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August 12, 2011 6:25 PM

Everything Must Go: Howrey's D.C. Furniture on the Auction Block

Posted by Sara Randazzo

The once-bustling Washington, D.C., headquarters of Howrey are about to be full again—not with lawyers, but with furniture shoppers bidding for bargains and looking to take advantage of the defunct firm's bad fortune.

At an auction scheduled for August 19, the Howrey estate is set to sell off the furniture and equipment that has occupied 300,000 square feet of office space spread across eight floors at 1299 Pennsylvania Avenue that once served as the bankrupt firm's home base.

The vast offerings—including granite and wood conference tables, desks of all shapes and sizes, filing cabinets, refrigerators and even a VCR—can be seen here.

San Francisco federal bankruptcy court judge Dennis Montali authorized the sale at a hearing Friday. At the same hearing, Montali also okayed the hiring of lawyers and accountants to aid in the bankruptcy process, the sale of furniture from the firm’s Irvine, California, office, and the termination of Howrey's London lease.

Montali gave Duane Morris final approval to represent Howrey on labor and employment work related to two lawsuits filed by former employees over the firm’s alleged failure to meet its obligations under the federal Worker Adjustment and Retraining Notification (WARN) Act.

As previously reported by The Am Law Daily, employment litigation partners Eve Klein, James Hollihan, and Lori Ocheltree, employee benefits and executive compensation partner John Reade, Jr., and bankruptcy partners Joel Walker, Ron Oliner, and special counsel Geoffrey Heaton are leading the Duane Morris team. As of a July 21 filing, Duane Morris had billed nearly $100,000 for work on behalf of Howrey before and after the firm’s involuntary Chapter 7 bankruptcy was converted to Chapter 11 on June 6.

Howrey’s longtime accounting firm, Salter & Co., will continue to work for the firm on tax matters, including the preparation of overdue partnership income tax returns from the 2010 fiscal year. Court filings show that Howrey has paid Salter more than $1.5 million since May 2010.

Signed in 2001, Howrey’s London lease had 14 years to go before Montali authorized its rejection on Friday. In Irvine, meanwhile, furniture from the firm’s former office at 4 Park Plaza is being sold to landlord The Irvine Company, with the sale agreement contingent on McDermott Will & Emery finalizing a lease by August 31 to take over the space, according to court filings. 

Several other items on Friday’s agenda were tabled until the next hearing, which is scheduled for August 31. Among the more interesting matters left unresolved: a motion to hire former Howrey partner Richard Burdge, now a solo practitioner in Los Angeles, to represent the estate in collections, malpractice cases, and fee disputes against former clients at a rate of $500 an hour. In an opposition to that motion filed with the court, attorneys for the committee of unsecured creditors requested that the scope of Burdge’s work be limited to a few matters already known to the committee, but not detailed in court documents.

According to court filings, Burdge has a claim of his own against the firm for $74,000 that he says he is owed for salary withheld in 2010 and 2011. The papers detail Burdge's nonequity status at the firm and say he received monthly payments of $28,333 during 2010, plus a roughly $65,600 payment in April of that year as "cleanup distribution" from 2009.

Burdge has already started working for the Howrey estate, billing $20,000 from April through early June, according to his motion.

The Howrey estate also hopes to hire Texas firm Schlanger, Silver, Barg & Paine to help collect attorney’s fees. Schlanger partner Michael Hirsch would take the lead at $500 an hour, according to court documents. A motion to hire Garden City Group to handle noticing, claims processing, and balloting administration services was also pushed to August 31.

Next on the agenda for the Howrey estate: working to settle a dispute with its medical insurance provider, CIGNA, over what the firm says are 4,000 unpaid claims to former employees worth between $1.5 million and $4.4 million. A hearing on that issue will occur in the next few weeks, according to Dylan Trache, a Wiley Rein partner on the firm's team representing Howrey. Trache also said Friday that the attorneys and Montali discussed plans for Howrey's dissolution team to move into new offices. The firm must vacate its current space by August 31.

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Its intriguing how furniture owned by famous and popular people tend to fetch much higher prices at auctions despite its age or condition. Thanks for your post.

Hard to believe. Interviewed there and I am glad I did not join.

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