The law firm of Michael Avenatti, who represents adult-film actress Stormy Daniels, was served with a $10 million settlement fine on Tuesday in bankruptcy court over a lapsed payment agreement.

The Eagan Avenatti law firm will be required to pay the sum after Avenatti failed to follow through in paying $2 million to a former associate, Jason Frank, to settle the firm's bankruptcy, according to the Los Angeles Times.

Avenatti's firm also owes back taxes to the IRS that includes more than $1.3 million in employee taxes that it never handed over to the government, the Justice Department reportedly said at the hearing.

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The name partner, who agreed to personally pay back $1.5 million of the total sum, has missed an installment and will reportedly soon face legal action by the federal government to demand payment.

Despite his position as the lead equity partner in the firm, Avenatti told the Times that they had confused him with an unrelated legal entity.