Howrey asks judge to throw out California bankruptcy proceedings – Thomson Reuters News & Insight

NEW YORK, May 4 (Reuters) – The defunct law firm Howrey LLP has asked a federal judge to throw out involuntary bankruptcy proceedings brought against it in California, saying the proper venue was the District of Columbia or Virginia.

In a motion filed with the U.S. Bankruptcy Court for the Northern District of California on Tuesday, Howrey argued that no major business decisions were made in California and most of its creditors were in the Washington metro area.

The bankruptcy petition was filed on behalf of three California-based creditors, who claimed that the law firm owes them a total of about $36,000. Those creditors are office supplies retailer Give Something Back Inc, court reporting company Jan Brown & Associates and Matura Ferrington Staffing Services Inc., which supplies contract attorneys.

Maureen Harrington, an attorney representing the creditors, said that her clients will challenge the motion and will seek to postpone a hearing scheduled for June 8 while they conduct discovery. The location of receivables, which could help determine proper venue, is not apparent from the firm’s statements, she said. Harrington is an attorney with Trepel McGrane Greenfield.

Judge Dennis Montali is presiding over the case.

In its motion, Howrey said that if the case is not moved to the Washington metro area, many of its creditors would be deprived of the chance to participate.

Included in Howrey’s motion was a five-page declaration by former Managing Partner Robert Ruyak, who described the rise and fall of the 56-year-old firm, culminating in a $50 million bill owed to its banker, Citibank.

The firm suffered a “significant decline in profits” beginning in 2009, and the departure of about 30 percent of its clients in 2010, Ruyak said in his declaration.

At its peak in 2008, Howrey had 743 attorneys in 16 offices, according to The National Law Journal. Washington was its largest center, with 304 attorneys.

At one time, the firm and its ancillary company, Cap Analysis Group LLC, employed 1,312 staffers, contract attorneys and partners worldwide. CapAnalysis was a financial and regulatory consultancy, Ruyak wrote.

Since the firm voted to dissolve on March 15, just 68 employees remain, Ruyak said.

The remaining employees and the firm’s dissolution committee are trying to close the firm’s books, which includes working with Citibank in an out-of-court wind down “so as to preserve as much value as possible” for creditors, Ruyak said.

The firm also is defending lawsuits in New York and California brought by former employees, who allege that the firm failed to warn workers of impending layoffs.

The bankruptcy case is In re Howrey LLP, U.S. Bankruptcy Court for the Northern District of California, No. 11-31376-DM.

For the creditors: Maureen Harrington of Trepel McGrane Greenfield.

For Howrey: Peter Gilhuly of Latham & Watkins.

(Reporting by Leigh Jones)

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