A Low-Ball Settlement Offer

I’ve received several e-mails from ex-Hellerites concerning a settlement offer made by the employment lawyer for Heller Ehrman LLP (John C. Fox of Manatt).

Blum Collins – the firm representing the class action lawsuit group – has been in contact with its clients in the form of two letters:

  • the settlement offer letter from John C. Fox dated August 27, 2009; and
  • a summary and recommendation letter from Craig M. Collins of Blum Collins dated September 4, 2009

For those ex-Heller Ehrman employees who have not yet signed up with Blum Collins as part of the class action lawsuit, I wanted to convey some of the information as to the settlement and why acceptance of such settlement is not recommended:

  • The offer is too low.  The Heller Ehrman LLP offer is less than 25% of the $23.4 million in claims owed to its former employees.
  • Heller Ehrman LLP has the ability to pay much more than the offered amount.  Besides having over $10 million in its bank accounts right now, according to the Unsecured Creditors Committee, there was a fraudulent conveyance of $106 million to Heller’s former shareholders prior to the firm’s collapse.  This money should be returned to the estate to take care of claims and bills.  And the $50 million which Bank of America took out of the firm despite not having a perfected security interest should also be returned to the estate.  Former clients of the firm still owe it over $50 million.  This is over $206 million total and yet we’ve being offered pennies on the dollar for our claims.
  • The former shareholders are looking out for themselves.  The settlement offer has been designed by the Dissolution Committee to protect the shareholders from having to return any of the $106 million mentioned above.  Instead of taking responsibility in paying former employees their hard-earned wages and benefits, the shareholders, by way of the Dissolution Committee, engage in bankruptcy maneuvers and delaying tactics to get out of such responsibility.
  • Taking advantage of desperation.  The Dissolution Committee is confident that there are enough former Heller employees who will be desperate to take any amount of money as a settlement no matter how insulting the amount.
  • Threats are part of the settlement offer.  It has been made clear by Heller Ehrman LLP that if the current offer is not accepted, they will use various banruptcy maneuvers, including a plan of reorganization, to try to force the ex-Heller employees to accept the low ball amount to settle the claims.
  • The Unsecured Creditors Committee is no friend of ex-Heller employees.  Despite our various attempts to secure a representative set on the committee, we still have no voice.  The Unsecured Creditors Committee has still not offered an explanation as to why it has not sued the former shareholders to recover the $106 million in alleged fraudulent transfers.  Any attempt for information has been blocked by the committee’s attorney and the committee seems to operate under an unhealthy cloak of secrecy. In addition, the committee has not offered an explanation for the delay in collecting the remaining over $50 million in accounts receivable owed to the firm.

What You Can Do

Not only is Heller Ehrman LLP’s low-ball settlement offer unreasonable and unacceptable, it is an insult as it incorporates desperate divide-and-conquer tactics used with its former loyal employees.

  • E-mail me at hellerdrone@gmail.com if you are a former Heller employee and would like to see a copy of the settlement offer and the Blum Collins response.
  • Go to http://www.blumcollins.com and sign up for the email list to receive future communications on the settlement offer and upcoming maneuvers by the Unsecured Creditors Committee.

* * *

The former shareholders cannot be allowed to avoid their responsibilities to its former employees by way of inadequate settlement offers and bankruptcy maneuvers.  There must be a much fairer resolution for all ex-employees.

© 2009, copyright Thomas MacEntee


1 Response to “A Low-Ball Settlement Offer”

  1. 1 P-OWED 21 September 2009 at 4:24 pm

    Has any reason been given for not including a representative of the employees on the unsecured creditors committee?
    When will a decision be rendered on whether Bank of America has to return the $50 million it took based on an incorrect UCC filing?
    Thank you for any information.

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