Lerer Hippeau is taking over Binary Capital’s portfolio after Justin Caldbeck’s departure

The New York venture capital firm Lerer Hippeau is poised to take over most of the stranded 25 companies in the portfolio of a competing firm that lost its partners in a sexual harassment scandal.

The remnant of Binary Capital, the firm run by Jonathan Teo and Justin Caldbeck, is striking a deal that will effectively allow Lerer Hippeau to assume the portfolio, Recode has learned. Lerer Hippeau will inherit a group of early-stage companies that have had little to no guidance since last summer, when Caldbeck was accused of unwanted sexual advances on multiple women, leading to the closure of his fund.

Lerer Hippeau will take over and gain some equity in at least Binary’s first fund, according to two people familiar with the matter. Lerer Hippeau would also assume Binary’s board seats.

Update: Lerer Hippeau emailed Binary portfolio companies Monday evening and confirmed that it would take over the management of the first fund, according to an email seen by Recode.

But the debate now revolves around whether Lerer Hippeau will win the smaller, younger portfolio of Binary’s second fund. The investors, or limited partners in the two funds, are not identical — and the limited partners are negotiating with one another over the final decision. There is some worry that limited partner could block the deal.

An announcement could come as soon as next week, the people said.

Lerer Hippeau, led by Eric Hippeau and the father-and-son pair of Ken and Ben Lerer, will have an enormously difficult task: It will have to rush help to two dozen new companies that it does not know while also managing its existing group of 165 companies. And it will also likely have to rebrand the Binary name, which is only four years old and is now defined by scandal.

But Lerer Hippeau would also see some of the management fees and carry — how venture capitalists make money — in exchange for the increased workload. They’ll also have the chance to build relationships with Binary’s existing LPs.

None of the companies in Binary Capital’s portfolio is particularly large. Multiple Binary-backed founders tell Recode they have heard next to nothing from the limited partnership advisory committee, the Binary LPs who were supposed to manage the investments, as they tried to find a way to save the companies.

After Caldbeck’s departure, Teo at first offered to resign, but his firm’s limited partners never officially accepted his resignation. The firm has since been bogged down in various legal matters, including an attempt by Teo to have his fate decided in arbitration.

Multiple funds in addition to Lerer Hippeau sought to acquire the portfolio in recent months, according to sources. One portfolio company had publicly pushed Binary to hire a female partner to manage its investments, and several others privately told Recode that they hoped Binary would.

None of Lerer Hippeau’s managing partners are female. Lerer Hippeau has typically focused on seed-stage deals in e-commerce, media and entertainment, especially those local to New York City. Prominent portfolio companies include BuzzFeed, Casper and Warby Parker.

Lerer Hippeau declined to comment. The pending deal was first reported by Axios.

This article originally appeared on Recode.net.