Maryland regulators, in the wake of collection law firm Mann Bracken LLP's closing, mailed letters to 1,400 licensed collection agencies in the state this week, instructing them to help connect debtors with the companies they owe.
Mark Kaufman, deputy commissioner of financial regulation at the Maryland Department of Labor, Licensing and Regulation, tells Collections & Credit Risk that the number of lawsuits dismissed last week by Maryland District Court Chief Judge Ben Clyburn could total "tens of thousands and significantly higher" than the 20,000 to 25,000 estimate Clyburn's office provided last week.
Without Mann Bracken's help, regulators have found it impossible to pinpoint a number. Mann Bracken officials could not be reached. Phones at the Rockville, Md. home office are disconnected.
Kaufman's office, which regulates the state's collection agencies, had asked Mann Bracken for a list of clients in order to contact them but the firm did not comply, prompting the decision to send the letters to agencies. Consumers concerned about the status of their accounts began flooding the Department of Labor, Licensing and Regulation with calls once Clyburn's office confirmed Mann Bracken's collapse, Court Dismisses Up To 25,000 Lawsuits; Giant Falls.
"For consumers, this is a very difficult and confusing situation. Some had sent money to Mann Bracken, or had legal cases pending, or were involved in payment plans. They don't know what to do now or where to turn," Bernie Kohn, a spokesperson in Kaufman's office, tells Collections & Credit Risk. "The gist [of the letter to agencies] is that we are telling these agencies it is not enough to simply respond to an inbound inquiry. We are holding them responsible - if they hired Mann Bracken, affiliate Axiant or related entity - for doing the outreach. It's their task to identify the consumers and let them know what to do."
Axiant provided Mann Bracken phone, computer and staffing and support services before filing for bankruptcy in November. In the filing, Axiant revealed it owes Mann Bracken more than $10.5 million, making the firm Axiant’s largest unsecured creditor. Axiant's bankruptcy plan was converted to Chapter 7 liquidation in December.
Mann Bracken filed motions in some of its cases this month stating that Axiant’s failure left the firm unable to handle litigation, according to a cease-and-desist order by Maryland's Collection Agency Licensing Board.
It is unclear what will happen to the dismissed lawsuits. On Thursday, Sidney S. Friedman, a managing partner at another legal collection firm in Maryland, Baltimore-based Weinstock, Friedman & Friedman, said the firm is reviewing “huge volumes” of former Mann Bracken cases and deciding whether they are within the statute of limitations and eligible to be re-filed. If so, the firm then will confer with specific clients to see if they want to continue to pursue their claims, Collection Giant's Collapse Leads To Market Opportunities.