$11 Million Settlement Approved in Bankruptcy of Cleveland-Based Arter &
Hadden Law Firm
CLEVELAND, OHIO, Sept. 14, 2007: The U.S. Bankruptcy Court in Cleveland approved a settlement for over $11 million between 180 former partners of Arter & Hadden and Marc P. Gertz, the bankruptcy Trustee for the defunct law firm.
Judge Randolph Baxter, the Chief Judge for the U.S. Bankruptcy Court for the Northern District of Ohio, presided over the case, which was filed by Gertz, seeking the recovery of funds and damages from more than 200 former partners of Arter & Hadden, which was headquartered in Cleveland.
Arter & Hadden, one of the country’s oldest law firms with 12 offices nationwide, closed its doors on July 15, 2003, owing millions of dollars in pension obligations and other debts to creditors. The lawsuit was filed by Gertz, who was appointed as Chapter 7 Trustee in January, 2004, and who
conducted an 18-month investigation into the cause of the firm’s demise. Gertz was represented by Robert S. Bernstein, managing partner of Bernstein Law Firm, P.C. based in Pittsburgh, PA, and Irving B. Sugerman, Robert M. Gippin and Michael A. Steel of the law firm of Goldman & Rosen, Ltd. in Akron, Ohio.
The settlement will allow for a significant distribution to the firm’s 400 or more creditors, including former landlords, court reporters, research service providers, suppliers and retired partners, according to attorneys for the trustee. “The number and amount of the creditors to receive payment
is still being reviewed,” Gertz said. “There may be some claims that are objectionable and it might take several months to make a final determination,” he added.
Gertz praised the efforts of his counsel as well as counsel for the former partners. “This was a very complex and emotionally charged case, but in the end, it was determined that this settlement was in the best interests of all of the parties.”
“Creditors should receive distributions in an amount up to 20 percent of their allowed claims, which is in the upper range of similar cases,” said Bernstein. There are also numerous other cases pending against former clients, according to Sugerman. To date, over $10 million has been
collected in assets, in addition to settlements reached with the firm’s lenders, he said, and the total amount of the recovery will exceed $20 million.
The largest group of former partners to settle was attorneys who left Arter & Hadden to form Tucker, Ellis & West in Cleveland and Bailey Cavalieri in Columbus, according to Bernstein. The remaining 100 attorneys to settle worked at Arter & Hadden’s 12 offices throughout the country. Legal proceedings and collection efforts will continue against the remaining 19 partners who have not settled, according to Gertz. A trial date has not been set.