Moving Expenses: One Incoming Associate’s Story

Your cruise director received an e-mail from a former incoming Heller associate who was expected to report to the New York office last Fall.  If you remember, the start dates were pushed back to January, promises of a stipend were made, yada yada yada.  Well here is a new twist on the old plot line “just when you thought it was safe to go back in the water.”

The incoming associate told me that he moved to New York a week before the announcement was made about the reconfigured start dates.  Since the move was arranged through Heller, the incoming associate thought that the bill for the movers had been paid.  Guess again.

He received a letter from the moving company stating that Heller had refused to pay the bill and the terms of the bill of lading used during the moved states that he would have to pay up in the event that Heller didn’t.

Now being asked to cough up close to $5,000, I’m sure the incoming associate wasn’t expecting that.  This is another example of not only the false promises offered by Heller but the utter lack of communication which has been the hallmark of Heller’s management style for quite some time.

As I’ve stated before, I hope that the incoming associates get in line with the rest of us and complete a Proof of Claim form for many of the items such as moving expenses, stipend, bar exam fees, etc. that Heller had promised it would provide.


11 Responses to “Moving Expenses: One Incoming Associate’s Story”

  1. 1 Former Associate 21 January 2009 at 12:29 pm

    Sorry to hear that. On an unrelated note (apologies for the threadjack)…

    In the Limited Opp./Non-Opp. of the Unsecured Creditors re certain of the leases (linked on the BK page of this site), there are a couple of juicy tidbits. First, in paragraph 11, the Committee states the following: “Though not disclosed at the preliminary cash collateral hearing, the Debtor’s
    obligations to Bank of America are guaranteed by the Debtor’s corporate general partners.” All along, I’ve been told by shareholders that there are no personal guarantees on any of the firm’s leases or loans. Maybe that’s a lie, or maybe “the Debtor’s corporate general partners” means something other than shareholders. I don’t know, but I’d love to find out more. If SHs diverted to BofA funds to which I was entitled (vacation and WARN) in order to avoid their own personal liability, that makes me a new kind of angry.
    Also, the committee does a nice job of piling on on BofA re the termination of the UCC recording. I really hope the bank gets its just deserts on that one (i.e., unsecured and in line just like the rest of us).
    Finally, a troubling passage: “the partnership has commenced its wind up and is no longer a going
    concern” (para. 6(a)). I would love an update on the status of collections, etc….
    Hope all is well.

  2. 2 Observer 21 January 2009 at 3:20 pm

    “no longer a going concern” only means that they are no longer doing legal work; doesn’t mean that collections aren’t still being made

  3. 3 Former Associate 21 January 2009 at 4:22 pm

    Weird, for some reason my brain saw “commenced” but interpreted it as “concluded.” That makes a lot more sense now. I’d love to learn more about the personal guarantees and the revelation in the pleading that this information may have been disclosed during a confidential meeting with Brad Scott.

  4. 4 Observer 21 January 2009 at 6:17 pm

    At first glance, “guaranteed by the Debtor’s corporate general partners” does not mean as much as one might think. That seems to refer only to the fact that Heller Ehrman LLP was owned by its state level partnership entities. The pleading statement does not seem to have any reference to any individual guarantees.

  5. 5 Former Associate 21 January 2009 at 6:23 pm

    Thanks, Observer. Looks like the Heller shareholders built themselves a nice little shell game, or house of cards, or [whatever cliche you prefer]…

  6. 6 Observer 21 January 2009 at 9:11 pm

    Somebody on had said that there were no individual partner guarantees on the bank debt, and that was a reason why
    B of A was so tight-fisted on use of collected funds.

    I had had the impression that there were individual partner guarantees, but limited to a portion of the debt in proportion to the size of the capital account of the individual partner. But I don’t know if that is currently correct or not.

    If anybody has actual knowledge — please chime in.

  7. 7 Anon 21 January 2009 at 10:32 pm

    There are no personal guarantees. Observer is correct in that the limited partners in the LLP were the prof corps set up in each various jurisdictions. Despite the nefarius claims to the contrary, the management had been trying to change the corporate structure to a true LLP for the past year.

  8. 8 Former Associate 22 January 2009 at 11:26 am

    It seems, then, that the individual state corporations were undercapitalized. I wonder if other corporate formalities were observed, such that an alter ego analysis would allow a piercing of the corporate veil.

  9. 9 Observer 22 January 2009 at 5:01 pm

    I don’t think piercing the corporate veil would have any substantive effect here. As far as I know, those state-level entities existed solely to have compliance with state-level law licensing requirements. The assets were owned by Heller Ehrman LLP, the debtor in the Ch. 11, and so are already in the case.

    Those thoughts are consistent with the fact that the firm has not bothered to file a bk case for any of the state-level LLP’s — presumably because there would have been no economic reason to do so.

  10. 10 Former Associate 22 January 2009 at 5:29 pm

    What, then, is the best legal strategy for forcing the individual SHs to contribute to the estate in order to meet the apparent shortfall? Perhaps best not discussed openly here.

  11. 11 Observer 22 January 2009 at 6:09 pm

    I haven’t reviewed the Cal limited partnership statutes to see what the exposure of the individual partners may be under the law.

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