UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

Richmond Division 

In re: LECLAIRRYAN PLLC, Case No. 19-34574-KRH 

 Chapter 7 

Debtor. 

MEMORANDUM OPINION 

On September 3, 2019 (the “Petition Date”), LeClairRyan PLLC (the “Debtor” or 

“LeClairRyan”) filed a voluntary petition1

 under Chapter 11 of Title 11 of the United States 

Code (the “Bankruptcy Code”), thereby commencing the above-captioned bankruptcy case (this 

“Bankruptcy Case”). As required by Rule 1007(a)(3) of the Federal Rules of Bankruptcy 

Procedure, on September 17, 2019, the Debtor filed its List of Equity Security Holders Pursuant 

to Rule 1007(a)(3) of the Federal Rules of Bankruptcy Procedure [ECF No. 79] (the “ESH 

List”), whereby the Debtor identified certain individual attorneys who were members of the 

Debtor as of July 29, 2019. The Bankruptcy Case was converted from a case under Chapter 11 

to one under Chapter 7 of the Bankruptcy Code on October 4, 2019. Lynn L. Tavenner (the 

“Trustee”) was appointed as the Chapter 7 trustee of the Debtor’s bankruptcy estate by the Office 

of the United States Trustee. 

This matter now comes before the Court upon the Motion to Amend Debtor’s Equity 

Security Holders List Pursuant to Bankruptcy Rule 1009(a) [ECF No. 1217] (the “Motion”) filed 

by Gary D. LeClair. Mr. LeClair’s Motion seeks entry of an order directing the Debtor to amend 

the ESH List to remove Mr. LeClair from the ESH List. By the (i) Joinder of Certain Former 

LeClairRyan, PLLC Attorneys to Motion to Amend Debtor’s Equity Security Holders List 

1

 On the Petition Date, attached to its petition, the Debtor filed its Unanimous Written Consent of Dissolution 

Committee [ECF No. 1 at 9-10], which authorized the filing of the Debtor’s petition based upon the Dissolution 

Resolution (as such term is defined herein). 

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 1 of 9
2 

Pursuant to Bankruptcy Rule 1009(a) [ECF No. 1234] filed by Megan Ben’Ary, Steven Blaine, 

James Carroll, Brian Donnell, Robert Fletcher, Robert Harrison, Charles Horn, Ray King, David 

Lay, Ilan Markus, David Phillips, Christopher Perkins, Christopher Pizzo, Thomas Regan, Peter 

Van Zandt, Robert Wayne, Andrew White, Diane Wilson, Robert Wonneberger, and Karen 

Yates; (ii) Rodney K. Adams, John T. Jessee, Paul C. Kuhnel, and Andrew K. Clark’s Joinder to 

Gary D. LeClair’s Motion to Amend Debtor’s Equity Security Holders List Pursuant to 

Bankruptcy Rule 1009(a) [ECF No. 1237]; and (iii) Joinder of Two Additional Former 

LeClairRyan, PLLC Attorneys to Motion to Amend Debtor’s Equity Security Holders List 

Pursuant to Bankruptcy Rules 1009(a) [ECF No. 1260] filed by Robin Teskin and Gretchen 

Jackson (the foregoing pleadings, collectively the “Joinders” and the foregoing filers, 

collectively, the “Former Attorneys”), certain Former Attorneys previously employed by the 

Debtor joined in the relief requested in the Motion. The Trustee responded to the Motion and 

each of the Joinders. See ECF Nos. 1255, 1256, 1257, 1264. Mr. LeClair filed a reply. See ECF 

No. 1266. 

On March 29, 2022, the Court conducted a hearing (the “Hearing”) on the Motion and the 

Joinders. Mr. LeClair testified at the Hearing and offered certain documents into evidence. The 

Trustee also presented evidence in support of her response. While the Former Attorneys 

appeared at the Hearing, the Former Attorneys did not present evidence and instead only offered 

argument in support of their Joinders. After due consideration of the pleadings, the arguments of 

counsel at the Hearing, the evidence presented by Mr. LeClair and the Trustee, and the 

authorities cited by the parties in their memoranda of law, the Court will deny the Motion for the 

reasons set forth below. 

