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June 7, 2006

Asbestos Bankruptcy Firm Must Return $9.7 Million in Fees

The Washington, D.C. firm of Gilbert, Heintz & Randolph has been ordered by the U.S. Bankruptcy Court for the District of New Jersey to disgorge approximately $9.7 million in legal fees it earned representing flooring manufacturer Congoleum Corp. in asbestos bankruptcy proceedings.  The Bankruptcy Court ordered the fees returned to Congoleum after a federal appeals court found that the firm violated conflict-of-interest rules by simultaneously representing Congoleum and thousands of plaintiffs who had asbestos claims against that company in bankruptcy proceedings.

In a hearing on a motion to stay the disgorgement order, a lawyer representing the firm said that GHR had $2.3 million in liquid assets and that, if the judgment were executed immediately, it could drive the firm out of business and "potentially into bankruptcy."  According to Alexia Garamfalvi's story for Legal Times, the firm's chairman said, however, that he doesn't think it will come to that and that settlelment negotiations are underway.

JDP

June 7, 2006 | Permalink

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