Joint Plan of Liquidation Filed

A joint plan of liquidation – basically a settlement of all bankruptcy claims – was filed very late Thursday evening, October 8, 2009 with the bankruptcy court.  The documents are listed below.

Part of the plan is a settlement of the Heller Ehrman employee claims.  Right now I am still reading and processing the information.  I will probably have a summary later this weekend.  But if others have a take on the plan and what it means to employees, please feel free to weigh in on the comments.

Joint Plan of Liquidation of Heller Ehrman LLP documents

Plan

Plan Ex A

Plan Ex B

Plan Ex C

Plan Ex D

Plan Notice

Plan Disclosure Statement

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22 Responses to “Joint Plan of Liquidation Filed”


  1. 1 Former Associate 10 October 2009 at 1:28 pm

    Still analyzing, but it looks like one of the big pot-sweeteners (compared to the prior offer) is the addition of $7 million for waiting time penalties. Note, however, that these are slotted to be paid only if every penny of every other unsecured claim is paid first. There may be some authority for that position, but I haven’t thoroughly explored it.

    Things I would like to know are:

    (1) Is the firm allowing all vacation claims (I think they are, regardless of whether you participate in the class)?

    (2) What percentage of the total WARN act claims is the firm offering to allow? They are proposing $3.85 million, but I don’t know what the total amount of WARN act claims are.

    (3) Is the WARN amount distributed pro rata among all former employees, or will it take into account that some of us were unemployed for a time? I think it is being evenly distributed, but I’m not sure that is fair.

    Just a few thoughts and questions.

  2. 2 Observer 10 October 2009 at 3:51 pm

    The first thing to take note of is that any objection to the adequacy of the information provided in the Disclosure Statement must be filed and served no later than Nov. 2. Such an objection has to be in writing; you can’t just show up at the hearing on Nov. 9 and raise an objection.

    These are not the dates for objection to the plan itself, which will be set later.

  3. 3 anon2 10 October 2009 at 8:44 pm

    For those of us in the class action I assume we will be getting a letter from Blum Collins that will more fully explain the details. From what I can understand of it, the court is allowing $950,000 to Blum Collins for attorneys fees and it supersedes each class member’s portion toward attorneys fees out of our individual claims. In other words, we do not have to pay attorneys fees. Correct? Sounds good to me.

  4. 4 Observer 10 October 2009 at 10:22 pm

    There are some key documents not yet available to HD. To figure out what the plan is really doing with ex-employee claims, we need to see certain exhibits to the disclosure statement that list individual claims. Heller has filed those exhibits under seal, so we’ll have to wait until our copy of these documents arrives in the mail before we can do more analyzing.

  5. 5 John 13 October 2009 at 4:02 pm

    What about employees that were not part of the classes listed? I’m thinking, for example, of the Madison office. Are they SOL, or are their claims paid with the other priority payments?

  6. 6 Non-Class Member 13 October 2009 at 6:28 pm

    Can anyone on behalf of the class explain what they are getting that the rest of us aren’t in exchange for taking $1mm off the top from the estate’s funds? In looking over the plan the only thing the class seems to be getting extra is the Class 6 Claims which take a whole lot of faith to think will ever be paid. The Class 1 Claims and Class 2 Claims should mean everyone gets their priority amount (as listed on your proof of claim presumably) paid out whether part of the class or not and then we all share in Class 5 Claims as unsecured creditors for the remainder of what was on our proof of claims.

    If folks are really willing to pay $1mm of the estate’s funds away (that could be used to pay priority and general unsecured claims in classes 1, 2 and 5) to have a shot at Class 6 Claims I’ve got a bridge to sell you.

  7. 7 Former SF Assoc 13 October 2009 at 9:30 pm

    The fact is that a whole lot of people broke a whole lot of laws, and we are getting paid only a percentage of what we are ultimately owed by the HEWM, its former partners and the banks.

    Let me be clear, and let there be no mistake about who benefits from this settlement: the attorneys “representing” the various parties. Us former employees are being screwed (yet again) by a bunch of attorneys looking after their own monetary interests.

    We should be paid every penny of what we are owed for 1) wages, 2) vacation, 3) WARN act wages/ penalties, 4) waiting time penalties.

    And let me be clear: the money is there. Citibank, Bank of America, the former shareholders who are at other firms, and indeed the estate itself is rolling in cash. And we need to make sure justice is served by getting 100% of what we are owed.

