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With New Economy companies such as Pathnet, e.spire, and ServInt looking to reorganize under the pressure of large debt, bankruptcy law — a favored field in the late 1980s and early 1990s — is hot again. Companies, especially those that have every intention of emerging from bankruptcy some day, are finding themselves in need of lawyers who can guide them through the maze of federal statutes. Many Northern Virginia companies that have filed for bankruptcy made the move in U.S. District Court in Wilmington, Del. Mary McDermott, general counsel of Pathnet, says her company filed in Delaware because of that court’s ability to handle complex bankruptcy cases and its straightforward procedures. Pathnet, like fellow Northern Virginia-based bankruptcy filers e.spire and CyberCash, is incorporated in Delaware. But a high-tech firm’s trip to Wilmington doesn’t necessarily mean that local law firms have been left out in the cold. Before filing for bankruptcy, many companies turned to their local outside counsel — who know their clients’ businesses and are often able to stay on during the restructuring. Pathnet, which has used the D.C. and New York offices of Covington & Burling as its general outside counsel, called in the Wilmington office of Philadelphia’s Saul Ewing to handle the bankruptcy filing. But despite the move to hire local guns for bankruptcy, Covington continues to assist Pathnet. Saul Ewing is popular — the 200-plus lawyer firm is also handling e.spire’s Delaware bankruptcy filing. E.spire, which has used Skadden, Arps, Slate, Meagher & Flom as its regular outside counsel, has continued that relationship despite making Saul Ewing lead counsel in the Chapter 11 reorganization. Reston’s CyberCash Inc. also filed its Chapter 11 petition in Delaware’s federal court, but unlike Pathnet and e.spire, the Internet and electronic payment provider looked to Wilmington’s Morris, Nichols, Arsht & Tunnell. Not every company will be relying on Delaware judges to handle their bankruptcies, though. The decision where to file for bankruptcy, says associate Jonathan Gold of D.C.’s Akin, Gump, Strauss, Hauer & Feld, “is made primarily by where the company operates and where the company is incorporated.” Gold, who was called in specifically to handle McLean, Va.-based ServInt’s Chapter 11 filing, will be heading to Alexandria, Va., for hearings on the bankruptcy petition. The company filed in the Eastern District of Virginia three months ago. “They are a Virginia company with their principal place of business in Virginia,” he says. “A lot of companies are incorporated in Delaware even though they have their principal place of business elsewhere.” Other firms holding on to the work for Northern Virginia-based companies are Brobeck, Phleger & Harrison, which is performing securities and employment duties for Herndon, Va.-based LifeMinders, and Shaw Pittman, which remains LifeMinders’ counsel on corporate and real estate issues, as well as Collaborex’s outside counsel.

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