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 2 of 9
3 

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. This 

is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Venue is proper before this Court 

pursuant to 28 U.S.C. §§ 1408 and 1409. Findings of fact shall be construed as conclusions of 

law and conclusions of law shall be construed as findings of fact when appropriate. See Fed. R. 

Bankr. P. 7052. 

As an initial matter, the issue presently before the Court is a discrete one: should the 

Trustee be ordered to amend the list of equity security holders for a now-defunct law firm devoid 

of lawyers in order to remove Mr. LeClair and the Former Attorneys as equity security holders?2

 

In answering this narrow question, the Court makes no finding as to the taxable consequences of 

being included on the ESH List.3

“Under the Virginia Limited Liability Company Act, Va. Code Ann. §§ 13.1–1000 to 

13.1–1087, a limited liability company is bound by its operating agreement, which regulates the 

conduct of its business and the relations of its members.” Belle v. Shaia (In re Nedrick), Case 

No. 10-33456-KLP, 2017 WL 1207507, at *4, 2017 Bankr. LEXIS 886, at *13 (Bankr. E.D. Va. 

Mar. 31, 2017) (citing Va. Code Ann. § 13.1-1023(A)(1)). As such, the Debtor’s Fourth 

Amended and Restated Shareholders Agreement of LeClairRyan, A Professional Corporation 

2

 The Former Attorneys only joined the Motion and, as such, the Court could interpret the Joinders as merely 

requesting that Mr. LeClair be removed from the ESH List. However, for the reasons stated herein, as the Court 

has no evidence that the Former Attorneys terminated their employment prior to July 29, 2019, to the extent that 

the joinders could be construed as individual requests for relief, such requests are without merit. 

3

 Bankruptcy taxation is a nuanced area of law. Generally, the filing of a bankruptcy petition by an individual 

under Chapter 7 or 11 of the Bankruptcy Code creates a separate taxable entity. 26 U.S.C § 1398. No separate 

taxable entity is created when a corporation or a partnership files a bankruptcy case. Id. § 1399; see also id. 

§ 1398(b)(2). No doubt, the responsibility for preparing and filing the tax returns for the bankruptcy estate fall 

on the Chapter 7 trustee. See id. § 1398(c)(1). In the case of a partnership or other tax flow-through entity, it is 

possible for the income generated by the bankruptcy estate to pass through to the partners’ level with a 

corresponding lack of cash flow necessary to pay the taxes. See id. § 702. The Debtor in the case at bar was a 

flow-through taxpayer prior to the Petition Date, and, as such, may continue to be a flow-through taxpayer postPetition Date. See e.g., Williams v. Comm’r, 123 T.C. 144, 149 (2004). Given the limited relief sought by the 

Motion, those complicated tax issues are not presently before the Court. 

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 3 of 9
4 

and Operating Agreement of LeClairRyan PLLC (the “Operating Agreement”), Mot. Ex. 3, ECF 

No. 1217-3, controls this dispute. 

In reviewing the Operating Agreement, the Court applies general rules of contract 

interpretation. See TM Delmarva Power, L.L.C. v. NCP of Va., L.L.C., 263 Va. 116, 119, 557 

S.E.2d 199, 200 (2002); Greenspon v. Hurwitz, 89 Va. Cir. 251 (Fairfax Cnty. 2014) (“The 

Virginia Supreme Court deals with interpretation of Operating Agreements as they would other 

contracts.”). “[W]hen the terms of a contract are clear and unambiguous, a court is required to 

construe the terms according to their plain meaning.” Advanced Training Grp. Worldwide, Inc. 

v. Proactive Techs. Inc., No. 19-cv-505-TSE, 2020 WL 4574493, at *11, 2020 U.S. Dist. LEXIS 

141855, at *28 (E.D. Va. Aug. 7, 2020) (citing to Bridgestone/Firestone, Inc. v. Prince William 

Square Assocs., 250 Va. 402, 407, 463 S.E.2d 661, 664 (1995)). 