  8. 8 Former SF Assoc 13 October 2009 at 9:34 pm

    And if you aren’t angry any more about what happened to us almost exactly a year ago to the day, then I urge you to go out and see Michael Moore’s new movie “Capitalism: a Love Story.” I was reduced to tears numerous times throughout the film as it brought back very painful memories of a year ago.

    There is one scene in particular where the workers at Republic Window in Chicago stage a sit-in in order to force Bank of America to pay regular wages, warn act wages and vacation time. I have never become so emotional in a movie theatre, and I was not the only one who clapped out loud during the scene.

    I, for one, refuse to accept a fraction of what these greedy pigs owe me.

  9. 9 Former LA Associate 13 October 2009 at 10:57 pm

    ALL WAGES should be paid in full to all of us who are rightfully owed to it. The GREED is what put us all here unfortunately in the first place.

    Those who cheated, will deserve what they will will get.

  10. 10 anon2 14 October 2009 at 1:40 am

    To Non-Class Member,

    The difference between what the class members and the non-class members will receive at this point is nothing. But prior to the all day mediation our class counsel attended on Sept 25 or 28, all employees collectively were only going to get a measly $7 million (the employees’ collective amount due is $24M). Blum Collins asked for $30M (to include their atty fees). Following the mediation, Blum Collins was able to get Heller estate to agree to pay $19M AND get the Court to pay their attorney fees out of the Estate pot, so each class member will receive most of their money, without having to pay any attorney fees. It’s definitely more than we would have received without class counsel.

    But if a non-class member wants to opt out, they can settle for the smaller amount, I’m sure the Heller estate wouldn’t mind pinching your share.

  11. 11 Observer 14 October 2009 at 1:43 am

    >Non-Class Member: If you accept the class settlement, you are assured of priority treatment for a portion of your WARN Act claim. If don’t accept the settlement (you have to opt out to avoid being bound by it), the debtor and committee reserve the right to object to your WARN Act claim or its status as priority. And I expect they will object to portions of the claims of opt-outs.

    You need to see the detailed list exhibits to the disclosure statement, which are (I think) still on their way in the mail, before you’ll know exactly how they are proposing to treat your claim.

    If you think the banks, the former shareholders, etc., should have to pay you whatever Heller as debtor doesn’t, you would have to opt out of the class and then sue those people yourself. Blum Collins has apparently signed on to the proposed settlement terms, so you would need different counsel and would have to pay them yourself. If you want to do all that, I’d be getting organized with several of you, and arranging for counsel as a group, quite soon. Things are likely to happen pretty fast over the next three months.

  12. 12 Former Associate 14 October 2009 at 11:10 am

    Here’s what I understand the deal to be:

    Vacation: Heller will allow (i.e., not object to) all of our claims based on unpaid vacation.

    WARN Act: If you are part of the class settlement, Heller will allow a certain amount of your WARN claim. As Observer points out, until you get your individual Exhibit A to the settlement agreement, you won’t know what percentage of your WARN claim they are offering to allow. If you opt out, I suspect they will object to your entire WARN claim, which means you’ve got to then litigate against Heller (and probably other creditors, who will want to see your claim as small as possible) your entitlement to it.

    Waiting Time Penalties: If you are part of the class settlement, Heller will allow $7 million for waiting time penalties. Again, without Exhibit A it’s hard to know what percentage of your claim they are allowing. Also–and this is a major issue–Heller is treating waiting time penalties as a subordinated class, which means you won’t get a penny of this component of your claim until every other unsecured claim is paid in full. If you opt out, I suspect Heller will object to your waiting time penalty claim. I think this $7 million offer is a bit hollow, as I suspect nothing will ever be paid in this category. They may as well allow the entire thing. The only priority lower than this category is shareholders actually getting some of their capital back.

    Finally, an observation that applies to all of the above: Heller “allowing” a claim of $X doesn’t mean you will get $X. It means that you will have an allowed claim for that amount. What you get will ultimately depend on how much $ the estate is able to recover from shareholders, Covington, BofA, clients who haven’t paid, etc. The disclosure statement estimates a payout on the general unsecured claims of 20 to 60 cents on the dollar. So, if your allowed vacation and WARN claim (I’ve left out waiting time penalties because I don’t think we’ll ever see a penny) is $20,000, you may ultimately only receive $4,000-$12,000. Then, Heller will withhold employment-type tax withholdings from that payment. Thus, your $40,000 claim, of which $20,000 is allowed, may ultimately only net you $2,500.

    If you don’t participate in the settlement, be prepared to litigate the WARN act and waiting time penalty issues. I think we have some good arguments on both. But I will wait to see my Exhibit A before deciding.

