1 DIAMOND MCCARTHY LLP Howard D. Ressler, Esq. (pro hac vice) 2 Stephen T. Loden, Esq. (pro hac vice) Jason M. Rudd, Esq. (pro hac vice) 3 Christopher R. Murray, Esq. (pro hac vice) 909 Fannin, 15th Floor 4 Houston, TX 77010 Telephone: 713-333-5100 5 Facsimile: 713-333-5199 [email protected] 6 [email protected] [email protected] 7 [email protected] Counsel for Allan B. Diamond, 8 Chapter 11 Trustee for Howrey LLP
9 KORNFIELD, NYBERG, BENDES & KUHNER, P.C. Eric A. Nyberg, Esq. (Bar No. 131105) 10 Chris D. Kuhner, Esq. (Bar No. 173291) 1970 Broadway, Suite 225 11 Oakland, CA 94612 Telephone: 510-763-1000 12 Facsimile: 510-273-8669 [email protected] 13 [email protected] Local Counsel for Allan B. Diamond, 14 Chapter 11 Trustee for Howrey LLP
15 UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 16 In re Case No. 11-31376 DM 17 Chapter 11 18 HOWREY LLP, FIRST INTERIM REPORT 19 OF CHAPTER 11 TRUSTEE ALLAN B. DIAMOND 20 Debtor. 21
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26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 1 of 37 1 Table of Contents
2 I. Introduction...... 4
3 II. Background...... 6
4 III. Estate Administration ...... 7
5 A. Trustee’s Retention of Professionals ...... 7
6 B. Compensation of the Trustee and Diamond McCarthy...... 9
7 IV. Business Operations ...... 10
8 A. Wind-Down Operations...... 10
9 1. Staff Reductions and Management of Critical Staff...... 10
10 2. Closing Facilities and Cutting Costs...... 11
11 3. Winding Down the Debtor’s Pension Plans...... 11
12 4. Downsizing Information Technology Infrastructure...... 11
13 5. Tax Matters ...... 12
14 6. Cash Collateral Use and Negotiations with Citibank, N.A...... 12
15 B. Disposition of Records of Former Howrey Clients...... 14
16 C. Foreign Operations ...... 15
17 1. United Kingdom ...... 15
18 2. Belgium...... 16
19 3. Germany...... 16
20 V. Asset Management ...... 17
21 A. Asset Recovery...... 17
22 1. Accounts Receivable...... 17
23 2. Contingency Fee Interests...... 18
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25 2 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 2 of 37 1 3. Equipment and Other Assets...... 23
2 B. Claims Investigation, Analysis and Recovery ...... 23
3 1. Preference and Fraudulent Transfer Litigation ...... 24
4 2. “Unfinished Business” Claims ...... 24
5 3. Other Potential Claims/Litigation...... 25
6 C. Asset Disposition...... 25
7 1. Art Collection Sales...... 26
8 2. Other Liquidations and Settlements...... 26
9 D. Defense of Claims ...... 26
10 1. Proofs of Claim...... 26
11 2. The WARN Act and Warner Investments Adversaries ...... 27
12 VI. Recovery to Creditors and a Chapter 11 Plan of Liquidation...... 27
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25 3 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 3 of 37 1 I. INTRODUCTION
2 Allan B. Diamond, the chapter 11 trustee (the “Trustee”) of the estate of Howrey LLP
3 (“Debtor” or “Howrey”) makes this First Interim Report on the progress and status of the case.
4 Since the Trustee’s appointment on October 12, 2011, the Trustee, with his team of
5 professionals and Howrey staff, have tackled many complex issues and successfully advanced
6 this bankruptcy case by:
7 a. Transitioning administration of the estate from the debtor-in-possession;
8 b. Negotiating weekly, monthly and quarterly extensions of the Debtor’s authority to use cash collateral; 9 c. Assessing, asserting and protecting the Debtor’s interests in various contingency 10 fee cases, including collecting significant recoveries; d. Selecting and employing legal, financial and collection professionals to 11 streamline administration of the estate;
12 e. Transitioning the collection of the Debtor’s accounts receivable to professionals employed on a contingency fee basis resulting in over $5 million in recoveries; 13 f. Finalizing the wind-down of the Debtor’s three pension plans; 14 g. Developing, obtaining approval and implementing procedures for the 15 disposition of voluminous physical and electronic client files;
16 h. Winding down the Debtor’s information technology infrastructure while preserving all critical data; 17 i. Analyzing, preparing and conducting asset sales; 18 j. Investigating, gathering and analyzing voluminous data and documents related 19 to potential litigation claims against myriad third-parties as well as conducting appropriate legal research, analysis and preparations for the commencement of 20 proceedings that seek monetary recoveries;
21 k. Commencing document and testimonial discovery related to certain potential assets and claims; and
22 l. Addressing numerous daily issues that arise in bankruptcy cases of similar complexity. 23
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25 4 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 4 of 37 1 Much has been accomplished in a relatively short amount of time. But much remains to
2 be done to complete the administration of the Debtor’s estate and provide the maximum recovery
3 for creditors.
4 The priority of the Trustee’s ongoing efforts is to maximize the recovery for Howrey’s
5 creditors (secured, administrative, priority and unsecured). It is anticipated that most of the
6 value available to creditors will come from potential claims that the Trustee is currently
7 investigating and developing arising from: (i) Howrey’s interest in pending contingency fee
8 cases; (ii) claims against former partners who received distributions at a time when the firm was
9 insolvent; (iii) claims against former partners that departed with “unfinished business” and their
10 successor law firms that have retained profits belonging to the Howrey estate; and (iv) other
11 potential litigation claims against various third-parties. The chapter 11 process allows the
12 Trustee the flexibility to pursue the full-range of available options to recover and monetize assets
13 as well as resolve disputes with Howrey creditors and, once identified, to craft an appropriate
14 plan of liquidation.
15 Another important goal has been to protect the interests of former clients by, among other
16 things, ensuring that client records and files are preserved, administered and ultimately disposed
17 of in a way that provides notice and an opportunity to retrieve their files to former clients while
18 safeguarding the confidentiality of client information. The chapter 11 process allows the Trustee
19 to direct resources to ensure this critical job is handled consistently with the highest standards of
20 professional ethics.
21 This First Interim Report is offered as a supplement to the Trustee’s monthly operating
22 reports, status hearings and other filings with the Bankruptcy Court.
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25 5 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 5 of 37 1 II. BACKGROUND
2 Prior to bankruptcy, Howrey was one of the largest law firms in the world. Founded in
3 1956, the firm grew to employ over 750 lawyers at offices in Washington, D.C., California,
4 Illinois, New York, Texas, Utah, Virginia and several foreign countries, including Belgium,
5 France, Germany, the Netherlands, Spain, Taiwan and the United Kingdom.
6 Howrey’s profitability suffered in the wake of the worldwide financial crisis and partners
7 began abandoning the firm. By March 2011, Howrey’s partnership formally voted to dissolve
8 the law firm. A Dissolution Committee was appointed to direct Howrey’s wind-down and
9 liquidation.
10 On April 11, 2011 (the “Petition Date”), three of Howrey’s creditors filed an involuntary
11 petition for bankruptcy under chapter 7 of the Bankruptcy Code in the United States Bankruptcy
12 Court for the Northern District of California, San Francisco Division (the “Bankruptcy Court”).
13 On June 7, 2011, the case was converted to a voluntary chapter 11 proceeding under the United
14 States Bankruptcy Code, thus allowing Howrey to continue as a debtor-in-possession. The
15 Dissolution Committee continued to direct the bankruptcy case on Howrey’s behalf until
16 Howrey’s secured lender, Citibank N.A., filed a motion to appoint a chapter 11 trustee to take
17 over administration of the case.
