Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
The New York firm had sought around $526,000 in fees for the five months from September 2006 to February 2007 that it acted as debtor's counsel to Source, publisher of The Source magazine. But Gonzalez said the 'manner in which Windels represented the Debtor and the firm's eventual singular concentration on fees, as opposed to its role as counsel, caused harm to the Debtor sufficient to support a denial of all fees sought.'
The judge said Windels Marx had a conflict of interest in representing Source in its bankruptcy proceeding because the law firm was itself a creditor and had a bill outstanding with the debtor company of as much as $200,000, even before the bankruptcy filing. Windels Marx partner Charles E. Simpson, who led the firm's bankruptcy representation, testified that his firm 'waived' that amount, but Gonzalez gave this claim little credence, noting that the firm did not write off the time until it was challenged on it in November 2007, and that even the firm's client was unaware the bill had been forgiven. Moreover, the judge pointed out, Windels Marx later sought payment of some of the supposedly waived legal fees from Source affiliates. Simpson did not return a call seeking comment.
Windels Marx had looked to Black Enterprise/Greenwich Street Corporate Growth Partners ' an investment group that took control of Source after instances of mismanagement came to light and then provided bankruptcy financing to pay the firm's bills, which the firm and the investment group had agreed to defer until the conclusion of the bankruptcy case. The judge pointed out that Windels Marx had disclosed none of these facts in its application to be retained as bankruptcy counsel.
The relationship with Black Enter-prise/Street grew fractious, apparently over the unpaid legal bills, and Simpson later accused the group in fee hearings of exercising improper control over Source, causing the debtor company to breach its fiduciary duty to unsecured creditors. But Gonzalez said Black Enterprise/ Greenwich Street's actions seemed reasonable in light of Source's financial situation, and said Simpson was at fault as a lawyer for not acting on his concern that his client was acting in an unlawful manner.
'Simpson's continued representation of the Debtor under this strained relationship was at odds with his ethical obligations and was detrimental to the estate,' the judge wrote. 'Rather than seeking to rectify his concerns regarding the Debtor, Simpson turned his efforts to securing an avenue for getting his firm's legal fees paid despite having agreed to defer them.'
The judge cited as particularly egregious Windels Marx's handling of an interim compensation motion brought by the creditor's committee, requesting the estate pay fees to professionals, including Windels Marx, on a monthly basis. Though it was debtor's counsel, the firm had not discussed the motion with its client and Simpson sent only an ill-prepared associate to the hearing on the motion. Gonzalez said the associate made unauthorized representation on the client's behalf and did not object to the motion, which the court granted.
'Based upon its agreement with [Black Enterprise/Greenwich Street] to defer fees, Windels knew it could not have brought the Interim Comp Motion for its own benefit and that the Debtor might resist paying Windels based upon the deferral agreement,' the judge wrote. 'By not advising its client, and not disclosing this to the Court, Windels was able to use the Interim Comp Order to try to override its agreement to defer compensation.'
The judge said Windels Marx's desire to be paid may have influenced the proceeding in other ways. Noting that the firm had taken no steps to include affiliated entities of Source in the bankruptcy, Gonzalez said he found it compelling that Windels Marx was a creditor of at least one of these affiliates, whose debt it intended to pursue.
The
The judge said
The relationship with Black Enter-prise/Street grew fractious, apparently over the unpaid legal bills, and Simpson later accused the group in fee hearings of exercising improper control over Source, causing the debtor company to breach its fiduciary duty to unsecured creditors. But Gonzalez said Black Enterprise/ Greenwich Street's actions seemed reasonable in light of Source's financial situation, and said Simpson was at fault as a lawyer for not acting on his concern that his client was acting in an unlawful manner.
'Simpson's continued representation of the Debtor under this strained relationship was at odds with his ethical obligations and was detrimental to the estate,' the judge wrote. 'Rather than seeking to rectify his concerns regarding the Debtor, Simpson turned his efforts to securing an avenue for getting his firm's legal fees paid despite having agreed to defer them.'
The judge cited as particularly egregious
'Based upon its agreement with [Black Enterprise/Greenwich Street] to defer fees, Windels knew it could not have brought the Interim Comp Motion for its own benefit and that the Debtor might resist paying Windels based upon the deferral agreement,' the judge wrote. 'By not advising its client, and not disclosing this to the Court, Windels was able to use the Interim Comp Order to try to override its agreement to defer compensation.'
The judge said
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
In June 2024, the First Department decided Huguenot LLC v. Megalith Capital Group Fund I, L.P., which resolved a question of liability for a group of condominium apartment buyers and in so doing, touched on a wide range of issues about how contracts can obligate purchasers of real property.
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.