The past four years have been increasingly anxious ones for bankruptcy lawyers. New Chapter 11 filings have plunged by nearly half since the banner year of 2009, and their size has also continued to shrink: Combined prepetition assets of the 20 largest companies entering bankruptcy from January through October totaled $36 billion, down from $55 billion during the same period last year, according to BankruptcyData.com. Even worse for law firms, half of the large-cap companies seeking bankruptcy protection these days stay there for just a few months, via prearranged or “prepackaged” bankruptcies or 363 fire sales, which generate substantially less work than traditional years-long proceedings.
The slowdown, however, has not affected firms equally. This year Kirkland & Ellis, for instance, grabbed a heftier market share. As of early November, in 2013 the firm had been tapped by six out of 34 new filers listing at least $100 million in prepetition assets, including the largest to date, Cengage Learning ($7.5 billion); combined prepetition assets of K&E’s new 2013 matters totaled $13.2 billion. The firm also landed five new out-of-court workouts in 2013, including helping Energy Future Holdings Corp., the former TXU Corporation, restructure more than $40 billion in debt from its 2007 LBO. In fact, Kirkland’s restructuring practice this year grew by five lawyers, to 102. Skadden, Arps, Slate, Meagher & Flom also had a good year: Its 63 bankruptcy lawyers were handling five new filings totaling $9.4 billion, as well as several nonpublic work outs. (Skadden’s practice head count remained flat year to year.)