The Court finds no ambiguity with the Operating Agreement in the case at bar. The 

Operating Agreement provides that “[t]he Company shall be dissolved and i[t]s affairs wound up 

only upon the occurrence of any of the following events: (a) [a]n election to dissolve the 

Company made by holders of a majority of the Common Shares.” Operating Agreement 

§ 11.01(a), ECF No. 1217-3 at 71. On July 29, 2019, the Debtor’s members voted to dissolve 

and liquidate the Debtor in accordance with section 11.01(a) (the “Dissolution Resolution”). See

Tavenner Decl. ¶ 8(d), ECF No. 1269 at 6-7; Tr.’s Ex. C, ECF No. 1258 at 86 (“[T]he Members 

agree that it is in the best interests of the Firm . . . that the Firm be dissolved and liquidated in 

accordance with, and pursuant to the Operating Agreement.”); see also Unanimous Written 

Consent of Dissolution Comm., ECF No. 1 at 9-10 (“[E]ffective July 29, 2019, the Members of 

the Company approved the dissolution and liquidation of the Company in accordance 

with . . . [the] Operating Agreement.”). “Dissolution of the Company shall be effective on the 

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 4 of 9
5 

day on which the event described in Section 11.01 occurs . . . .” Operating Agreement § 11.02, 

ECF No. 1217-3 at 71. As the members elected to dissolve the Debtor on July 29, 2019, 

dissolution of LeClairRyan was effective as of July 29, 2019. 

The Operating Agreement provides that, if a member sought to leave the Debtor, such 

member’s common and preferred stock would be “deemed sold and transferred to the Company 

as of the Termination Date.” Operating Agreement § 2.02(g), ECF No. 1217-3 at 30. 

“Termination Date” is defined as “the effective date of the termination of the Transferring 

Member’s employment with the Company.” Id. § 2.02(a)(i), ECF No. 1217-3 at 25. Thus, by 

the express, unambiguous language of the Operating Agreement, where members sought to leave 

the Debtor, their shares would be deemed transferred back to the Debtor on the date that they 

were no longer employed by the Debtor. 

At the Hearing, only Mr. LeClair offered evidence as to the date he terminated his 

employment with the Debtor; none of the Former Attorneys introduced evidence concerning 

when they each separated from the Debtor. Based on the uncontroverted evidence, Mr. LeClair 

terminated his employment with the Debtor on July 31, 2019 – two days after the Debtor voted 

to dissolve. However, those two days are outcome determinative. Once the Debtor voted to 

dissolve, members were no longer able to withdraw or resign from the Debtor. 

So long as a Member continues to hold any shares, such Member 

shall not have the ability to withdraw or resign as a Member prior 

to the dissolution and winding up of the Company and any such 

withdrawal or resignation or attempted withdrawal or resignation 

by a Member prior to the dissolution or winding up of the 

Company shall be null and void and of no force or effect. 

Id. § 5.03, ECF No. 1217-3 at 50. After the Debtor voted to dissolve in accordance with section 

11.01(a) of the Operating Agreement, which dissolution was effective on July 29, 2019, per 

section 11.03 of the Operating Agreement, members could no longer withdraw or resign from the 

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 5 of 9
6 

Debtor. As such, Mr. LeClair’s purported resignation on July 31, 2019, was “null and void and 

of no force or effect.” Id. § 5.03, ECF No. 1217-3 at 50. 

