Law firm representing interests of Wu and Woods in EHT cases says it is owed US$258,000

LAWYERS from Potter Anderson & Corroon representing the interests of Howard Wu and Taylor Woods - the co-founders of Eagle Hospitality Trust (EHT)'s sponsor Urban Commons - have applied for leave to withdraw as counsel in relation to EHT-related bankruptcy cases and adversary proceedings.

Documents lodged July 2in the United States Bankruptcy Court for the district of Delaware stated that the parties it represents, affiliated with Mr Wu and Mr Woods, are delinquent on payments to Potter Anderson in the amount of not less than $258,633.47 as of end-June.

This amount is exclusive of an "evergreen retainer" of US$250,000. The total unfunded obligations of the various parties is now at least U$508,633.47 and has continued to accrue, said the law firm.

Potter Anderson noted that the scope of its representation "grew exponentially" over the course of the bankruptcy proceedings as it had to serve as both bankruptcy counsel and litigation counsel.

This happened after EHT-related entities filed and were granted a motion for the examination of Mr Woods, Mr Wu and affiliated parties in connection with an allegedly unauthorised application for a US government-backed loan.

The parties represented by Potter Anderson had reportedly agreed to replenish the total retainer to US$250,000 within three business days upon receipt of an invoice from Potter Anderson.

But this was not done despite "numerous requests over the past few months", Potter Anderson said.

The law firm also said it does not believe that the "failure to fund will be cured".

Delaware court rules do not allow an attorney to withdraw unless another one is found. But Potter Anderson said it was unable to find substitute counsel after contacting several Delaware attorneys.

The court can, however, grant a withdrawal under certain circumstances.

In its notice, Potter Anderson argued that such withdrawal should be granted because the parties it represents have failed to meet their obligations under the relevant engagement letters.

Potter Anderson had "on countless occasions" given notice of its intent to withdraw if payment of invoices or replenishment of the evergreen retainer were not made in a timely manner, but its clients have not made the necessary payments.

Additionally, Potter Anderson said there are "pending controversies" in which it can and needs to represent the various parties.

The Business Times has reached out to Urban Commons and Potter Anderson for comment.