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September 24, 2008



The announcement from Heller that it is working with its lenders and already subleasing floors in SF And NYC will probably trigger a response from its larger creditors. Even if the banks and landlords are willing to deal, the unsecured creditors and employees with severance claims should have learned from past cases that the sooner an involuntary bankrutpcy is initiated, the better if they want to capture what cash there is in the company. The firm may prefer to have its case filed in New York rather than California to take advantage of the pro business orientation of the New York court.

If the firm is allowed to channel its remaining cash and assets to the preferred creditors, there will be little available to the trade.

The firm has made it clear that it is liquidating and creditors who are on the outside looking in may not want to wait for the money to get divied up as the firm unwinds.

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