LESLIE FAY’S LAWYER CAUTIONS AGAINST MIDSTREAM SWITCH
NEW YORK — Bankruptcy counsel for The Leslie Fay Cos. told Bankruptcy Judge Tina L. Brozman Monday that removing the law firm as the apparel maker’s representative in its Chapter 11 case would severely harm the reorganization.
“Replacing attorneys anytime past the first 30 days of a Chapter 11 case results in disruption and delay [of the case],” said Harvey Miller, of Weil, Gotshal & Manges. “There will be a steep learning curve for any new counsel.”
Miller made his remarks in court after Arthur Gonzalez, the U.S. trustee, asked Brozman to disqualify Weil, Gotshal and impose financial sanctions on the firm because it failed to disclose possible conflicts in the case.
Weil, Gotshal did not disclose in April 1993, when Leslie Fay filed for bankruptcy court protection, that it had represented two companies whose executives were on Leslie Fay’s audit committee.
Weil, Gotshal also represented the audit committee, beginning in January 1993, in its fact-finding investigation into the accounting scandal that forced the apparel maker to restate reported earnings into steep losses and pushed it into Chapter 11.
Gonzalez said the two directors could have played a role in the scandal, and Weil, Gotshal’s failure to disclose the relationships tainted the audit committee’s final report.
Miller said the possibility of the two directors being implicated was so remote as to make Gonzalez’s charges moot.
Brozman reserved decision on Gonzalez’s motion.
— Fairchild News Service