| NEW YORK
NEW YORK May 28 The unusual case of defunct law
firm Jacoby & Meyers Bankruptcy LLP will remain in New York, a
judge ruled on Wednesday, rejecting the firm's efforts to
dismiss litigation initiated by its creditors.
J&M Bankruptcy's liquidation is one of the odder bankruptcy
filings this year. The firm, which itself specialized in helping
clients through bankruptcy, was pushed into a Chapter 7
liquidation in March by creditors who said the firm had
shuttered with little warning, leaving clients in the lurch.
The creditor group, led by legal data and education service
LegalZoom.com, is trying to piece together a puzzle it believes
could expose J&M Bankruptcy as a scheme to make off with the
retention payments of their down-and-out clients.
Judge Shelley Chapman said in court on Wednesday that the
morass of questions posed by the case, including the firm's
relationship with Jacoby & Meyers, a well-known New York-based
personal injury law firm, require bankruptcy court oversight.
"Time's a-wasting," Chapman said. "This is case that needs
In court papers, the creditor group pointed to uncertainty
over the status of client files, which have proved difficult to
locate despite the firm's statement that it transferred them to
J&M Bankruptcy previously operated as Chicago-based Macey
Bankruptcy Law PC, which has been sued by clients and government
regulators accusing it of defrauding clients. The firm reached a
$2.1 million settlement in 2012 with the Illinois attorney
general, then adopted the J&M name a day later through an
agreement with Jacoby & Meyers.
Whether the deal was an official merger or just a licensing
agreement - and why Jacoby & Meyers agreed to such a deal with a
firm in legal trouble - remains unclear.
Mark Frankel, a lawyer for J&M Bankruptcy, declined to
comment after Wednesday's hearing, and a spokesman for Jacoby &
Meyers did not respond to requests for comment.
Fred Stevens, an attorney for the creditors, on Wednesday
accused Macey of essentially changing its name to avoid bad
press and continue to attract clients.
"We're really concerned about" the clients, Stevens said. He
said the firm has not been paid for the work so far.
Frankel argued the case should be dismissed or moved to
Chicago, where the J&M Bankruptcy was headquartered. He said an
independent trustee has already been appointed to investigate
the firm's closure and wind down operations.
But the trustee, Robert Handler, has been given a budget of
only $25,000 for the work. Handler told the court it was not
enough. Chapman agreed, saying "the size of the task" requires a
court-appointed trustee with court oversight.
The case is In re Jacoby & Meyers Bankruptcy LLP, U.S.
Bankruptcy Court, Southern District of New York, No. 14-10641.
(Reporting by Nick Brown; Editing by Grant McCool)