The trustee overseeing LeClairRyan’s bankruptcy liquidation has just scored millions more in his hunt for cash to pay off creditors at the collapsed Richmond law firm.
A settlement of nearly $ 10 million was reached on Monday between director Lynn Tavenner and two dozen former directors, officers and shareholders of the company, including co-founder and namesake Gary LeClair, as well as former CEOs David Freinberg and Erik Gustafson.
As approved by Judge Kevin Huennekens on Monday, the settlement money will come from a management liability insurance policy that LeClairRyan had in place at the time of its collapse in 2019. It includes an upfront payment to the bankruptcy estate of $ 9.47 million plus additional expenses of no more than $ 525,000.
The deal ends Tavenner’s efforts to recover some compensation paid to the 26 shareholders in question before the company’s demise. Each of the 26 was a shareholder or held managerial positions, either in the ranks of the company’s management or on its board of directors from 2014 until his death.
Tavenner began the process by issuing formal notices proposing to settle through mediation. For those who refused to go to mediation, the trustee took the next step and filed a series of lawsuits on September 2.
Tavenner had sought compensation in the range of five to six figures from most of the defending shareholders. For many former directors, the lawsuits demanded tens of millions in damages.
All parties eventually participated in a 2 p.m. settlement conference on November 16, after which the agreement was reached.
“After long and fiercely contested negotiations, the parties have agreed to fully and definitively resolve the covered claims without admission of liability,” the court documents indicate.
In the end, Tavenner was able to tap into a liability policy from Columbia Casualty. Tavenner had previously said in court proceedings that she was targeting the proceeds of the policy.
In addition to Freinberg and Gustafson, those included in the settlement were Lori Thompson, who was the firm’s general counsel in its dying days and sat on its dissolution committee.
For Gary LeClair, the settlement frees him from Tavenner’s litigation, which was due to be tried in April. In that case, in which LeClair was a co-defendant with legal services firm UnitedLex, Tavenner sought to blame him for the firm’s failure and claimed he had benefited financially.
While LeClair had initially sought unsuccessfully to have the case dismissed, this latest regulation exonerates him from any further liability and releases him as a defendant. This case continues against the other defendants, with depositions starting this week ahead of next year’s trial.
The settlement comes just days after longtime former LCR lawyer and legal director Bruce Matson was sentenced to nearly four years in prison for stealing money from bankruptcy accounts while at the firm lawyers. Matson is now serving his sentence at a federal institution in Maryland.