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August 16, 2011 6:32 PM

Heller Estate Close to Paying Former Employees and Unsecured Creditors

Posted by Sara Randazzo

Unsecured creditors of Heller Ehrman are expected to finally experience a payday in September, nearly three years after the San Francisco firm filed for bankruptcy, according to sibling publication The Recorder (subscription required).

Thomas Willoughby, counsel to the committee of unsecured creditors, filed a motion Monday requesting approval of the payments. The creditors should receive between 24 cents and 33 cents on the dollar, Willoughby told the Recorder, for a total amount of between $21 million and $28 million. Willoughby, a partner with Sacramento boutique Felderstein Fitzgerald Willoughby & Pascuzzi, also represents the unsecured creditors in the Howrey bankruptcy.

Almost 1,000 former staff and associates are included in the group of unsecured creditors. The former employees are due money for violations of the Worker Adjustment and Retraining Notification (WARN) Act, vacation pay, and other unsecured claims worth about $13.2 million, which will amount to about $3 million in payouts, according to terms of the disbursement, the Recorder reports.

Part of the money will come from a settlement reached in late July with former Heller partners now at Covington & Burling, who agreed to pay back almost $5 million stemming from work they took with them as Heller collapsed. The estate also received $20 million from a settlement it made with its former banks, Bank of America, and Citibank, according to a court filing.

The Heller estate will make the first payments at the end of September, pending approval from U.S. bankruptcy judge Dennis Montali, following a Sept. 12 hearing, the Recorder reports.

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