Sitting through Thursday's hearing on the dispute between Heller’s creditors and Bank of America, we got the sense BofA is having a hard time finding anyone to talk to. Those who knew anything about how Heller worked, the bank's lawyers pretty much said, either can’t be found or aren’t talking.
“We are encountering the defense that people at Heller were all very compartmentalized, and there’s nobody who has broad-based knowledge of their financial operations,” Kirke Hasson of Pillsbury Winthrop Shaw Pittman said in court. “They all have very narrow windows of information and that’s an impediment.”
Really? Nobody? Well, that might explain some things. But certainly somebody knows something.
More apparent obstacles, after the jump.
Hasson didn’t immediately return a call* asking who he’d tried to speak with. After all, last we checked, former Heller chairman Matt Larrabee and a few of the other partners who served in top management now work within spitting distance of Pillsbury’s San Francisco office.
(*micro-update: Friday afternoon, Hasson referred us to Bank of America spokeswoman Shirley Norton ... who did not immediately return a call for comment.)
BofA is trying to unravel Heller’s complicated corporate structure— nine professional corporation “partners” composed Heller Ehrman LLP — to see how it can defend itself in the suit brought by creditors, who want BofA to pay back $58 million it received in the 90 days leading up to Heller’s bankruptcy. It would like to show that the LLP was irrelevant, and that the assets of Heller were created and owned by the partner corporations.
Because of the bankruptcy, BofA is also having a rough time deposing witnesses, so it thinks it will have to subpoena some of them. The bank’s lawyers also want to interview Heller’s clients to try to see how things worked (to whom they wrote checks, for instance, to show who, the LLP or the PCs, held the reins). But Heller’s been mum about revealing client names.
“We’ve already been told by the debtor that they have very significant witness control problems, their responses to the [deposition requests] say that there’s likely nobody that we can control who can provide all the information you are seeking,” Hasson said in court.
“We are already encountering the apparent intention of the creditor to withhold the names of the debtors on the accounts receivable of Heller Ehrman on the theory that the names of clients are privileged.”
And, to prove the PCs are solvent (an important issue in the bankruptcy because creditors only have dibs on money transfers made by an insolvent entity), Hasson also noted they might try to find out the net worth of partners, and he’s “expecting resistance on that.”
Ya think?
— Amanda Royal
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