18 On October 7, 2011, the United States Trustee’s Office of the Department of Justice
19 appointed Allan B. Diamond to serve as the chapter 11 trustee. On October 12, 2011, the
20 Bankruptcy Court approved that appointment. Immediately upon appointment, the Trustee
21 began to handle the affairs of the Howrey bankruptcy estate. These efforts are discussed below
22 in the following groupings:
23 A. Estate Administration concerns the bankruptcy administrative aspects of the case, including selection and retention of professionals, review and analysis of all 24
25 6 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 6 of 37 1 professional fee applications and all dealings with the Bankruptcy Court generally. 2 B. Business Operations refers to winding down Howrey’s business operations, 3 including the (i) maintenance, assembly, protection, return, disposition and handling of all client and law firm records, files and data, (ii) closing Howrey’s 4 worldwide offices and coordinating with other court appointed officials from foreign countries, (iii) managing and completing the processes associated with all 5 necessary tax returns, pension, healthcare and other insurance obligations, (iv) reducing and winding down all Howrey operational costs, including information 6 technology systems, data centers, personnel, facilities, furniture, equipment, art work and other assets, and (v) managing Howrey’s wind-down staff. 7 C. Asset Management includes investigation, recovery and monetization of assets 8 of the estate, including the prosecution, settlement and resolution of potential claims and causes of actions against former partners and third-parties, as well as 9 liquidation, sale and disposition of assets.
10 D. Claims Administration and Litigation Defense encompasses handling and defending all types of claims against the estate, including WARN Act, 11 professional liability, contract and other potential creditor claims. III. ESTATE ADMINISTRATION 12 Upon his appointment, the Trustee began administering the Howrey estate. Given the 13 complexity of winding down an international law firm with thousands of former clients and 14 employees, the Trustee has been engaged in the efforts described below. 15 A. Trustee’s Retention of Professionals 16 To assist in administering the bankruptcy case, the Trustee has carefully selected and 17 successfully secured Bankruptcy Court authority to retain and compensate legal, financial, 18 accounting and other professionals. The Trustee retained the law firm of Diamond McCarthy 19 LLP (“Diamond McCarthy”) to serve as general bankruptcy counsel under section 327(a) of the 20 Bankruptcy Code. The Diamond McCarthy firm is uniquely suited to serve in this capacity, 21 given its highly relevant experience advising the trustee in the national law firm bankruptcy case 22 of Drier LLP, as well as its involvement in other national law firm bankruptcy cases. In addition, 23 Diamond McCarthy’s lawyers have decades of experience and expertise in handling all types of 24
25 7 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 7 of 37 1 litigation claims and fraudulent transfer actions on behalf of bankruptcy trustees, debtor estates
2 and creditor committees nationwide. Further, Diamond McCarthy’s ability to hit the ground
3 running and to provide top-tier legal services at hourly rates that compare favorably to those of
4 other national firms made Diamond McCarthy ideally suited to serve the Howrey estate. The
5 Trustee obtained Bankruptcy Court authority to employ Diamond McCarthy on November 29,
6 2011.
7 The Trustee engaged the Bay Area law firm of Kornfield, Nyberg, Bendes & Kuhner,
8 P.C. as local California counsel. Attorneys Eric Nyberg and Chris Kuhner have extensive
9 experience practicing before the Bankruptcy Courts in the Northern District of California and
10 continue to provide insight and assistance on a range of estate administration issues. The Trustee
11 obtained Bankruptcy Court authority to employ the Kornfield, Nyberg, Bendes & Kuhner, P.C.
12 law firm on November 29, 2011.
13 The Trustee reached an agreement with the Official Committee of Unsecured Creditors
14 (the “Committee”) whereby they each would employ Development Specialists, Inc. (“DSI”) as
15 their respective financial advisors in order to minimize costs to the Estate. The Committee had
16 retained DSI prior to the appointment of the Trustee. The Trustee worked with the Committee to
17 expand the scope of DSI’s services, which the Bankruptcy Court approved.
18 The Trustee also retained specialized counsel in a number of areas. Most recently, the
19 Trustee obtained Bankruptcy Court approval to hire the Eversheds law firm in the United
20 Kingdom for the purpose of, among other potential actions, reinstating the charter of Howrey’s
21 UK LLP entity. This action is necessary in order to conduct a proper liquidation of Howrey UK
22 and eventually to repatriate any and all funds due and owing to the Howrey estate, as described
23 in more detail below.
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25 8 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 8 of 37 1 Tax and accounting professionals are also essential to the efficient wind-down of
2 Howrey’s operations. To provide these services, the Trustee selected the tax accounting firm of
3 Eichstaed & Lervold LLP to complete Howrey’s required tax reporting and filing. The Trustee
4 also hired, with Bankruptcy Court Approval, the accounting firm Baker Tilly Virchow Krause
5 LP and the actuary firm October Three Consulting Group LLC to provide specialized accounting
6 to complete the wind-down of Howrey’s three pension plans.
7 The Trustee selected and engaged the Adler Law Firm, of San Francisco, California, as
8 special counsel for collection of Howrey’s prepetition accounts receivable. The Adler Law Firm
9 is particularly well-suited for this task, having provided services to numerous chapter 7 and 11
10 trustees in major law firm bankruptcy cases, including the chapter 7 cases of Brobeck, Phleger &
11 Harrison LLP and Thelen LLP. The Bankruptcy Court granted the Trustee authorization to hire
12 the Adler Law Firm on December 20, 2011. In addition to the Adler Law Firm, the Trustee
13 retained the services of On-Site Associates, LLC, an experienced accounts receivable collection
14 agent for law firms. The retention agreement called for payment at a percentage of collections
15 on a sliding scale to both reduce the cash costs to the Howrey estate and to properly incentivize
16 collections efforts. The Bankruptcy Court approved this retention on December 19, 2011.
17 B. Compensation of the Trustee and His Professionals
18 As with all professionals employed under section 327 of the Bankruptcy Code, and
19 pursuant to the Bankruptcy Court’s orders regarding compensation of professionals, the
20 Trustee’s professionals (with the exception of those retained on a contingency fee arrangement)
21 are compensated in arrears on a monthly basis for fees and expenses, subject to a 20% hold-back
22 of fees pending quarterly interim fee applications. The Trustee’s compensation is similarly
23 subject to periodic payments subject to hold-backs. While the Trustee believes the estate will
24 recover assets sufficient to pay all administrative creditors in full, out of an abundance of caution
25 9 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 9 of 37 1 and to preserve cash in the estate, the Trustee’s professionals have voluntarily agreed to forego
2 collection of the 20% hold-backs of fees until additional assets are liquidated. Further, the
3 Trustee has not sought payment of any trustee fees to date.
4 The Trustee has previously disclosed that he is also the managing partner of the Diamond
5 McCarthy law firm. To ensure that the Howrey estate is not billed twice for the Trustee’s
6 services, both the Trustee and Diamond McCarthy keep detailed time records that distinguish
7 between legal services provided by Diamond McCarthy personnel and non-legal services that fall
8 under the Trustee’s administrative duties.
