A ‘Dating Game’ for Lawyers: Inside the Linens ‘n Things Beauty Pageant

[WSJ_law_blog]

Bankruptcy lawyers are happy; at least happier than they were a year ago. According to statistics cited in Jeffrey McCracken’s story in today’s WSJ, already there have been more corporate defaults in 2008 than there were in all of 2007.

So why do the bankruptcy lawyers in McCracken’s piece seem so glum? Because they’re getting a reminder that the arrival of bankruptcies do not necessarily mean bankruptcy work. First, in many instances, are the so-called “beauty pageants,” in which lawyers and turnaround advisers arrive en masse to pitch their wares to trustees and creditors.

At a Doubletree hotel in Wilmington, Del., McCracken recently attended the beauty pageant in the Linens ‘n Things bankruptcy for a ringside seat to the process. Ten law firms and advisory firms made the trek to Wilmington. Only four were asked to pitch to Linens’ unsecured creditors. Just two — one of each — will win.

“I’ve been complaining about the indignity of these things for years, but no one listens,” says Jay Indyke, a veteran bankruptcy attorney at Cooley Godward Kronish, who estimates that he has attended hundreds of these events. “You fly in, spend a day and might never get a chance to speak or meet with creditors. No one listens to me.”

Ultimately, both Indyke’s team at Cooley and a team led by Scott Hazan of Otterbourg Steindler were allowed to pitch the unsecured creditors. Hazan wound up winning the business.
“Nope. I’ve got nothing to say,” said Indyke after the decision. He quickly packed up the firm’s proposals and headed out the door.