NEW YORK — A bankruptcy judge ruled Thursday that The Leslie Fay Cos. can keep Weil, Gotshal & Manges as its bankruptcy counsel, but fined the law firm an unspecified amount for not disclosing its ties to two Leslie Fay board members.
At the same time, Judge Tina L. Brozman barred Weil, Gotshal from representing Leslie Fay in any related lawsuits that might grow out of the firm’s Chapter 11 reorganization.
Harvey Miller, of Weil, Gotshal, had argued that disqualifying his firm would impair Leslie Fay’s reorganization efforts.
The question of disqualifying Weil, Gotshal first arose when some creditors complained that the law firm did not disclose that it represented corporations whose executives sit on Leslie Fay’s board. U.S. Trustee Arthur J. Gonzalez then asked Judge Brozman to disqualify Weil, Gotshal for failing to disclose the relationships.
Brozman said “[Leslie Fay] may not be able to withstand the great delay and costs occasioned by the departure of the counsel with whom it has worked so long. [Leslie Fay] must begin the process of emerging from this court.” As for the amount of fines, Brozman had not yet determined them.
Alan Miller, of Weil, Gotshal, reached at his office Thursday evening, said he was on a conference call and could not comment on the decision “at this time.” A spokesman for Leslie Fay said the company had not seen the decision and could not comment.
— Fairchild News Service