9 IV. BUSINESS OPERATIONS
10 A. Wind-Down Operations
11 The Trustee and his professionals continue to perform a wide range of necessary and
12 essential tasks for the benefit of Howrey’s estate. These include day-to-day management of
13 Howrey’s wind-down operations, as well as meetings with counterparties and other parties-in-
14 interest to reduce costs and streamline core functions. The Trustee and his professionals also
15 regularly respond to questions from the public, media and creditors regarding the status of the
16 case, their claims and their potential recovery.
17 1. Staff Reductions and Management of Critical Staff
18 Upon the Trustee’s appointment in October 2011, Howrey employed approximately
19 twenty-three full-time employees and several additional part-time and hourly employees, staff
20 and attorneys, with a monthly payroll exceeding $350,000. The Trustee has since reduced full-
21 time staffing by nineteen, with four remaining full-time staff members working from Howrey’s
22 wind-down office in Washington, D.C. In addition, the Trustee employs three former Howrey
23 staff members on a part-time and as-needed basis to address specific issues as they arise. The
24 Trustee has lowered the monthly payroll costs by 84% to $55,000.
25 10 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 10 of 37 1 The Trustee and his professionals work closely with the Howrey staff and rely on their
2 expertise and institutional knowledge of Howrey to efficiently administer the estate for the
3 benefit of creditors.
4 2. Closing Facilities and Cutting Costs
5 Staff reductions have also allowed the Trustee to downsize Howrey’s office space. On
6 the Appointment Date, Howrey occupied over 14,000 square feet of office space on
7 Pennsylvania Avenue in Washington, D.C. at a monthly cost of over $40,700 pursuant to a one
8 year lease negotiated prior to the Trustee’s appointment. On September 1, 2012, the Trustee will
9 move the Howrey staff to a considerably smaller location at a monthly cost of only $6,000,
10 which will save the estate $34,700 per month.
11 3. Winding Down the Debtor’s Pension Plans
12 The Trustee has worked to complete the final wind-down of Howrey’s three prepetition
13 pension plans. Since his appointment, the Trustee has coordinated the final disbursement of plan
14 funds to beneficiaries. On July 10, 2012, the Bankruptcy Court approved the Trustee’s
15 employment of accountants and actuaries to perform the required final reporting and accounting
16 required to complete the pension plan wind-downs. The Trustee anticipates the completion of all
17 final reports and the related governmental filings in the next ninety days, which will complete the
18 wind-down of the Debtor’s pension plans.
19 4. Downsizing Information Technology Infrastructure
20 At the time of the Trustee’s appointment, the Debtor operated and maintained the
21 information technology infrastructure of a global law firm that included 300 physical servers
22 with 200 terabytes of data operating in data centers in Virginia and the Netherlands. The
23 operating cost of this infrastructure exceeded $100,000 per month. Operation of data centers
24 designed to support thousands of users globally was no longer necessary to Howrey, and
25 11 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 11 of 37 1 reduction of the costs associated with the data centers was critical to preserve the estate’s
2 resources.
3 Unwinding this infrastructure requires considerable expertise. In late 2011, the Trustee
4 engaged the Aldridge Company (“Aldridge”) to assist him in this task. Aldridge was
5 subsequently approved by the Bankruptcy Court and, by March 2012, Aldridge, the Trustee, and
6 Howrey’s wind-down staff successfully reduced Howrey’s hosted data center from three hundred
7 servers to a combination of four physical servers and additional cloud-based servers. As a result
8 of these efforts, the Howrey estate was able to eliminate the need for the massive data centers
9 based in Virginia, and Amsterdam, Netherlands – thus reducing the monthly operating cost of
10 Howrey’s information technology infrastructure from over $100,000 to $12,000. This resulted in
11 a cost savings to the estate of more than $1,000,000 per year. This feat was accomplished while
12 preserving all former client data and all of the Debtor’s financial and operational electronic
13 records.
14 5. Tax Matters
15 On July 10, 2012, the Court approved the Trustee’s employment of tax accountants to
16 complete the Debtor’s 2011 tax returns and related tax filings. The Trustee’s accountants,
17 together with his financial advisors at DSI, are preparing these tax filings for submission later
18 this year. Further, the Trustee and his professionals have worked with taxing authorities in
19 California, Texas, New York, and other jurisdictions to address tax claims, return submissions as
20 well as other related issues and disputes.
21 6. Cash Collateral Use and Negotiations with Citibank, N.A.
22 As well documented in this Bankruptcy Case, Howrey’s largest creditor, Citibank, N.A.
23 (“Citibank”), asserts a lien on substantially all of Howrey’s prepetition assets, including accounts
24 receivable and the cash on hand in the estate. Prior to the Trustee’s appointment, the Debtor and
25 12 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 12 of 37 1 Citibank entered into interim cash collateral orders that provided Howrey access to Citibank’s
2 cash collateral to fund operations and pay administrative expenses.
3 The Trustee’s appointment coincided with the expiration of the Debtor’s cash collateral
4 authority and budget with Citibank, requiring immediate negotiations with Citibank and its
5 counsel to implement an extension of cash collateral usage to prevent interruption in the Debtor’s
6 operations. The Trustee and Citibank successfully reached interim extensions of the cash
7 collateral budget to fund immediate operational costs.
8 On December 9, 2011, the Trustee entered with Citibank a Stipulation Extending
9 Chapter 11 Trustee’s Use of Cash Collateral, which was approved by the Bankruptcy Court by
10 order dated December 13, 2011. Under the terms of the stipulation, the Trustee has continued to
11 administer the Howrey estate using cash collateral by consent from Citibank.
12 The Debtor’s ability to use Citibank’s cash collateral remains central to the successful
13 administration of this case. Accordingly, the Trustee and his professionals dedicate significant
14 time and resources to working with Citibank to ensure the Debtor’s continued access to cash
15 collateral. The Trustee has reached numerous agreements on a series of weekly and monthly
16 interim stipulations and revised budgets that have provided for the Debtor’s continued use of
17 cash collateral.
18 As of the filing of this report, the Trustee presented and Citibank approved an interim
19 cash collateral budget extension through September 30, 2012. In addition to interim extensions
20 of cash collateral, as part of the Trustee’s longer term plan for the recovery and monetization of
21 estate assets, the Trustee is negotiating the terms of a proposed final cash collateral order with
22 Citibank that will provide long term access to cash collateral, eliminating the need and cost of
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25 13 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 13 of 37 1 negotiating short-term extensions. Once completed, the proposed final order will be submitted to
2 the Bankruptcy Court for approval.
3 B. Disposition of Records of Former Howrey Clients
4 Howrey entered bankruptcy with approximately 220,000 boxes of documents located in
5 various physical locations around the globe as well as hundreds of terabytes of electronic files of
6 former clients. The physical records were stored primarily at twelve different third-party
7 facilities across the United States and in foreign jurisdictions. Electronic records were stored
8 primarily on Howrey’s servers and administered by Howrey staff. When Howrey vacated its
9 headquarters offices in Washington, DC, Howrey staff cleared each office and gathered client
10 records and files to ensure their safe keeping and maintenance pending appropriate disposition.
11 The Trustee, among his first major undertakings, proposed and obtained Bankruptcy
12 Court approval to carry out a comprehensive client files disposition protocol. This protocol,
13 among other measures, called for written and publication notice to former Howrey clients
14 regarding the existence of physical and electronic records, provided the opportunity for former
15 clients to retrieve their files and, finally, in the case of unclaimed or expressly abandoned client
16 files, authorized the secure destruction of those records. All of this was accomplished after
17 extensive research and analysis of the applicable codes and canons of professional responsibility
18 governing the disposition and/or return of client records.
