Bankruptcy, Dissolution, Heller Ehrman, Musical Chairs

Anatomy Of A Dissolution: Why Buy The Cow When You Can Get The Milk For Free?

Heller Ehrman LLP Above the Law blog.JPGIf any Heller Ehrman attorneys were hoping that a major firm would sweep in and hire a whole bunch of Hellerites, the Dissolution Committee is warning you not to hold your breath. The Recorder reports:

On Tuesday, Peter Benvenutti, the chairman of the dissolution committee now controlling the firm, confirmed whispers that Baker & McKenzie and Winston & Strawn, both one-time merger candidates, had withdrawn proposals to pick up large groups of lawyers and their expensive real estate. While Benvenutti would not say whether deals on this scale are being discussed with any other firms, he did say there’s interest in taking over certain of the firm’s leases, and “we expect to have clarity in a day or two.”

At this point, why would Baker or Winston Strawn take on expensive lawyers when they can just sit back and cherry pick the superstars they want? We haven’t heard any story of a Heller rainmaker saying “If I come, these 30 people are coming with me.”

More bad news after the jump.

If this is happening to associates who are already there, formerly “incoming” Heller associates are truly on their own. Displaced “4Ls” have started their own support blog.

Meanwhile, current Heller employees just learned that their 401(k) plans have been frozen:

As you know, the shareholders voted to dissolve the firm on September 26, 2008. Wind down operations continue under the Dissolution Committee with the employment of most employees ending on or before November 28. The firm’s dissolution on September 26 caused the Heller Ehrman LLP 401(k) Retirement Savings and Profit Sharing Plan to terminate.

In order to assure an orderly termination process and a fair and equitable allocation of costs associated with the plan termination, the Dissolution Committee has decided to temporarily freeze the Plan. During this temporary freeze period, you can continue to access your plan account and change investments through Vanguard. However, effective immediately, no new contributions or loans will be permitted and no withdrawals or distributions requests will be processed. If you have an outstanding loan, your loan payments will continue to be deducted from your paycheck and applied to the loan balance, while payrolls are processed. More details on loan repayments will be available shortly.

Once the Dissolution Committee is confident that all costs of plan administration paid, the freeze will end. You will then need to decide what to do with your plan savings. Additional instructions will be sent to you about your distribution options at the appropriate time.

But the calls for violent revolution have dissipated. Forcing Heller into involuntary bankruptcy isn’t necessarily the best option:

A bankruptcy attorney not involved in the Heller situation observed that it’s in the interest of Heller’s banks — Bank of America and Citibank — not to force the firm to file for bankruptcy, because that would make it more difficult to collect receivables. Michael Cooper, a Wendel, Rosen, Black & Dean bankruptcy attorney, said that despite the dissolution committee’s efforts, Heller could be forced into bankruptcy if at least three creditors who are owed more than $13,475 file an involuntary bankruptcy petition. The firm’s creditors include banks, landlords and vendors as well as employees who haven’t been paid in full. Some employees have said they plan to file wage claims for unpaid vacation time.

Heller associates and staff have likely been through the Denial and Anger stages already. Perhaps being abandoned by both Baker and Winston (again) will be the end of the Bargaining stage.

Next up: Depression.

No Big Deals for Heller Ehrman’s People, Offices []

Official News on 401k Plan Freeze [Heller Highwater]

Firms Withdraw Offers to Absorb Large Groups of Heller Lawyers [WSJ Law Blog]

Earlier: Prior ATL coverage of Heller’s dissolution

(hidden for your protection)

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