  13. 13 Paladin 14 October 2009 at 1:59 pm

    Correct, Former Associate. Which means that the class action blew a million dollars of creditor money for essentially nothing.

  14. 14 Former SF Assoc 14 October 2009 at 3:56 pm

    Well, not for essentially nothing. Some lawyers got rich off of our misery (again). Doesn’t that count for something? :-)

  15. 15 Thomas MacEntee 14 October 2009 at 6:19 pm

    Time for me to step in. I will have a more detailed post tomorrow since I just got home from San Francisco.

    Former SF Assoc I take exception to your last comment about Blum Collins. I personally know the risks that they took as well as the risks taken by the named plaintiffs and all the hard work involved with this case and settlement.

    I was on many of the conference calls late at night and on Saturdays working on strategy etc. Also your colleagues who did sign on with Blum Collins were willing to risk 20-30% of their settlement to fees for Blum Collins out of their own pockets.

    In addition many of the name plaintiffs put their own personal and professional reputations on the line – some of us received nasty, vitriolic hate mail from former shareholders. Some of us have been black-balled on the professional sphere and are still not employed due to our involvement with the class action suit. And I’ll point out that I along with several others don’t feel the need to hide behind anonymity in our comments, our articles or our involvement with this case.

    If you or anyone else who was a former Heller Ehrman employee wants to go off and organize your own class or defend yourself you are free to do so. When all is said and done, I’d like to see what your settlement amount is compared to what is listed in the Plan of Liquidation.

    I will have more details as to the settlement and why I think it is in the best interest of ex-Heller employees tomorrow.

    Thomas MacEntee

  16. 16 dandelion greens 15 October 2009 at 12:17 am

    I heard some of the partners actually submitted claims for vacation time they claim they were owed from before they made partner. Are those greed b*stards getting paid that amount, too, under this settlement?

  17. 17 Former Associate 15 October 2009 at 10:09 am

    dg – that’s definitely true for at least one junior partner; I saw his claim. I don’t know if the firm is allowing the claim or not.

  18. 18 Paladin 15 October 2009 at 1:03 pm

    @Former SF Associate

    As per usual! Lawyers and lawfirms are walking away with buckets of cash. Nothing new here.

  19. 19 Paladin 15 October 2009 at 1:23 pm

    @Tom

    Gosh, is your flame directed at me? There is no vitrolic in my comments, only observation. My observation is that the Class Action cost the creditors a million dollars in known lawyer fees, which does not include what the Estate spent to defend against it, which also comes out of the creditor pot, and the Class ended with very little to show for it.

    My opinion stands. However much the Class Action assuaged the anger and bitterness of those who pursued it, they will probably end up with nothing more than they would have received anyway, and perhaps less, given the astounding lawyer fees.

    The lawyers representing the various parties in this sad affair are the only ones making any money. They will profit hugely. The rest of us will divvy up the pennies they leave behind.

  20. 20 Anonandon 15 October 2009 at 2:05 pm

    Does anyone know when the exhibits filed under seal (i.e. the breakdown of individual claims) will be made available? I’m assuming there is no way to request/view them as of now.

  21. 21 Former SF Assoc 15 October 2009 at 4:38 pm

    Look, I appreciate what the named members of the class did, and I appreciate the time that you, Thomas, have spent on this Web site, and the time you’ve spent with Blum Collins. I really, really do appreciate that, and I know other former Heller employees do too. This blog has been a huge, huge source of information and comfort in the last year.

    But, I am still furious at the Firm, the former shareholders, Bank of America, and Citibank. I want my money, yes. But what would make me even happier would be to see the former shareholders, B of A, and Citi pay very dearly for their sins to the extent the law will allow. Massive fines, huge punitive damages (pain and suffering, emotional distress), and possibly criminal fines and jail time for former shareholders (I realize jail time is highly unlikely, but it would be nice to see people like Barry Levin and Matt Larrabee shake in their boots a little).

    This settlement (from my skimming of it) releases HEWM, the former shareholders, B of A, and Citi from any and all claims against them by HEWM former employees.

    I want justice. To me, a percentage of what I’m owed without any further accountability by the former shareholders, B of A, and Citi is not justice.

  22. 22 Travis Bickle 15 October 2009 at 9:16 pm

    Part of me totally agrees with Former SF Assoc. I want to see the villains get what they deserve. But I understand if certain class members who are in dire need of funds really want this thing to settle.

    Sounds like settlement is a “done deal” for the class action headed by Blum Collins. Looking forward to seeing Thomas’ post on it.


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