19 Since the Bankruptcy Court granted approval of the Trustee’s proposed client records
20 procedures on March 2, 2012, the Trustee and Howrey’s staff have implemented the procedures,
21 including mailing the court approved notice and request form to over 10,000 former clients. In
22 addition, the Trustee published the court-approved notice in the National Edition of the Wall
23 Street Journal on May 8, 2012.
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25 14 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 14 of 37 1 To date, the Trustee has received approximately 850 responses from former Howrey
2 clients directing disposition of their physical and electronic records. Approximately 500 former
3 clients have requested files. Pursuant to the Trustee’s procedure for cost-sharing, the estate has
4 invoiced former clients approximately $50,000 to help cover the costs of the client files
5 disposition.
6 Notwithstanding this progress, a recent complication is hindering the client file return
7 process. On June 28, 2012, significant structural damage was sustained at one of Recall North
8 America’s (“Recall”) warehouses in Landover, Maryland. Recall is Howrey’s largest record
9 storage vendor. A substantial section of the warehouse roof collapsed, compromising a
10 significant number of stored documents and exposing them to the elements. Recall has informed
11 the Trustee that approximately 60,000 boxes of documents belonging to Howrey’s estate were
12 impacted by the collapse. As of the date of this First Interim Report, Recall is still determining
13 the scope of damage and when, if ever, the documents will be recovered. The Trustee, his
14 professionals and Howrey’s specialized wind-down staff continue to carry out the client file
15 disposition plan. If a former client requests the return of files that reside in the collapsed
16 warehouse, Recall will inform the client during the document transfer process. Subject to the
17 impact of the Recall facility collapse on specific client files, the Trustee anticipates completion
18 of the transfer and disposition of client files by the end of February 2013.
19 C. Foreign Operations
20 1. United Kingdom
21 Howrey’s wholly owned United Kingdom partnership (“Howrey UK”) operated
22 Howrey’s London and Paris offices. Howrey UK lost its registration with the Register of
23 Companies before the Trustee’s appointment and is not currently a party to any insolvency
24 liquidation or wind-down proceedings. Nevertheless, Howrey UK faces asserted unpaid
25 15 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 15 of 37 1 creditors claims and holds unadministered assets, including funds held in bank accounts and
2 uncollected accounts receivable. The Trustee has consulted with UK counsel regarding options
3 for the liquidation of Howrey UK and determined that Howrey UK should be placed in a
4 separate insolvency proceeding under UK law.
5 On August 6, 2012, the Bankruptcy Court approved the Trustee’s retention of the
6 Eversheds law firm as his UK counsel to facilitate the commencement of proceedings to restore
7 Howrey UK’s registration and provide for the wind-down of Howrey UK through a court
8 appointed liquidator. The Trustee anticipates these actions will take two to three months and will
9 result in Howrey UK’s orderly administration by a separate UK liquidator. Although Howrey
10 has a right to any surplus assets remaining upon the satisfaction of Howrey UK’s creditors and
11 related administrative expenses, at this time the Trustee is not able to predict if, or when, Howrey
12 will receive any funds from the liquidation of Howrey UK.
13 2. Belgium
14 Prior to the Trustee’s appointment, Belgium authorities appointed Mr. Marc Dal as the
15 official administrator to conduct the liquidation of Howrey’s Belgium based assets and liabilities.
16 Mr. Dal continues to liquidate Howrey’s Belgium assets and administer claims related to
17 Howrey’s Belgium operations. The Trustee and Mr. Dal regularly communicate to coordinate
18 these liquidation activities and exchange information and data to support each other’s efforts.
19 3. Germany
20 Certain creditors of Howrey’s German offices initiated secondary insolvency proceedings
21 against Howrey in Germany. A German court appointed Mr. Daniel F. Fritz as the liquidator for
22 Howrey’s German assets for the benefit of creditors with claims relating to Howrey’s former
23 offices in Germany. The Trustee and Mr. Fritz regularly communicate to coordinate these
24 liquidation activities and exchange information and data to support each other’s efforts.
25 16 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 16 of 37 1 V. ASSET MANAGEMENT
2 The Debtor’s primary assets include (i) outstanding accounts receivable, (ii) equipment,
3 art work and other personal property, (iii) interests in pending contingency fee matters, and
4 (iv) potential litigation claims. Each asset category is addressed below.
5 A. Asset Recovery
6 1. Accounts Receivable
7 The Trustee has funded administration of the Howrey estate primarily with proceeds
8 collected from prepetition accounts receivable with the consent of Citibank, which asserts a lien
9 on these proceeds as cash collateral. As noted, the Trustee retained professionals to assist in
10 collections efforts, including On-Site Associates LLC and the Adler Law Firm. To increase the
11 efficiency of the collections process, the Trustee also developed a collections settlement protocol
12 whereby the Bankruptcy Court pre-approved settlement parameters and guidelines for accounts
13 receivable. The Bankruptcy Court approved these settlement procedures and guidelines on
14 March 16, 2012.
15 To date, the Trustee’s efforts have recovered over $5,000,000 in account receivable
16 collections. These collection efforts continue, with the estate still holding millions of dollars in
17 outstanding accounts for collection. However, as collectable accounts are liquidated, the
18 remaining accounts will increasingly represent the most difficult collection targets. Accordingly,
19 the Trustee and his professionals have made the aggressive collection of accounts receivable an
20 urgent priority. The Trustee anticipates the collection of additional funds from accounts
21 receivable over the next several months, with collections slowing over time due to the natural
22 collection cycle. Certain of the accounts receivable to be collected are currently in arbitration
23 proceedings pending in venues across the United States and likely will take significantly longer
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25 17 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 17 of 37 1 to be resolved through the arbitration process. These matters are being handled by the Adler
2 Law Firm and other co-counsel as necessary.
3 2. Contingency Fee Interests
4 The Debtor’s interests in various contingency fee cases represent some of the estate’s
5 most significant assets, including those matters commonly referred to as the “Milk” cases and the
6 “Hispanic Farmers” cases, among others. The Trustee and his professionals have aggressively
7 pursued the advancement and collection of these contingency fee interests.
8 a) Milk Antitrust Litigation
9 Prior to Howrey’s vote of dissolution, Howrey represented plaintiffs in two class action
10 cases alleging violations of the antitrust laws. Shortly after the Howrey Dissolution Committee
11 was established but prior to the time that Howrey’s involuntary bankruptcy proceedings were
12 initiated, the former Howrey partners representing the class plaintiffs in these cases left Howrey
13 and joined the law firm of Baker Hostetler, LLP (“BH”), taking these two class action cases and
14 the clients owning such cases, among other cases and clients, with them to BH. An agreement
15 (the “Transfer Agreement”) was reached at that time between BH, on the one hand, and the
16 Dissolution Committee for and on behalf of Howrey, on the other, with respect to the allocation
17 between BH and Howrey of attorneys’ fees and expenses that may be awarded by courts in
18 connection with any future recoveries in these two class action cases.
19 In the first class action case, Allen v. Dairy Farmers of America, Case No. 5:09-cv-230 in
20 the United States District Court for the District of Vermont (“NE Milk”), a settlement had been
21 reached in principle and was pending at the time of the Transfer Agreement in March, 2011.
