The LeClairRyan bankruptcy liquidation trustee is seeking to claw back distributions from the defunct law firm, alleging “improper distributions of substantial sums of money.”
LeClairRyan attorneys want to recover funds from firm shareholders, employees and third parties, trustee Lynn Tavenner says in over 40 court filings Thursday. The filings in the U.S. Bankruptcy Court for the Eastern District of Virginia also allege that former officers and directors breached their fiduciary duties.
The filings are the latest in the saga for LeClairRyan, a firm that went bankrupt in 2019 but continues as a target of ever-more mountainous amounts of court filings through its Chapter 7 liquidation.
Tavenner has also brought a case against UnitedLex Corp and ULX Partners, the joint venture between LeClairRyan and UnitedLex was supposed to help the struggling Richmond, Va.-based firm stay afloat but instead resulted in fraud, Tavenner alleges.
Tavenner, who is represented represented by Quinn Emanuel’s Erika Morabito and Brittany Nelson, last week amended the complaint in that case, adding LeClairRyan co-founder Gary LeClair as a defendant. LeClair’s attorney Scott Sexton called the allegations “completely meritless” in a statement to Bloomberg Law last week.
Among those named by the trustee in proceedings on Thursday are LeClairRyan’s former leadership team, including its chief executive officer C. Erik Gustafson, who led the firm from 2016 until 2019 and Elizabeth Acee, who was named firm president in Feb. 2019. Those named also include UnitedLex CEO Dan Reed and CVC Capital Partners.
Founded in 1988 as a regional corporate firm, LeClairRyan increased overhead expenses as it expanded across the U.S. and suffered declining revenues and mass partner defections, ultimately forcing its filing for bankruptcy.