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UnitedLex and LeClairRyan face trustee lawsuit

A plaque is displayed at the entrance to the US District Bankruptcy Court for the Southern District of New York. REUTERS / Brendan McDermid

  • Bankruptcy Judge Keeps All Chapter 7 Trustee Claims Intact
  • UnitedLex and Gary LeClair face 2018 joint venture allegations, company collapse

(Reuters) – A Richmond, Va. Bankruptcy judge gave the Chapter 7 trustee overseeing the dissolution of the late law firm LeClairRyan the green light on Wednesday to sue firm co-founder and alternative legal services provider UnitedLex Corp.

U.S. New Mexico Bankruptcy judge Kevin Huennekens has rejected offers from UnitedLex and LeClairRyan co-founder Gary LeClair to reject updated claims filed in August by Chapter 7 administrator Lynn Tavenner.

Tavenner alleges that a 2018 joint venture between LeClairRyan and UnitedLex increased the ailing law firm’s debt while unduly giving UnitedLex control over LeClairRyan’s operations and intellectual property.

She also claims that LeClair was unduly enriched before his business collapsed in 2019 through his role as long-time president. His complaint described LeClairRyan as a “Ponzi scheme” that used capital contributions from new side hires to pay legacy shareholders.

UnitedLex and LeClair have both denied Tavenner’s claims.

In wednesday 28-page decisionHuennekens said Tavenner had sufficiently pleaded his claims and dismissed the defendants’ claim that the trustee’s amended complaint reintroduces conspiracy allegations he previously dismissed in a July ruling. Huennekens said he did not completely dismiss the allegations, contrary to what the defendants argued.

“The defendants’ argument that the trustee resurrects old claims or violates the law of the case is without merit,” he wrote.

Huennekens ‘decision comes just over two weeks after hearing oral arguments on the defendants’ motions.

Lawyers representing the Tavenner, LeClair and UnitedLex entities did not respond to requests for comment.

The case is Lynn Tavenner, as Chapter 7 Trustee against ULX Partners LLC, US Bankruptcy Court for the Eastern District of Virginia, adversarial proceeding # 20-03124.

For Lynn Tavenner: Erika Morabito and Brittany Nelson by Quinn Emanuel Urquhart & Sullivan

For UnitedLex Corp: J. Gregory Milmoe, David Barger and Thomas McKee of Greenberg Traurig

For Gary LeClair: Andrew Bowman and Scott Sexton of Gentry Locke; and William Broscious

Read more:

UnitedLex and LeClairRyan founder call on judge to dismiss trustee’s lawsuit

LeClairRyan founder slams allegations he helped law firm tank

David Thomas reports on legal affairs including law firm strategy, hiring, mergers and litigation. He is based in Chicago. He can be reached at [email protected] and on Twitter @ DaveThomas5150.

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