(Reuters) - A federal judge in Chicago on Friday unfroze the assets of famed plaintiffs' lawyer Thomas Girardi and his faltering firm Girardi Keese at the behest of the interim bankruptcy trustees overseeing their estates.

At the same hearing, U.S. District Judge Thomas Durkin indicated he wasn't ready to decide whether ex-Girardi Keese attorneys David Lira and Keith Griffin should be held in civil contempt for their roles in failing to distribute $2 million in settlement proceeds to the families of four victims of a 2018 plane crash.

Durkin said he might request another round of briefings and potentially hold an evidentiary hearing with live witnesses. Because of the factual disputes present in the case, Durkin said he would want the hearing to be held live in his downtown Chicago courtroom.

"I would prefer to do that face-to-face with witnesses so that I can see them and hear them in a courtroom," Durkin said.

Durkin acknowledged, however, that it is currently not safe for witnesses from out of state to travel to Chicago.

The judge in December held Girardi and his firm in civil contempt, entered a $2 million judgment against them, and referred the case to federal prosecutors after they failed to pay his clients, families of the victims of Lion Air Flight 610, $2 million in settlement funds paid out by Boeing.

However, Durkin gave both Lira and Griffin a chance to respond to the allegations made by Edelson, a Chicago plaintiffs' firm that first raised the alarm about the missing settlement funds.

Lira and Griffin have said in court that Girardi Keese, including its financial accounts, were controlled entirely by Girardi. Lira echoed that argument in a Dec. 21 filing; Griffin filed his formal response under seal.

Durkin's comments come days after a bankruptcy judge in Los Angeles ordered the Office of the U.S. Trustee to appoint interim Chapter 7 trustees to oversee the estates of Girardi and his firm.

Elissa Miller, a partner at SulmeyerKupetz, and Jason Rund of Sheridan & Rund were appointed this week by the U.S. Trustee to serve as interim bankruptcy trustees for Girardi Keese and Girardi himself, respectively. Both are based in Los Angeles County.

Miller on Friday urged Durkin to lift his asset-freeze order, noting it could interfere with her duties and the work awaiting her in managing the estate is extensive. Rund expressed similar sentiments.

In lifting his freeze order, Durkin said, "that should, I hope, not prevent either of you from exercising your responsibilities completely and with no interference from everything going on in this court."

Parties who alleged they're owed a collective $6.5 million by Girardi and his firm filed involuntary bankruptcy petitions to initiate proceedings last month. They sought the imposition of the interim trustees as the firm is poised to receive at least $10 million from settlements it reached.

"If an interim trustee is not promptly appointed, there is a significant risk that payments made in these cases to the debtors will be transferred, concealed, or otherwise dissipated," they wrote in a Dec. 24 filing.

Attorneys for Lira, Christopher Sheean of Swanson, Martin & Bell and Edith Matthai of Robie & Matthai, declined to comment. Griffin's attorney, Ryan Saba of Rosen Saba, did not respond to a request for comment, nor did attorneys for Girardi and Girardi Keese. A spokeswoman for the Edelson firm also did not respond to a request for comment.

The case is In re: Lion Air Flight 610, U.S. District Court for the Northern District of Illinois, 1:18-cv-07686.