Defunct law firm Thelen LLP is telling courts it couldn’t possibly pay its employees accrued vacation, or give 60 days’ notice of impending layoffs.
In response to ex-employees seeking damages under the federal WARN Act, the firm says it should be excused from its obligations because they were impossible to fulfill. Also, because the firm had been seeking capital to keep in business, informing employees would have jeopardized attempts to secure a loan.
Thelen told its employees in late October that it would cease doing business by December 1st. Citibank, the only secured creditor, seized the firm’s bank accounts and did not allow it to pay employees accrued vacation.
Steve Blum, who represents plaintiffs in the federal class action, said it’s a “cop out” to blame the banks. The partners should have ponied up the money for the employees, he said.
Latham & Watkins partner Wayne Flick, who filed the answer on behalf of Thelen, declined to comment.
Thelen owed Citibank $60 million when it dissolved. It has paid off about $25 million and is continuing to collect payments, according to bankruptcy partner Peter Gilhuly at Latham & Watkins.
Blum is also representing former Heller employees in a potential class action against that firm, which filed for bankruptcy in December.