Heller Ehrman LLP v. Arnold and Porter, LLP (In re Heller Ehrman LLP), Adv. Proc. No. 10-03203 (Bankr. N.D. Cal. September 28, 2011)

Recommendation of Bankruptcy Judge Regarding Motions To Withdraw The Reference in the United States Bankruptcy Court for the Northern District of California by U.S. Bankruptcy Judge Dennis Montali –  Judge Montali issues his recommendation to the District Court against the motion of sixteen law firm defendants to withdraw of the reference under Stern v. Marshall.  Plaintiff, liquidating debtor Heller Ehrman LLP, sued the defendant law firms for the value of profits received by them with respect to “unfinished business” that, at the time of Heller’s dissolution, was taken to those firms by former Heller partners.  Heller seeks to avoid its pre-petition “Jewel Waiver” as an actual or constructive fraudulent transfer pursuant to Bankruptcy Code Sections 548 and 550, as well as under the California Civil Code.  Declining to adopt an “unnecessary extension of the narrow holding in Stern“, Judge Montali concludes: “Stern is inapplicable and that these matters are core proceedings in which I can enter a final judgment. Even if it were not, I could handle all pre-trial matters and motions exactly as I have done in other non-core cases”.