22 Since that time, the settlement agreement has been fully executed, approved by the court and
23 consummated. Of the attorneys’ fees and expenses awarded by the court, lead class counsel at
24 Cohen Milstein has allocated approximately $2,400,000 to Howrey and BH collectively. The
25 18 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 18 of 37 1 Trustee and BH have entered into an escrow agreement pursuant to which this $2,400,000 will
2 be deposited at Citibank, N.A. under the joint control of the Trustee and BH, pending resolution
3 of the allocation issues between them. The Trustee currently is in negotiations with BH with
4 respect to such allocation.
5 In the second case, In re Southeastern Milk Antitrust Litigation, Master File No. 2:08-
6 MD-1000 (“SE Milk”) pending in the United States District Court for the Eastern District of
7 Tennessee, a settlement was reached with defendant Dean Foods in the early summer of 2011.
8 Issues related to class certification, however, subsequently arose and delayed final approval of
9 the settlement pending court appointment of separate counsel for a certain sub-class. In March,
10 2012, the delayed settlements (with Dean Foods, Southern Marketing Agency, Inc., and James
11 Baird) were preliminarily approved in the aggregate amount of $145,000,000. Those settlements
12 received final approval from the court on May 15, 2012. The settlements are structured with the
13 payment of $65,000,000 to be made upon consummation and the balance to be paid pro-rata each
14 year over the next four years (through 2016).
15 On July 11, 2012, the court issued its order approving attorneys’ fees and expenses to all
16 class counsel in the total amount of approximately $48,000,000 in fees and $7,400,000 in
17 expenses. Bob Abrams, one of Howrey’s former partners who departed Howrey for BH, has
18 been approved by the Court to make the allocation of attorneys’ fees and expenses among the
19 various law firms acting as counsel for the plaintiffs. The allocation of fees and expenses for the
20 SE Milk case has not yet been determined. The Trustee anticipates that any funds allocated
21 collectively to Howrey/BH will be the subject to negotiations between the Trustee and BH
22 (including, without limitation, all issues involving the March 2011 Transfer Agreement). Even
23
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25 19 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 19 of 37 1 without negotiation, however, the Trustee anticipates the receipt of a substantial recovery in fees
2 and expenses from the SE Milk case.
3 The plaintiffs’ case against the remaining defendant, Dairy Farmers of America, is
4 currently set for trial in Tennessee in November 2012, although the defendant has sought
5 permission to appeal the class certification order to the Sixth Circuit in advance of trial.
6 Accordingly, any recovery from the remaining defendants in the SE Milk case is subject to the
7 results and delays of the pending appeal request, trial and other factors. The Trustee is taking all
8 actions to closely monitor the case and protect the estate’s interest in all potential recoveries
9 from the SE Milk matters.
10 b) Hispanic Farmers Litigation
11 Prior to bankruptcy, Howrey represented several hundred individual Hispanic farmers
12 with claims against the United States Department of Agriculture for discrimination based on
13 race. Howrey represented named farmers in a putative class action case called Garcia v. Vilsack,
14 case number 00-CV-2445 and the companion case of Cantu v. United States, case number 11-
15 CV-00541, both in the United States District Court for the District of Columbia. The plaintiffs
16 claim liability of over $1 billion. Howrey accepted the representation of these clients in these
17 cases on a contingent fee basis. By the time of the bankruptcy filing, Howrey had invested
18 approximately $30 million of time expense and out of pocket expenses in the prosecution of
19 these cases.
20 Because Howrey’s malpractice insurance coverage expired on December 31, 2011, and
21 the Howrey bankruptcy estate no longer employed any lawyers, the Trustee was compelled to
22 file motions to withdraw as counsel from the two cases in the U.S. District Court for the District
23 of Columbia. Those motions were followed by the Trustee’s limited joinder of a motion in the
24 Bankruptcy Court to reject the engagement contracts with the Hispanic farmers. To protect the
25 20 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 20 of 37 1 estate’s contingent fee interest in the cases, the Trustee opposed the efforts of the Official
2 Committee of Unsecured Creditors to reject the engagement contracts outright. Instead, the
3 Trustee argued for and obtained a Bankruptcy Court order that rejected the contracts while
4 preserving the rights of the Howrey estate to pursue its claims to any potential future recoveries
5 or funds established for the benefit of the aggrieved Hispanic farmers, based on Howrey’s
6 decade long efforts and contingent fee investment in the cases.
7 Given the relatively large size of the investment made by Howrey in these Hispanic
8 farmer cases, the Trustee and his professionals have spent an appropriate amount of effort
9 analyzing and evaluating the cases and trying to secure new firms to undertake the representation
10 of the Hispanic farmers. A team of law firms and consultants is now representing various
11 plaintiff Hispanic farmers in these matters. The Trustee is coordinating and supporting their
12 efforts. At this time, it is impossible to estimate with any certainty what recovery may result
13 from the litigation or other actions the Trustee may take to recover compensation for the
14 substantial efforts and expense incurred by Howrey and the Howrey estate for the benefit of
15 these Hispanic farmers. The Trustee will continue to safeguard Howrey’s investment and
16 interests in any right to compensation and recoveries.
17 c) The Online DVD Rental Antitrust Litigation
18 Howrey also continues to have a contingent fee interest in an antitrust class action
19 formally known as In re: Online DVD Rental Antitrust Litigation (Case No. 4:09-md-02029-
20 PJH, United States District Court for the Northern District of California). The Online DVD
21 Rental Antitrust Litigation is colloquially known as Netflix/Wal-Mart, named after two target
22 defendants. Like the Milk cases, Howrey lawyers working on Netflix/Wal-Mart moved from
23 Howrey to BH prior to the commencement of the involuntary bankruptcy proceeding.
24
25 21 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 21 of 37 1 The Trustee continues to monitor Netflix/Wal-Mart closely. Since his appointment, the
2 following activity has occurred in the case. First, Netflix won dismissal of the lawsuit on
3 summary judgment in November 2011. Plaintiffs timely appealed the district court’s summary
4 judgment ruling to the Ninth Circuit on December 20, 2011 (Case No. 11-18034). Briefing is
5 complete but, based on the average time between appeal and resolution in the Ninth Circuit, the
6 Trustee does not expect a ruling for at least another twelve months. The Trustee continues to
7 monitor the appeal, but cannot estimate the likelihood of success or the amount of money, if any,
8 that Howrey may recover by virtue of its representation of the plaintiffs’ class against Netflix.
9 Second, the district court gave final approval to the Plaintiffs’ settlement of claims
10 against Wal-Mart for $27,250,000 on March 14, 2012, with $6,812,500 of the award being paid
11 as attorneys’ fees and $1,700,000 in expenses to class counsel. How much of this money would
12 be paid to Howrey has not been resolved. However, the entire attorneys’ fees award is also
13 pending in the Ninth Circuit, as multiple objectors have appealed the district court’s approval of
14 the attorneys’ fees award as excessive and/or prohibited by the Class Action Fairness Act
15 (“CAFA”). Briefing of this appeal has not yet begun. Of the various objectors, it appears the
16 first opening brief is due in late August 2012, with the remaining briefs due in early September
17 2012. Plaintiffs’ consolidated response to the objections is currently due October 9, 2012. As
18 with the Netflix appeal, at this time the Trustee does not expect a ruling on the various Wal-Mart
19 attorneys’ fees appeals within the next twelve months. In the event the attorneys’ fees award is
20 upheld, however, the Trustee expects a significant recovery to the Howrey estate.
