Bankruptcy Work Picking Up (Really! And We Mean it This Time!)

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There’s Laird, Law Blog readers, “the guiding genius of crossover board sports,” doing his thing with that funny-looking paddle. And you know what that means: time for our weekly (or so) spin over to the wacky world of bankruptcy — and what a wacky world it is, with its DIP loans, second liens, exclusivity periods and, of course, its own set of judges.

Couple bits of news to throw out there today:

First, after what felt like years of talking about it (click here and here for recent posts), bankruptcy work is finally actually, really ticking up, at least according to this piece from the Recorder. And for it, we can thank the sour economy. “What used to really be a trickle — one [filing] every two to three weeks — is now closer to one a day. And it’s a steady drumbeat of filings and a steady drumbeat of phone calls, of problematic situations,” Peter Gilhuly, a bankruptcy partner in Latham & Watkins’s Los Angeles office, told the paper. “I think we’ll be in a full insolvency cycle six months from now, and it will continue for some time.”

Bolstering the theory: this piece out today from the WSJ’s Jeff McCracken, on how the dried up credit markets are pushing companies to the brink. Consider the somewhat chilling lead: “More companies than ever are in the weakest of liquidity positions and struggling to cover their bills, according to a Moody’s Investors Service Inc. report on public debt.” While the rest of us engage in so much hand-wringing, bankruptcy lawyers are gearing up for boom time.

Second, a bit of unwelcome news for bankruptcy lawyers at McDermott Will & Emery. On Monday, a bankruptcy trustee for Saint Vincent’s Catholic Medical Centers of New York sued the firm for malpractice, alleging that the firm’s lawyers “put their personal relationships and selfish economic concerns above the interests of the charitable institution they were entrusted to protect.” Here’s the story, from the National Law Journal’s Amanda Bronstad.The complaint, filed Monday in Manhattan Supreme Court, alleges McDermott Will put off a much-needed Chapter 11 filing to facilitate self-dealing by two other members of the hospital group’s restructuring team. As a result, the trustee claims, Saint Vincent’s took a big financial hit and took longer to emerge from bankruptcy after it finally did file.

In a statement, McDermott Will said it would not comment on the case because it is a pending matter.