Risk Update

Conflicts Called — Firm Fights for Revised Role, Dual Representation DQ

Posted Dan Bressler

“Vinson & Elkins Pursues Narrower Role in Enviva’s Bankruptcy” —

  • “Vinson & Elkins LLP is seeking a new role in Enviva Inc.’s bankruptcy weeks after a judge rejected its bid to serve as debtors’ counsel.”
  • “The request comes after Judge Brian F. Kenney of the US Bankruptcy Court for the Eastern District of Virginia in May ruled that Vinson & Elkins couldn’t represent Enviva in its bankruptcy because it has a longstanding relationship with Riverstone Investment Group LLC, a private equity firm that held 43% of Enviva’s publicly traded shares. Kenney declined Enviva’s request for reconsideration in July.”
  • “When Kenney rejected Vinson & Elkins’ initial employment application, he left open the possibility that the firm could represent Enviva in a different capacity under a section of the bankruptcy code that is less restrictive on conflicts of interest.”
  • “‘The Court explained in the Reconsideration Order that there may nevertheless be an important role for V&E in these chapter 11 cases as special counsel under section 327(e) of the Bankruptcy Code due to its deep institutional knowledge of the Debtors,’ Enviva said in a Tuesday filing.”
  • “Under 327(e), Vinson & Elkins can work on the case as long as the matters it works on don’t involve its other clients.”
  • “Under the Tuesday proposal, Vinson & Elkins will continue to work as Enviva’s company counsel, handling governance issues, regulatory filings, tax matters and other issues, according to filings.”
  • “Vinson & Elkins said it conducted ‘a thorough conflicts analysis’ and determined none of its lawyers working in the Enviva bankruptcy has an adverse interest to Enviva on the matters they will be working on.”
  • “Vinson & Elkins narrowed the scope of its representation after talking to the US Trustee, the Justice Department’s bankruptcy watchdog, it said. Enviva and the two firms will coordinate to ‘avoid unnecessary duplication,’ Enviva said in a filing.”

“Attorneys – Disqualification – Conflict of interest [Massachusetts]” —

  • Koch, et al. v. Curley, et al. (Lawyers Weekly No. 09-092-24) (14 pages) (Squires-Lee, J.) (Suffolk Superior Court) (Civil Action No. 2384CV02766-BLS2) (July 16, 2024).
    • “William Koch (Koch) owns and manages a number of businesses including Renegade Management, Inc. (Renegade), a family office management company, and Nauticus Marina, Inc. (Nauticus Marina) (together with Koch and Renegade, Plaintiffs), which holds a commercial marina in Osterville, Massachusetts. Mark Curley (Curley) was employed by Koch and his entities from 1994 until December 2018. His duties included managing aspects of the family business and overseeing Nauticus Marina.”
    • “This case arises, in part, from a sale-leaseback transaction involving one of Nauticus Marina’s assets, 138 Bridge Street (Property), a marina with numerous docks. Plaintiffs allege that although the Property was worth at least nine million dollars, Koch received only a $500,000 promissory note and Curley’s promise to continue to work for Koch and his entities for twenty years without his annual six figure bonuses. Plaintiffs maintain that Curley’s promise to remain employed turned out to be ‘a gross and intentional misrepresentation… regarding the most material term of th[e] agreement.’ … Plaintiffs bring claims against Curley and Bridge Street Marina, LLC (Bridge Street) (together with Curley, Defendants), the entity to which the Property was transferred, of Fraudulent Inducement (Count I), Breach of Contract (Count II), Unjust Enrichment (Count III), and Breach of Fiduciary Duty (Count IV).”
    • “Plaintiffs have filed a Motion to Disqualify Defendants’ counsel, Albert J. Schulz (Schulz). Because I conclude that, at a minimum, Shulz represented both parties to the transaction — Plaintiffs and Defendants — the Motion must be allowed.”
    • “Plaintiffs seek to disqualify Shulz as Defendants’ counsel. They argue that he has a current conflict of interest prohibited by the Mass. R. Prof. C. 1.9(a). Alternatively, they argue that Shulz is prohibited from representing Defendants pursuant to Mass. R. Prof. C. 3.7(a) because Shulz is a necessary witness at trial. As explained below, I conclude that disqualification is required under Mass. R. Prof. C. 1.9(a).”
    • “I conclude that Shulz represented Plaintiffs in the transaction in addition to Curley. It does not matter that there was no engagement letter. … Here, there is sufficient evidence to conclude that there was an implied attorney client relationship in connection with the 2015 transaction.”
    • “Having determined that Shulz represented Plaintiffs in the very transaction Plaintiffs now claim was fraudulently induced, it would be an affront to the legal system and denigrate the high ethical standards required of attorneys in the Commonwealth to permit Shulz to represent Curley against Plaintiffs.”