21 d) Other Contingency Fee Cases
22 The Trustee continues to actively monitor several other contingency fee litigation matters
23 in which Howrey maintains an interest for collection opportunities. For example, Howrey has
24 recently earned a contingency fee interest in insurance related litigation asserted by Howrey’s
25 22 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 22 of 37 1 former client MidAmerican Energy Company (the “MEC Cases”). Prior to Howrey’s
2 dissolution, the MEC Cases were transitioned to Perkins Coie LLP. MEC and Perkins Coie have
3 now resolved this litigation through confidential settlements, resulting in contingency fees to be
4 shared between Howrey and Perkins Coie. The Trustee and Perkins Coie have successfully
5 negotiated an agreed division of the contingency fees between Howrey and Perkins on a pro rata
6 basis calculated from the professional fees each firm billed on the matter, resulting in a recovery
7 of over $600,000 to the Howrey estate. The Trustee is documenting this arrangement with
8 Perkins Coie and anticipates filing a motion for Bankruptcy Court approval of the proposed
9 agreement in the next two weeks.
10 3. Equipment and Other Assets
11 The Trustee has undertaken to preserve and liquidate furniture, equipment and other
12 assets of the estate. With the down-sizing of the Howrey office space, the Trustee anticipates
13 liquidating the majority of Howrey’s remaining office furniture and peripheral equipment in the
14 next 30 days pursuant to the de minimis asset sale procedures approved by the Bankruptcy Court.
15 The Howrey estate also holds surplus server and computer equipment from the wind-
16 down of the data centers. The Trustee is preserving this equipment until all former client and
17 Howrey data is safely preserved in other forms and is then wiped from the equipment such that it
18 cannot be retrieved. The Trustee has requested initial offers to purchase this equipment and is
19 assessing means to wipe the data stored on it. The Trustee anticipates these procedures to be
20 accomplished and a sale of this equipment before year end.
21 B. Claims Investigation, Analysis and Recovery
22 In addition to the expected significant proceeds from Howrey’s interest in the various
23 contingency fee matters discussed above, creditor recoveries in this bankruptcy case will be
24 significantly determined by the resolution of the estate’s potential claims against third parties,
25 23 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 23 of 37 1 including those against former Howrey partners and their successor law firms, potential breach
2 of contract actions and avoidance actions under the Bankruptcy Code. The Trustee and his
3 professionals are developing and pursuing all the estate’s potential litigation claims.
4 1. Preference and Fraudulent Transfer Litigation
5 Evidence available to and marshaled by the Trustee indicates that various former partners
6 of Howrey received payments and distributions either at a time when Howrey was insolvent
7 and/or otherwise in excess of amounts properly distributable at the time they were made. Such
8 over-distributions likely constituted fraudulent transfers, breaches of fiduciary duty, and breaches
9 of Howrey’s partnership agreement or are otherwise actionable. The Trustee’s financial and
10 legal advisors are completing a comprehensive analysis of these potential claims. The Trustee
11 anticipates that settlement proposals to resolve these claims will be forthcoming in the coming
12 months and that barring amicable resolutions, litigation will likely be commenced seeking
13 recoveries on such claims for the estate.
14 In addition, Howrey made payments to certain creditors in the ninety-day period
15 preceding the Petition Date that the Trustee may recover as preferences under Bankruptcy Code
16 § 547. The Trustee’s consultants and legal team have completed an initial analysis of the
17 potentially preferential payments and anticipate sending out demand letters to preference
18 recipients within the next thirty days to initiate collection for the benefit of the Howrey estate.
19 2. “Unfinished Business” Claims
20 The Trustee has been investigating and gathering information related to Howrey’s former
21 representation of clients in matters that were “unfinished” at the time that former Howrey
22 partners departed the firm taking such “unfinished business” with them to successor law firms.
23 In July 2012, the Trustee filed an omnibus motion for authority to issue Federal Rule of
24 Bankruptcy Procedure 2004 (“Rule 2004”) subpoenas to approximately seventy law firms that
25 24 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 24 of 37 1 may have received profits from Howrey’s unfinished business. The Bankruptcy Court granted
2 this motion and the Trustee is in the process of contacting and/or serving such law firms with
3 subpoenas for the production of certain documentation, data and information related to Howrey’s
4 unfinished business. This discovery will allow the Trustee and his professionals to evaluate
5 potential causes of action, including unfinished business related claims.
6 The Trustee anticipates the expeditious conclusion of the claim investigation process and
7 the immediate pursuit, of all viable claims through either settlement or litigation.
8 3. Other Potential Claims and Litigation
9 The Trustee has also been evaluating various contracts entered into by the Debtor pre-
10 petition which have been breached by the respective counter-parties. The Trustee and his
11 professionals continue to undertake legal research, document review and analysis of these
12 potential claims and anticipate arriving at evaluations and assessments related to such claims in
13 the coming months, after which appropriate follow up action will be taken. Moreover, the
14 Trustee and his professionals are currently investigating various acts and events, that occurred
15 both before the Petition Date and during the “gap” period prior to the order for relief, that may
16 have resulted in damages to the estate. It is anticipated that Rule 2004 examinations and
17 subpoenas will be sought in the near future with respect to former lawyers and employees of the
18 Debtor in order to determine and assess the viability of any claims for damages as a result of
19 such actions or transactions.
20 C. Asset Disposition
21 The Trustee’s primary goal is to maximize the value of the Howrey estate. This includes
22 disposing of assets of the estate in a manner that ensures their highest value.
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25 25 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 25 of 37 1 1. Art Collection Sales
2 Prior to the Trustee’s appointment, Howrey placed its remaining art work assets with five
3 separate art dealers, brokers and storage facilities in California, Illinois and Washington, D.C.
4 The Trustee is consolidating the number of third-party vendors responsible for the disposition of
5 Howrey’s art collection. One of these vendors, Bonhams, is currently assessing the remaining
6 art assets and will present a recommended course of action to the Trustee that will maximize the
7 recovery for these assets. The Trustee anticipates implementing a comprehensive sales process
8 for the remaining art assets in the next thirty to sixty days.
9 2. Other Liquidations and Settlements
10 The Trustee regularly evaluates proposals by claimants to settle disputes with the Howrey
11 estate on terms that benefit Howrey’s creditors. In two cases, Howrey entered settlements with
12 storage facilities to abandon the contents of those facilities to the storage vendors in exchange for
13 those vendors abandoning both pre-petition and post-petition claims for storage costs. The
14 Trustee obtained Bankruptcy Court approval of the settlements with Extra Space Management,
15 Inc. on March 2, 2012, and with Ortiz Brothers Moving and Storage on July 2, 2012.
16 D. Defense of Claims
17 1. Proofs of Claim The Trustee continues to monitor proofs of claim as they are received. The general bar 18 date for proofs of claim passed on October 11, 2011. Extensions of the bar date were granted for 19 certain plaintiffs in the WARN Act litigation described below and Citibank, pursuant to the 20 terms of cash collateral orders approved by the Bankruptcy Court. 21 As part of the plan formulation and confirmation process and before any distributions to 22 general creditors, the Trustee will complete a full analysis of all asserted claims and will file 23 objections where appropriate to ensure that no claims are improperly allowed. 24
25 26 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 26 of 37 1 2. The WARN Act and Warner Investments Adversaries
2 On April 12, 2011, a former Howrey employee named Stephanie Langley brought a
3 putative class action against Howrey’s estate alleging violations of the WARN Act. This case is
4 pending before the Bankruptcy Court as adversary proceeding 11-03065. Pursuant to a June 28,
5 2012 order, the bar date for filing of WARN Act claims on behalf of the Langley putative class
6 was extended to October 1, 2012, and the Court indicated that no further extensions would be
7 granted absent a written showing of cause. A status conference is scheduled in the Langley
8 WARN adversary for October 15, 2012, at which time the Trustee and counsel for the plaintiffs
9 will report the status and plan for advancing the resolution of the claims at issue.
