Light Reading: Judge Turned Up Heat on O'Melveny

Legal Pad noted last week that U.S. Bankruptcy Judge Marilyn Morgan had ordered an evidentiary hearing to go over O’Melveny & Myers partner Suzzanne Uhland’s role in the 2006 Intel-VIA settlement in the SonicBlue bankruptcy.

We now have a copy of the hearing transcript, which you can view here.

You can see Judge Morgan was not exactly gentle when she questioned whether there was negligence or misconduct on O’Melveny’s part in the settlement, which benefited VIA over other unsecured creditors.

Here’s what Morgan says on Page 42:

“Now I want to turn to the status conference portion of this hearing on the second disputed issue, whether there is evidence of misconduct or negligence on O'Melveny's [part] that warrants a reduction or complete disallowance of the fees requested.
I'm going to say that what bothers me when I look at the record, and I have gone much deeper than you all have in looking at the deposition testimony that was earlier filed with the Court.
It - your conduct doesn't make sense, Ms. Uhland. I can't make it hang together. And it leaves me with more questions than answers. So the only way that I know how to resolve that is to require an evidentiary hearing. ”

In 2006, O’Melveny and Pillsbury failed to disclose a key element of the settlement that made it clear VIA would have senior debt status. Pillsbury was kicked off the case and last month had to pay $10 million for that mistake, which led to the revelation of conflicts of interest.

An O’Melveny spokeswoman said Tuesday the firm welcomes the evidentiary hearing.

“That will give the court a great opportunity to better understand the very complex facts surrounding the Intel-VIA license negotiations,” spokeswoman Marjory Appel said. “And it will also provide an opportunity to demonstrate the value our work generated for the bankruptcy estate.”

The estate was facing a $70 million debt to Intel, which was reduced to $12 million by the settlement, according to O’Melveny’s fee request.

— Amanda Royal
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Comments

[Observer]

One irony here is that Judge Morgan won't get to the bottom of this:
She is retiring from the bankruptcy bench as of June 30 this year.

[A Reader]

Well, Judge Morgan's retirement has been announced. But, apparently, from the transcript, she will not be fully off the bench and into retirement before that evidentiary hearing in October.

[Firemarshall Bob]

Susan Uhland and O'Melveny & Myers are becoming famous for their SONICblue entanglements with Bruce Bennett et al. over at the BankruptcyMisconduct website. Just seems odd that Martha Stewart and "Little Kim" both do hard prison time for purported lies regarding much smaller financial amounts, but up until now Uhland and the other lawyers are merely risking some of their fews. What about disbarment and incarceration? This website won't let up until that sort of justice comes to pass.