A bankruptcy downturn squeezes restructuring practices
Bankruptcy filings are falling on a nationwide basis, forcing some law firms to cut the size of their restructuring practices or reallocate their lawyers.
In the Southern District of New York, the number of business Chapter 11 filings dropped 71 percent over the four-year period from June 2009 to June 2013, the New York Law Journal (sub. req.) reports. In the second quarter of 2013, Chapter 11 filings in the Southern District dropped 70 percent from the same period last year.
John Rapisardi, co-chair of the restructuring practice at O’Melveny & Myers, tells the publication that “firms across the board have been trimming their restructuring practices because there’s been a pronounced slowdown in the field.” Companies today are avoiding bankruptcy because they have greater access to capital to refinance their debt at attractive interest rates, Rapisardi tells the New York Law Journal.
Some bankruptcy lawyers point to the layoff of 60 associates and 110 support staffers at Weil, Gotshal & Manges as proof of the impact of the bankruptcy downturn. The firm’s executive partner and chairman, Barry Wolf, explained the layoffs in a June memo that noted a wind-down in restructuring and litigation work related to the economic downturn.
Some bankruptcy lawyers are taking on corporate or litigation work. Mark Bane, chair of the business restructuring practice at Ropes & Gray, tells the publication he is focusing on out-of-court restructurings. Stephen Lerner, chair of Squire Sanders’ restructuring and insolvency practice, says his firm is focusing on cross-border restructuring.