10 Prior to the Trustee’s appointment, the Debtor’s former counsel commenced litigation
11 arising from a non-residential lease agreement against Warner Investments, L.P. (“Warner”)
12 which is currently pending before the Bankruptcy Court in adversary proceeding 11-03170.
13 Warner has asserted claims against the estate and filed requests for payment of administrative
14 rent. In light of the current cash position of the estate, the Trustee and Warner have agreed to
15 stay the adversary proceeding and Warner’s administrative expense motion several times. Most
16 recently, the parties agreed to extend the stay to February 21, 2013.
17 VI. RECOVERY TO CREDITORS AND A CHAPTER 11 PLAN OF LIQUIDATION
18 The benefit of liquidating the Howrey estate in chapter 11, rather than chapter 7, is to
19 allow the flexibility and tools provided by the plan formulation and confirmation process for the
20 resolution of the estate’s potential litigation claims. It is too early in the case for the Trustee to
21 predict the recovery that will ultimately be paid to all creditors. However, the Trustee at this
22 time believes that ultimately there will be sufficient estate assets to satisfy all potential
23
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25 27 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 27 of 37 1 administrative 1 and secured claims in full and provide a recovery to priority and general
2 unsecured creditors.
3 The Trustee presently holds approximately $1,300,000 in cash and significantly more in
4 unliquidated and contingent assets, including accounts receivable, potential litigation claims,
5 contingency fee interests and other assets described herein. Most, if not all, of the current cash
6 on hand and many of these assets may constitute the collateral of Citibank, which has allowed
7 the Trustee to use its cash collateral pursuant to interim cash collateral orders, stipulations and
8 related budgets. Accordingly, the Trustee anticipates having sufficient funds to pay ongoing
9 administrative costs subject to budget limits.
10 The ultimate recovery to secured and unsecured creditors will depend primarily on two
11 factors: (i) the proceeds the Trustee recovers from the Debtor’s interest in the contingency fee
12 cases, including the Milk cases; and (ii) the recoveries the Trustee obtains from the potential
13 litigation claims described above.
14 As the Trustee continues to evaluate the assets of the estate, including potential litigation
15 claims, the full scope and potential distributions from the Howrey estate will become more
16 predictable within certain ranges. Until then, creditors and parties-in-interest benefit from a
17 careful approach that maximizes the value for the estate. The Trustee will supplement this report
18 with additional information as the case progresses.
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20
21
22 1 In addition to ongoing professional and operational expenses, the estate faces potential administrative expense claims in excess of $10 million from landlords and other potential claimants. While these administrative expense 23 claims may be in dispute, if allowed, they could be entitled to the same priority as any other claims allowed under Bankruptcy Code § 503(b). In that event, there are currently insufficient liquid assets to immediately satisfy all of 24 those administrative expense claims in full.
25 28 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 28 of 37 1 Dated: August 20, 2012
2 /s/ Allan B. Diamond, Trustee Allan B. Diamond 3 Chapter 11 Trustee of Howrey LLP
4 and
5 Howard D. Ressler, Esq. (pro hac vice) Stephen T. Loden, Esq. (pro hac vice) 6 Jason M. Rudd, Esq. (pro hac vice) Christopher R. Murray, Esq. (pro hac vice) 7 DIAMOND MCCARTHY LLP 909 Fannin, 15th Floor 8 Houston, TX 77010 Telephone: 713-333-5100 9 Facsimile: 713-333-5199 [email protected] 10 [email protected] [email protected] 11 [email protected] Counsel for Allan B. Diamond, 12 Chapter 11 Trustee for Howrey LLP
13 Eric A. Nyberg, Esq. (Bar No. 131105) KORNFIELD, NYBERG, BENDES 14 & KUHNER, P.C. Chris D. Kuhner, Esq. (Bar No. 173291) 15 1970 Broadway, Suite 225 Oakland, CA 94612 16 Telephone: 510-763-1000 Facsimile: 510-273-8669 17 [email protected] [email protected] 18 Local Counsel for Allan B. Diamond, Chapter 11 Trustee for Howrey LLP 19
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25 29 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 29 of 37 1 CERTIFICATE OF SERVICE
2 __X__ (CM/ECF) The document was electronically served on the parties to this action via the mandatory United States Bankruptcy Court of California CM/ECF system upon filing of above 3 described document.:
4 SEE ATTACHED SERVICE LIST
5 __X__ (ELECTRONIC MAIL SERVICE) By electronic mail (e-mail) the above listed document(s) without error to the email address(es) set forth below on this date. 6 SEE ATTACHED SERVICE LIST 7 __X__ (UNITED STATES MAIL) By depositing a copy of the above-referenced documents for 8 mailing in the United States Mail, first class postage prepaid, at Houston, Texas, to the parties listed on the Service List attached hereto, at their last known mailing addresses, on August 20, 9 2012.
10 SEE ATTACHED SERVICE LIST
11 __ __ (OVERNIGHT COURIER) By depositing a true and correct copy of the above referenced document for overnight delivery via Federal Express, at a collection facility 12 maintained for such purpose, addressed to the parties on the attached service list, at their last known delivery address, on the date above written. 13 __ __ (COURIER SERVICE) By providing true and correct copies of the above referenced 14 documents [with copies of the supporting detailed invoices/attorney time records for the Final Fee Application] via courier delivery, to the following on or about ______: 15
16 __ __ (FACSIMILE) That I served a true and correct copy of the above-referenced document via facsimile, to the facsimile numbers indicated, to those people listed on the attached service list, 17 on the date above written.
