Weil faces $40m claim by Christian group

WEIL Gotshal & Manges is being sued for $40m (£22.7m) over a bankruptcy filing in the US by a former not-for-profit client.

The National Benevolent Association (NBA), a social services arm of the Christian Church (Disciples of Christ), alleges negligence and breach of fiduciary duty.

The NBA was able to offer a full recovery and pay $230m (£130.2m) to its unsecured creditors after selling most of its facilities.

The NBA’s claims creditors were amenable to negating the need for bankruptcy, but the NBA said Weil ruined any chance by taking an "unreasonable negotiating position".

Weil’s team, led by partner Deryk Palmer, was paid around $9m (£5.1m) in fees. The NBA said the push for fees led to the unnecessary bankruptcy filing.

Weil issued a statement: “We don’t believe the claims have any merit. We fully advised NBA’s Board and its restructuring committee, which had its own independent counsel, of the relevant issues and worked closely with them as they identified what course would best further NBA’s charitable mission…

Weil, Gotshal & Manges LLP’s only motivation throughout its representation of NBA was to best serve its clients. We regret that the new Board of NBA, which was not the Board with whom we dealt during this entire period, has chosen to file these meritless claims.”