Richmond, VA -- (ReleaseWire) -- 09/27/2019 --On September 26, 2019, it was decided that the bankruptcy case of former law firm LeClairRyan PLLC ("LeClairRyan") would be converted to liquidate under chapter 7 effective October 4, 2019 at 12 p.m. and that a chapter 7 trustee would be appointed. LeClairRyan, ABL Alliance LLLP (LeClairRyan's secured lender), and the Office of the U.S. Trustee (the "UST") all agreed that the case should be converted to chapter 7. However, they disagreed as to if the conversion should be immediate or delayed until October 4th.
The UST's representative, Robert Van Arsdale, argued that the conversion should be immediate. LeClairRyan's counsel, Tyler Brown with the law firm of Hunton Andrews Kurth LLP, argued that the Court should defer to the debtor's business judgment and that the UST had put on no evidence to establish cause for the conversion. Judge Kevin Huennekens deferred to the business judgment of LeClairRyan and ordered the conversion as of October 4th. Judge Huennekens commented that there was no hint of anything improper going on in the case, otherwise a conversion would have been ordered effective immediately. He further commented that the case was always destined for chapter 7 and that it was only a question of when and how to make a smooth transition.
On September 3, 2019, LeClairRyan filed a petition under chapter 11 of the bankruptcy code following its cessation of operations in August 2019. LeClairRyan had struggled following an exodus of partners in recent years.
On September 12, 2019, the UST filed its motion to convert the chapter 11 bankruptcy of LeClairRyan to chapter 7. The UST argued that LeClairRyan continuing as a liquidating chapter 11 bankruptcy was going to increase the burden of fees that will ultimately reduce the recovery to unsecured creditors.
LeClairRyan's primary asset is its accounts receivable in the approximate amount of $20 million. According to its approved interim budget, LeClairRyan was to collect a total of $4,425,000 in cash receipts during the first four weeks of the case, with $1,306,000.00 collected the week ending September 6, 2019. Upon information received by the UST, the report for the first week shows that the projected collections are significantly lower than what had been projected by over 40 percent. While the fee collections have not been coming in at the rate originally expected, the operating expenses continue at approximately $228,000.00 a week (or $910,000 during the first four weeks).
Upon conversion, LeClairRyan's case will be overseen by a chapter 7 trustee. The trustee will be appointed randomly from the panel of chapter 7 trustees.
About Ronald Page
Ronald Page (http://rpagelaw.com) is a corporate bankruptcy attorney based in Richmond. With offices in Richmond, Virginia, Ronald Page, PLC has extensive experience representing secured and unsecured creditors in bankruptcy proceedings. Please contact Ronald Page, a Richmond Virginia Bankruptcy Attorney (http://rpagelaw.com), if you need assistance protecting your interests in LeClairRyan's bankruptcy.
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Ronald Page, PLC
http://rpagelaw.com
PO Box 73524
N. Chesterfield, VA 23235
(804) 562-8704