Law Firm Finds New Life, Not Death, in Bankruptcy
A First: Law Firm Finds New Life, Not Death, in Bankruptcy¬†
The Wall Street Journal’s Law Blog Jacqueline Palank¬†reports:
A South Florida law firm recently used bankruptcy to do something no one in the legal industry has done before: sell itself to another firm.
Companies across corporate America, from Blockbuster to General Motors, have sought court protection while they try to sell continuing businesses to potential white knights. But until last week, law firms usually used bankruptcy to shut down.
So the $7.8 million cash-and-debt sale of midsize law firm¬†Ruden McClosky¬†out of bankruptcy to fellow South Florida law firm¬†Greenspoon Marder¬†made legal and bankruptcy history,¬†as I reported¬†in this WSJ story.¬†What‚Äôs more, the deal will likely inspire other struggling law firms to turn to bankruptcy as a place to find new life rather than a place to die, restructuring professionals say.
That‚Äôs because law firms are facing unprecedented financial pressures, brought on by the economic downturn and fierce competition. Past fixes, from layoffs to mergers, are no longer enough to keep the lights on and save jobs.
‚ÄúI am seeing much greater interest on the part of law firms that are experiencing financial stress to consider ‚Äėout of the box‚Äô solutions to their financial dilemmas, including bankruptcy,‚ÄĚ says¬†Bill Brennan, a principal with legal consulting firm Altman Weil. ‚ÄúI expect that this will become much more common in the very near future.‚ÄĚ