Law firms cash in on bankruptcies
As the credit crunch continues, many businesses have to file for bankruptcy. That means that one area of business is booming: bankruptcy services firms. John Dimsdale reports on how they are staffing up.
U.S. Bankruptcy Court (Mario Tama/Getty Images)
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TESS VIGELAND: We won't call it a silver lining, but here's one side effect of rocky economic times. The bankruptcy business is booming. Corporate bankruptcy filings by the end of last September had already exceeded totals for all of 2006.
Marketplace's John Dimsdale finds lots of anecdotal evidence that there's much more to come.
JOHN DIMSDALE: Jack Williams, the scholar in residence at the American Bankruptcy Institute, doesn't have to see the statistics to know business bankruptcies will be big in the future.
JACK WILLIAMS: Premier bankruptcy firms are ramping up. Not only bankruptcy attorneys but financial advisers, turnaround managers, distressed evaluation experts. So many people are moving so quickly to get the expertise so that they're in place as this thing starts to snowball.
Bankruptcy partner Zack Clement, at Fulbright and Jaworski in Houston, can confirm the anticipation, even though, so far, his firm hasn't seen a lot of new cases.
ZACK CLEMENT: One need only be in this business to know the frequency with which headhunter calls come has gone up very substantially in the last year or so.
TONY CLARK: If you're a restructuring professional, well, you know, it isn't such a bad sign.
Tony Clark heads up the reorganization practice at the law firm of Skadden Arps. He says until the middle of last year, easy credit made it simple for companies to refinance their loans.
CLARK: It's the worst credit market certainly in my career in the last the last thirty years, and I suspect it's probably the worst credit market in modern history. That tells you that an even greater number of these companies are not going to be able to refinance and they're going to have to turn to Chapter 11 to restructure their balance sheets.
Clark says any company having trouble securing credit to refinance debt should contact a bankruptcy expert to take early advantage of Chapter 11's protection from creditors.
In Washington, I'm John Dimsdale for Marketplace.
