Omission in Congoleum Case Costs Advisory Firm $13
Trenton, NJ, February 22, 2006--U.S. Bankruptcy Court Judge Kathryn Ferguson has stripped a Washington, D.C., insurance recovery firm of $13 million in legal fees because it failed to disclose conflicts of interest while conducting bankruptcy work for Mercerville's Congoleum, according to reports from the New Jersey Law Journal.
The disgorgement ruling was based on an October 2005 decision by the 3rd U.S. Circuit Court of Appeals that disqualified Gilbert Heintz from further work on Congoleum's Chapter 11 because it also served as co-counsel to a firm that represented many of the parties pursuing asbestos claims against the company. Congoleum’s Chapter 11 was aimed at getting rid of thousands of asbestos claims by setting up an insurance-funded trust.
Judge Ferguson is reported to have said that if the company had come forward earlier with information regarding the conflicts, she would not have approved the retention of Gilbert Heintz in January 2004 as special insurance counsel. Her latest ruling was delivered in a conference call to lawyers in the case.
Although Ferguson did not specify any amounts, the law journal notes that "billing records show that the court approved $9 million in fees and costs to the firm last year and that $4 million in bills were pending." The decision, it adds, is likely to be appealed by Gilbert Heintz's Newark law firm Latham & Watkins.
