Judge Christopher Coury signed the receivership order today, after it was agreed to by the firm, PNC Bank and the landlord (Red Cityscape). The receiver will be Jeremiah Foster at Resolute Commercial Services.
In this sort of situation (where the company is closing its doors), a receivership is much like a bankruptcy with a trustee in place. The Receiver will be responsible for collecting the monies owed by JSS's many clients, as well as liquidating other assets.
PNC Bank began the receivership proceeding 10 days ago, at a point where JSS had taken approximately $3.4M of a $4M line of credit executed less than three months ago.
Scott Cohen, representing PNC, told the court that JSS has not given any indication of how much money is currently owed to JSS (now, the Receiver). "We are a bit in the dark about the amount of the receivables" and they are "getting stale."
Many (or, most) of the attorneys have already moved to new law firms, bringing clients with them. The Order signed today warns former JSS attorneys to not collect any monies that should go to their old firm, or risk "civil or criminal contempt".
That may not always be easy to figure out in ongoing matters, contingency fee arrangements, etc. Clients would also be well-advised to make sure they pay the correct entity - the Receiver's address and phone number are listed in the Order, below.
The firm put a message up on its website this afternoon, advising clients August 31 would be its last day of operations. "For more than 80 years, Jennings, Strouss & Salmon proudly provided legal services as one of the premier law firms in the State of Arizona. Regrettably those decades of service come to an end on August 31, 2023 when the firm ceases active operations. For those of you who have not already been in touch with your attorney about the transition of their practice to another firm, please contact them at their “jsslaw.com” email address and you will receive information on how to reach them at their new firm. The entire team at Jennings Strouss thanks the Community for its tremendous support over the years."
Beyond the closing of the firm itself, there is still an unexplored story of how this happened, and how the firm drew down $3.4M from its (new) line of credit in less than three months. (Arizona's Law is reaching out to partners and others, and is interested in speaking with persons who have knowledge of the situation.)
Also at today's hearing, a disagreement between PNC and Cityscape came up. PNC would like the Receiver to turn over all collected monies to the bank, but the landlord argues that its statutory lien should be satisfied first. Judge Coury decided to have the Receiver hold any assets until September 8 to give them a chance to reach agreement, and set an October status conference.
JSS's monthly rent for its Phoenix offices was approximately $200,000/month (or, $2.4M/year). JSS had offices in Tucson, Washington, and Austin (and elsewhere).
(CORRECTION: I had multiple "Scotts" on my brain earlier. Scott Cohen is representing PNC, not Scott Palumbo.)
This article was reported by AZ Law founder Paul Weich.
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. AZ Law is founded by Phoenix attorney Paul Weich, and joins Arizona's Politics on the internet.
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