After Heritage Partners defaulted on a $47 million loan, they lost ownership of a Tribeca condominium project.
When they later sued their attorneys for $80 million in damages--for purportedly failing to advise them to pursue a Chapter 11 bankruptcy filing--the New York County Supreme Court dismissed the case, because Heritage failed to show that “but for” their attorneys’ alleged negligence the company would have kept the property.
On appeal to the Appellate Division, First Department, Heritage Partners argued that had the bankruptcy case been filed, the $80 million received from condominium sales would have been enough to cover the $63 million in total debt. But on its review of the record, the AD1 thought the malpractice claims were “speculative” because Heritage failed to show that it had the funds to initiate a bankruptcy proceeding and that it would have secured debtor-in-possession financing.
Now that’s damaging.
To view a copy of the Appellate Division’s decision, please use this link: Heritage Partners, LLC v. Stroock & Stroock & Lavan LLP