18 /s/ Jason M. Rudd 19 Jason M. Rudd
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25 31 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 31 of 37 1 VIA CM/ECF:
2 United States Trustee Minnie Loo, Esq. Donna S. Tamanaha, Esq. 3 Office of the U.S. Trustee 235 Pine Street. 7th Floor 4 San Francisco, CA 94104-3484 Email: [email protected] 5 Email: [email protected]
6 Chapter 11 Trustee Allan B. Diamond 7 Diamond McCarthy, LLP Two Houston Center 8 909 Fannin Street, Suite 1500 Houston, Texas 77010 9 Email: [email protected]
10 Counsel for the Chapter 11 Trustee Diamond McCarthy, LLP Howard D. Ressler, Esq. 11 Email: [email protected] Stephen T. Loden, Esq. 12 Email: [email protected] Jason M. Rudd, Esq. 13 Email: [email protected]
14 Kornfield Nyberg Bender & Kuhner P.C. Eric Nyberg 15 Email: [email protected] Chris D. Kuhner 16 Email: [email protected]
17 Debtor’s Counsel Wiley Rein LLP H. Jason Gold 18 Valerie P. Morison Dylan G. Trache 19 Email: [email protected] Email: [email protected] 20 Email: [email protected]
21 Murray & Murray Robert A. Franklin 22 Craig M. Prim Jenny Lynn Fountain 23 Email: [email protected] Email: [email protected] 24
25 32 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 32 of 37 1 Email: [email protected]
2 Duane Morris LLP Geoffrey A. Heaton, Esq. 3 Email: [email protected] Aron M. Oiner, Esq. 4 Email: [email protected]
5 Law Offices of Latham & Watkins Kimberly A. Posin, Esq. Email: [email protected] 6 Murray & Murray Craig M. Prim, Esq. 7 Email: [email protected] Robert A. Franklin, Esq. 8 Email: [email protected] Jenny L. Fountain, Esq. 9 Email: [email protected]
10
11 Official Committee of Unsecured Creditors Whiteford, Taylor & Preston LLP Bradford F. Englander, Esq. 12 Email: [email protected] John F. Carlton, Esq. 13 Email: [email protected] Justin P. Fasano, Esq. 14 Email: [email protected]
15 Counsel for The Irvine Company, LLC Allen Matkins, et al. 16 Email: [email protected]
17 Counsel for Creditor Ctitbank, N.A. Paul, Weiss, Rifkind, Wharton & Garrison 18 Larry Peitzman, Esq. Email: [email protected] 19 Counsel for Creditor Protiviti, Inc. Pachulski, Stang, Ziehl & Jones 20 John D. Fiero, Esq. Email: [email protected] 21 Counsel for Creditor Oracle America, Inc. Buchalter Nemer 22 Shawn M. Christianson, Esq. Email: [email protected] 23 Counsel for Creditor U.S. Bank, N.A., Perkins Coie LLP 24
25 33 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 33 of 37 1 as Trustee David J. Gold, Esq. Email: [email protected] 2 Counsel for Attorneys’ Liability Assurance Perkins Coie LLP 3 Society, Inc., A Risk Retention Group Alan D. Smith, Esq. Email: [email protected] 4 Counsel for Creditors Advanced Discovery Trepel McGrane Greenfield LLP 5 LLc, Give Something Back, Inc., Jan Brown Maureen A. Harrington, Esq. & Associates, Kent Daniels & Associates, Inc., Email: [email protected] 6 L.A. Best Photocopies, Inc., Western Christopher D. Sullivan, Esq. Messenger Service, Inc. Email: [email protected] 7 Counsel for BP/CGCENTER I, LLC Allen, Matkins, Leck, Gamble and 8 Mallory William W. Huckins 9 Email: [email protected]
10 Counsel for Creditor Warner Investment, L.P. Luce, Forward, Hamilton & Scripps 11 Michael A. Isaacs, Esq. Email: [email protected] 12 Email: [email protected]
13 Counsel for Creditor Dewey & LeBoeuf LLP Dewey and LeBoeuf Paul S. Jasper, Esq. 14 Email: [email protected]
15 Counsel for Creditor Iron Mountain Bartlett, Hackett and Feinberg Information Management Inc. Frank F. McGinn, Esq. 16 Email: [email protected]
17 Counsel for Creditor Hines REIT 321 DLA Piper LLP 18 North Clark Street, LLC Frank T. Pepler, Esq. Email: [email protected] 19
20 Counsel for Creditor Stephanie Langley Outten and Golden LLP Rene S. Roupinian, Esq. 21 Email: [email protected]
22 Counsel for Creditor Stephanie Langley Law Offices of James D. Wood James D. Wood, Esq. 23 Email: [email protected]
24
25 34 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 34 of 37 1 Counsel for Creditor Pension Benefit Office of the Chief Counsel Guaranty Corp. Lawrence F. Landgraff, Esq. 2 Email: [email protected]
3 Counsel for Interested Party Connecticut Schnader Harrison Segal and Lewis General Life Insurance Company Melissa Lor, Esq. 4 Email: [email protected]
5 Counsel for Interested Party Ad Hoc MacConaghy and Barnier 6 Committee of Certain Former Howrey John H. MacConaghy, Esq. Partners Email: [email protected] 7 Monique Jewett-Brewster, Esq. Email: [email protected] 8 Counsel for Creditors Advanced Discovery McGrane LLP 9 LLC, Give Something Back, Inc, Jan Brown William McGrane, Esq. And Associates, Kent Daniels and Associates Email: [email protected] 10 Inc., L.A. Best Photocopies, Inc., Western Messenger Service, Inc. 11 Counsel for Interested Party Connecticut Melissa Lor 12 General Life Insurance Co. Email: [email protected]
13 Counsel for Creditor Knickerbocker Seyfarth Shaw LLP Properties, Inc. XXXIII Scott Olson, Esq. 14 Email: [email protected]
15 Counsel for Creditor Banc of America Law Offices of Serlin and Whiteford 16 Leasing & Capital, LLC Mark A. Serlin, Esq. Email: [email protected] 17 Counsel for Creditor Texas Comptroller Bankruptcy & Collections Division 18 of Public Accounts Kimberly Walsh, Esq. Email: [email protected] 19 Counsel for Creditor 200 S. Main Street Ballard Spahr Andrews and Ingersoll 20 Investors, LLC Rebecca J. Winthrop, Esq. Email: [email protected] 21 Penny M. Costa, Esq. Email: [email protected] 22
23 Counsel for Creditor Citibank, N.A. Peitzman Weg LLP Larry Peitzman, Esq. 24
25 35 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 35 of 37 1 Email: [email protected]
2 Counsel for Amy J. Fink Jones Day Robert A. Trodella 3 Email: [email protected]
4
5 VIA EMAIL:
6 Counsel for Creditor Citibank, N.A. Paul, Weiss, Rifkind, Wharton & Garrison 7 Kelley A. Cornish, Esq. Email: [email protected] 8 Diane Meyers, Esq. Email:[email protected] 9 Jacob J. Adlerstein, Esq. Email: [email protected] 10 Ballard Spahr LLP 11 Matthew Moncur, Esq. Email: [email protected] 12 EMC Corporation 13 c/o Receivable Management Services Steven Sass, Esq. 14 Email: [email protected] Ronald Rowland, Esq. 15 Email: [email protected]
16 Olin Corporation S. Christian Mullgardt 17 Email: [email protected]
18
19 VIA U.S. MAIL:
20 Richard Burdge, Esq. The Burdge Law Firm PC 21 500 S Grand Ave Ste 1500 Los Angeles, CA 90071 22
23
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25 36 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 36 of 37 1 Jeffrey C. Wisler, Esq. 2 Connolly Bove Lodge & Hutz LLP 1007 North Orange Street 3 Wilmington, DE 19899 Attorneys for Interested Party Connecticut General Life Insurance Company 4 IKON Office Solutions 5 Recovery & Bankruptcy Group 3920 Arkwright Road, Suite 400 6 Macon, GA 31210
7 EMC Corporation c/o RMS Bankruptcy Recovery Services 8 Attn: President or General/Managing Agent P.O. Box 5126 9 Timonium, MD 21094-5126
10 Salter & Company LLC 4600 East-West Highway, Suite 300 11 Bethesda, MD 20814
12 County of Loudoun Virginia Belkys Escobar 13 1 Harrison St., S.E. 5th Fl. Leesburg, VA 20175-3102 14 Matura Farrington Staffing Services, Inc. 15 700 So. Flower Street, Suite 2505 Los Angeles, CA 90017 16 Guy Davis 17 Protiviti Inc. 1051 East Cary Street, Suite 602 18 Richmond, VA 23219
19 George E. Shoup, III Development Specialists, inc. 20 6375 Riverside Drive, Suite 200 Dublin, OH 43017-5373 21 Kyle Everett 22 Development Specialists, Inc. 235 Pine Street, Suite 1150 23 San Francisco, CA 94104
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25 37 26 Case: 11-31376 Doc# 765 Filed: 08/20/12 Entered: 08/20/12 12:17:41 Page 37 of 37