Although the Court does not have any evidence properly before it as to the date(s) the 

Former Attorneys left the Debtor, any member who left the firm’s employ after July 29, 2019, 

could not transfer their shares back to the Debtor. Therefore, based on the evidence adduced at 

the Hearing that Mr. LeClair terminated his employment with the Debtor after July 29, 2019, and 

based upon the absence of any evidence that the Former Attorneys terminated their employment 

prior to July 29, 2019, the Court finds that the Debtor and the Former Attorneys are properly 

included on the ESH List. 

Finally, the Court rejects Mr. LeClair’s challenge to the validity of the Dissolution 

Resolution. Section 9.08(i)(i) of the Operating Agreement requires “the written consent or 

affirmative vote of the holders of a majority of the then outstanding Series A Preferred Shares 

and Series B Preferred Shares taken as a single class, given in writing or by vote at a meeting, 

consenting or voting” to “liquidate, dissolve, or wind-up the business and affairs of the 

Company.” Id. § 9.08(i)(i), ECF No. 1217-3 at 66. The ESH List indicates that Mr. LeClair held 

the majority of then-outstanding preferred shares. See ESH List, ECF No. 79. As such, Mr. 

LeClair argues that his written consent or affirmative vote was required to approve the 

dissolution of the Debtor. 

Mr. LeClair has been an active participant and central figure in this Bankruptcy Case, 

which has been pending before this Court for almost three years. For the first time, by his reply, 

Mr. LeClair suggests that he did not vote to approve the Dissolution Resolution and, therefore, 

the Dissolution Resolution was ineffective. At the Hearing, Mr. LeClair backtracked from this 

initial position, stating instead that he did not challenge the validity of the Dissolution Resolution 

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 6 of 9
7 

as to the Debtor’s bankruptcy filing generally. Rather, Mr. LeClair advanced the proposition that 

the Dissolution Resolution is only invalid when calculating the appropriate date by which to 

determine his equity interest. The distinction that Mr. LeClair makes is fundamentally flawed. 

Either the Dissolution Resolution is valid, in which case, the bankruptcy filing was properly 

authorized, but Mr. LeClair’s purported withdrawal was ineffective; or the Dissolution 

Resolution is invalid, in which case Mr. LeClair may have effectively withdrawn pre-Petition 

Date, but the bankruptcy filing was not authorized. See Price v. Gurney, 324 U.S. 100, 106 

(1945) (holding that where a corporate filing has not been authorized by state law, the 

bankruptcy court must dismiss the petition). Mr. LeClair cannot arbitrarily pick and choose 

whether and when the Dissolution Resolution was valid as best suits his individual interests. 

Regardless, the Court rejects Mr. LeClair’s contention and finds that the Dissolution Resolution 

was valid. 

Mr. LeClair consented to the Debtor’s dissolution in writing as required by the Operating 

Agreement. Namely, section 2.02(h) of the Operating Agreement provides that a withdrawing 

member would have to provide thirty days’ prior written notice of an impending withdrawal. 

Operating Agreement § 2.02(h), ECF No. 1217-3 at 30. Such notice “may be waived . . . or 

shortened in the sole discretion of the Chief Executive Officer.” Id., ECF No. 1217-3 at 30-31. 

By email dated July 26, 2019, the Debtor’s Chief Executive Officer provided the Debtor’s 

then-members with an update as to the planned dissolution of the firm, the terms of the 

dissolution committee, and confirmed that the thirty-day notice requirement had been waived. 

See Mot. Ex. 5, ECF No. 1217-5 at 2. In reliance on this email, on July 26, 2019, Mr. LeClair 

stated his intention to “resign [his] employment effective as of 11:59PM on August 4, 2019,” and 

confirmed that “the Firm has waived the 30-day Notice period set forth in Section 2.02(h).” 

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 7 of 9
8 

Mot. Ex. 6, ECF No. 1217-6 at 2. By such email, Mr. LeClair availed himself of the benefit of 

the waiver of the notice period, which was a necessary component of the planned dissolution of 

the Debtor. Such email constitutes written consent, thereby satisfying section 9.08(i)(i) of the 

Operating Agreement. 

