Heller Ehrman, The Banks and The UCCs – Oh My!

Update – here is the corrected UCC filing by Bank of America:
https://hellerdrone.files.wordpress.com/2009/01/20081001-corrected-bofa-ucc.pdf

Check out the News Articles section today and you will see many stories concerning whether or not the banks involved with the Heller Ehrman dissolution had any standing in collecting the $51 million dollars they did over the past few months.

Expect more news over the coming days and weeks on this issue which is very important.  If the bankruptcy court finds that the banks did not have a secured interest (by filing supposedly “erroneous” UCC forms), they may have to return all monies which were collected during the 90-day period prior to Heller’s Chapter 11 filing on December 28, 2008.

Is this good news?  Yes but not just for the ex-employees at Heller.  It means that the $51 million will go back into “the pot,” as it were, and be available for all creditors.  This means there will be a scramble as to which creditors have priority or more of a claim to that and other monies collected.

Stay tuned.

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7 Responses to “Heller Ehrman, The Banks and The UCCs – Oh My!”


  1. 1 Yet another ex-Hellerite 6 January 2009 at 12:42 pm

    Ouch… but correct me if I’m wrong here. If BofA’s and Citi’s security interest was erroneously voided in 2007, did they even have legal standing to foreclose on their line of credit? Did Heller end up dissolving due to a typo?

  2. 2 Former Associate 6 January 2009 at 12:46 pm

    You make a good point. Had Heller done its diligence, perhaps we all could have been paid timely.

  3. 3 Wow 6 January 2009 at 3:23 pm

    Yet another ex-Hellerite: Wow. If what you are saying is correct, that is just stunning. While the shareholders never really gave a good reason fpr tje dissolution, It seems that the banks were the straw that broke the camel’s back. If they hadn’t called in the loans, maybe the firm would have tried to recover, and we’d all have our jobs.

    Time for a massive suit against BofA and Citi?

  4. 4 concerned 6 January 2009 at 3:44 pm

    Another ex-Hellerite: I don’t really care where the money comes from — BofA and/or Heller — Time to pay up what is due.

    So many questions… Why wasn’t this discovered before Heller dissolved? Were all the “risk management” professionals asleep? Why didn’t the Firm throw a party upon receipt of the UCC termination? Wasn’t Heller a law firm familiar with UCC practices?

    I could go on and on…but this is just mind blowing that a law firm let a $57 million “mistake” slip through without capitalizing on it. Details…Details.

  5. 5 333 Survivor 6 January 2009 at 3:46 pm

    If BofA didn’t have to respond until 2010, then that only means they must have intentionally filed in 2007 to terminate the secured interest. I’m not sure Heller would have claimed bankruptcy had they known this. But this is something Heller should have been on top of too.

    Someone please let BofA know that there are no “do-over’s” in bankruptcy and UCC filings. I hope Heller charges them late fees if not paid back in time, just like they charge us late fees. Yikes, I’d hate to be the one who filed the termination document. Can someone say “Malpractice”.

  6. 6 Wow 6 January 2009 at 4:48 pm

    Yeah. Karma is a b**ch, isn’t it BofA and Citibank?
    No mercy when I paid that credit card bill a day late.
    No mercy when you decided to raise by credit card APR to 30% from 7% when you found out I left my job to go back to school.
    No mercy when i lost my job at Heller and I needed a little understanding paying my credit card and student loan bills.
    No mercy when I walked into a Citi branch last week to cash a check dated for the next day so I could pay my rent.

    SO I SAY NO MERCY TO BofA and CITI. Give us our money back, and get out of my life.

  7. 7 Observer 6 January 2009 at 4:55 pm

    This has the potential to change the landscape for priority of claims among all the unsecureds. That can be good for us, with our employee priority status as to a portion of our claims. It does not add money to the pot in total: The $51 MM may come back in (more likely there will be negotiations), but if it does the banks then have a claim for that amount too. They will then share with us, and all other unsecureds.

    This does not mean any immediate scramble for priority among the creditors. The debtor can only (and eventually) distribute to claims in accordance with the priorities of the bankruptcy code.

    What will happen next are three things:

    — Heller will now be able to (or attempt to) hang on to the next dollars of AR collections, on the basis that there is not a bank lien on them.

    — Possibly, negotiations between Heller and the banks ove the UCC issue. (Just for example, the banks could agree that the $51MM has to be available for all claims, while Heller agrees that the money can sit at the banks until it is all sorted out..)

    — Probably, an adversary proceeding or motion to determine the status of the banks alleged lien.


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