Legal News

Pillsbury settles with SonicBlue for $10 million

By Richard Binder

Pillsbury Winthrop Shaw Pittman has reached a $10 million settlement in a malpractice dispute with bankrupt client SonicBlue, a court filing Tuesday shows.

The firm will pay $7.6 million and forgo $2.4 million in outstanding fees to SonicBlue's estate, according to the filing, which awaits approval by a bankruptcy judge at a hearing slated for March 31.

SonicBlue's estate had sued Pillsbury for malpractice and breach of fiduciary duty, demanding the firm return $4.2 million in fees and pay $11 million in damages.

Pillsbury represented the SonicBlue estate from the filing of its bankruptcy petition in 2003 until 2007 when it came to light that the firm had failed to disclose to the court a 2002 pre-bankruptcy promise to creditors. The firm promised in a letter to three hedge funds, which had invested in a $75 million bond issue, that they would be repaid in full should SonicBlue enter bankruptcy protection.

Pillsbury attorneys later described the letter as a "scrivener's error."

Read the full story at The Recorder.

Full post as published by Legal Pad | LA on March 11, 2009 (boomark / email).