Alternatively, the Court finds that Mr. LeClair ratified the Debtor’s dissolution. “[U]nder 

Virginia law, the unauthorized filing of a voluntary petition in bankruptcy [o]n behalf of a 

corporation might be ratified in appropriate circumstances by ensuing conduct of persons with 

power to have authorized it originally.” Hager v. Gibson, 108 F.3d 35, 40 (4th Cir. 1997). 

“[O]ne may ratify an unauthorized act by ‘accepting its benefits with full knowledge of the 

relevant facts, or, if upon learning of the act, he fails to promptly disavow it.’” Id. (quoting Kilby 

v. Pickurel, 240 Va. 271, 275, 396 S.E.2d 666, 668-69 (1990)). For the reasons stated herein, the 

Court finds that Mr. LeClair ratified the Dissolution Resolution by his July 26, 2019, email. See

Mot. Ex. 6, ECF No. 1217-6 at 2. 

Furthermore, Mr. LeClair undoubtedly ratified the Dissolution Resolution through his 

conduct in this Bankruptcy Case.4

 Mr. LeClair was included on the ESH List and the Debtor’s 

schedules and statements. Mr. LeClair received the Notice of Chapter 7 Bankruptcy Case – 

Proof of Claim Deadline Set [ECF No. 177 at 221], which scheduled the meeting of creditors in 

this Bankruptcy Case and set the deadline to file proofs of claim. In response to the Notice of 

Chapter 7 Bankruptcy Case, on December 11, 2019, Mr. LeClair filed a proof of claim against 

the Debtor, Proof of Claim No. 134, which he has twice amended. Beginning in 2021, Mr. 

4

 The Fourth Circuit has recognized that ratification and relation-back doctrine is not a rule “of statutory or 

constitutional limitation upon the jurisdiction of federal courts.” Hager, 108 F.3d at 41. Rather, it is a matter of 

“federal interstitial common law, judicially created, grounded in policy and necessity.” Id. As such, this does 

not implicate the jurisdictional concerns raised by Roman Cath. Archdiocese of San Juan, Puerto Rico v. 

Acevedo Feliciano, ___ U.S. ___, 140 S. Ct. 696 (2020). 

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 8 of 9
9 

LeClair began to take a more active role in these proceedings, objecting to various motions, 

including this Motion. Finally, Mr. LeClair entered into a settlement agreement with the Trustee, 

whereby Mr. LeClair settled various claims asserted against him by the Trustee.5

 Not only did 

Mr. LeClair know of the Debtor’s bankruptcy filing and fail to promptly raise the issue of 

corporate authority, but Mr. LeClair also accepted the benefits of the bankruptcy filing for 

years.6

 Through such conduct, Mr. LeClair has undoubtedly ratified the Dissolution Resolution. 

Where such ratification occurs, the ratification relates back to the date of the underlying 

act. See Hager, 108 F.3d at 41. Therefore, even if Mr. LeClair did not provide his written 

consent to the Dissolution Resolution – which the Court finds he did – Mr. LeClair ratified it by 

his conduct. By application of the relation-back principle, such ratification validated the 

Dissolution Resolution as of the date thereof, i.e., July 29, 2019. 

For these reasons, the Motion is denied. A separate order will issue. 

Dated: April 21, 2022 /s/ Kevin R. Huennekens 

UNITED STATES BANKRUPTCY JUDGE 

Entered on Docket: 

5

 The terms of the settlement remain under seal. 

6

 Mr. LeClair most recently ratified the Dissolution Resolution by, among other things, his admissions in the 

Motion conceding that the Court has jurisdiction, that the Motion is a core proceeding, and the statutory 

predicates for the relief. Mot. ¶¶ 2-4, ECF No. 1217 at 2. 

April 21, 2022

Case 19-34574-KRH Doc 1301 Filed 04/21/22 Entered 04/21/22 14:03:40 Desc Main

Document Page 9 of 9