Change of status from L1B to H1B with an expired L1B visa but extended I94 (given@ Port of entry)

[vks1021]

1) Details :

L1B VISA with employer A expired in - June 2012

I94 valid till - NOV 2014

By mistake (or due to unkown reasons) Immigration officer at port of entry gave I94 beyond the VISA expiry date as mentioned above. The L1B VISA extension was never filed after its expiry by my current employer as I got an extended I94 valid till NOV 2014 so no visa extension was suaght.

Can I apply for change of status from L1B to H1 on 1st April 2013 with above status.

2) If Answer to above is YES,

what if change of status is denied by USCIS? will it override the current I94 and I would have to leave the country immediately OR I can continue working on my current L1 status till above I94 expiry date irrespective of approval or deniel of L1 to H1 change of status application

Please help and advise on both of above questions.