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Paul Hastings Faces Lawsuit Alleging Malpractice by Redwood Liquidating Co.

published July 06, 2023

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( 13 votes, average: 4.1 out of 5)
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Paul Hastings Faces Lawsuit Alleging Malpractice by Redwood Liquidating Co.

Paul Hastings, a prominent law firm, is facing a lawsuit accusing it of malpractice by a California biotechnology company, Redwood Liquidating Co. The company alleges that Paul Hastings mishandled their efforts to remove its founder from the board, resulting in significant financial losses and ultimately leading to bankruptcy.
 

According to a complaint filed on June 30 in Los Angeles, Redwood Liquidating Co. claims they hired Paul Hastings in early 2021, intending to implement corporate governance reforms. They aimed to sideline the company's founder, Hesaam Esfandyarpour, and introduce new leadership to oversee its commercialization efforts. The plan included appointing a new CEO and three independent directors to the board, per consent drafted by Paul Hastings.
 
However, complications arose when the Delaware Chancery Court declared the consents invalid after Esfandyarpour filed a lawsuit. As a result, the newly appointed directors were deemed invalidly appointed. The legal dispute surrounding the invalid consents depleted Redwood's remaining cash reserves, raised concerns among investors about the board's legitimacy and disrupted financing opportunities. These unfavorable circumstances eventually led to the closure of the company and its subsequent bankruptcy filing in July 2022, necessitating the liquidation of its assets.
 
Paul Hastings responded to the lawsuit by stating an email, firmly refuting the claims as baseless. The firm denies Redwood's attempt to blame the company's bankruptcy and failure on its former legal counsel. Paul Hastings asserts its readiness to defend itself in court against these allegations.
 
Redwood is being represented by California-based law firms Lesnick Prince & Pappas and Binder & Schwartz in the lawsuit against Paul Hastings. In the ongoing bankruptcy proceedings in Delaware, Redwood is represented by Willkie Farr & Gallagher and Richards, Layton & Finger.

published July 06, 2023

( 13 votes, average: 4.1 out of 5)
What do you think about this article? Rate it using the stars above and let us know what you think in the comments below.