Manhattan Supreme Court by trustee Richard Gray, alleges McDermott Will put off a much-needed Chapter 11 filing to facilitate self-dealing by two other members of the hospital group's restructuring team. As a result of the delay, the trustee claims, Saint Vincent's incurred greater operating losses, paid more professional fees and took longer to emerge from bankruptcy after it finally did file.

The suit is requesting $1.2 billion in damages for legal malpractice, fraud and breach of fiduciary duty, among other claims, as well as disgorgement of $4.5 million in previously paid legal fees. In addition to the firm itself, partners William P. Smith, Stephen B. Selbst and David D. Cleary are individually named as defendants. ...

The other members of the restructuring team cited in the suit are financial advisory firm Huron Consulting Inc., and turnaround boutique Speltz & Weis, whose principals David Speltz and Timothy Weis respectively stepped into the roles of chief executive officer and chief financial officer at Saint Vincent's in 2004. McDermott Will was retained to advise on the group's financial situation in December 2003.

Full post as published by Georgia Bankruptcy Blog on April 17, 2008 (boomark / email).