Richmond, VA -- (ReleaseWire) -- 09/16/2019 --On September 12, 2019, the Office of the U.S. Trustee (the "UST") filed its motion to convert the chapter 11 bankruptcy of LeClairRyan PLLC ("LeClairRyan") to chapter 7. This motion is set for hearing on September 26, 2019 at 2 p.m. in the courtroom of Judge Kevin Huennekens. The UST argues that LeClairRyan continuing as a liquidating chapter 11 bankruptcy is going to increase the burden of fees that will ultimately reduce the recovery to unsecured creditors.
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. LeClairRyan's bankruptcy case is numbered 19-34574- KRH. Proposed counsel for LeClairRyan is the law firm of Hunton Andrews Kurth LLP.
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).
To date, the UST has yet to form a committee of unsecured creditors in LeClairRyan's case. These committees hire professionals, including attorneys and financial advisors, to advise them and to help maximize the recovery for unsecured creditors. Their professional fees are administrative expenses that are paid by the debtor's bankruptcy estate. Appointment of such committees is an expensive, but necessary, component of any large chapter 11 bankruptcy. However, such committees are not appointed in chapter 7 bankruptcies as their duties are provided by the chapter 7 trustee.
Given the hemorrhage of cash in this case, the UST seeks conversion of the case and to have a chapter 7 trustee appointed to orderly winddown LeClairRyan's affairs.
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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