H1B visa stamping complication after using 240-day rule. How can I resolve?

I have been working in USA on L1 visa with admit until date in december 2021. The lawyers of my employer filed for extension of my visa before this date. I continued to work and stay in USA based on 240 day extension automatically triggered by timely filing extension petition https://www.uscis.gov/i-9-central/fo...ant-categories

In April 2022’s H1B visa lottery, my application was selected and petition approved. My previous L1 extension petition filed always remained pending until was withdrawn after I left USA to appear for H1B interview.

Visa officer during H1b visa interview indicated that I have overstayed my visa and put my application in administrative processing and requested additional documents to support my case. I have provided them and now waiting for result.

Is it possible for visa application to be denied due to overstay inspite of 240 day rule allowing me to legally continue my stay after I-94 expiry date?

I think what could have been done differently is to upgrade your extension of status application to premium processing instead of withdrawal.

Did you consult the immigration lawyer of your L1B employer and discuss?