Circling the drain

25 April 2012 By Reynolds Holding

Ruden McClosky kept its business going by pulling off a unique pre-agreed bankruptcy and merger. Dewey & LeBoeuf might do the same, if partner and client defections don’t swamp it first. But the maneuver is tricky, and the New York firm could learn from Ruden’s experience.

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Teetering U.S. law firm Dewey & LeBoeuf owes about $75 million to JPMorgan Chase, Bank of America and other lenders under a $100 million revolving credit line and has until the end of April to negotiate an extension of the facility, Reuters reported on April 24.

New York-based Dewey has lost about 70 of more than 300 partners since Jan. 1. It has retained bankruptcy counsel and is in preliminary talks to merge with rival firm Greenberg Traurig, according to Reuters.

In December, Florida-based Ruden McClosky became the first U.S. law firm to use a prepackaged bankruptcy to sell itself to another firm. Howrey, Heller Ehrman, Brobeck Phleger & Harrison and other large U.S. firms have liquidated in recent years after filing for bankruptcy.

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