Kirkland & Ellis, the nation’s second-largest law firm when measured by gross revenue, can thank its high-powered bankruptcy practice for providing some added ballast to its already burgeoning bottom line.
The restructuring group soared last year by taking the lead on a surge in energy company bankruptcies, and while that industry has steadied in 2017, Kirkland has stepped up to advise clients in the ailing retail sector, picking up Chapter 11 assignments for fashion house BCBG Max Azria Group LLC and discount footwear company Payless ShoeSource Inc.
In mid-May, Kirkland picked up a role for Rue21 Inc. on its bankruptcy filing in Pittsburgh. On Friday, the firm and restructuring partner Jonathan Henes filed their application for employment as lead Chapter 11 counsel to the struggling Warrendale, Pennsylvania-based teen fashion retailer. The document states that Kirkland has received $950,000 in advance retainers from Rue21 and that partners will bill the debtor between $930 to $1,745 for their services, of counsel between $555 and $1,745 and associates at hourly rates ranging from $555 to $1,015.
The American Lawyer reported in 2013 on Kirkland’s role representing a special committee of Rue21’s board on the company’s $1.1 billion sale to private equity firm Apax Partners LP, a former part owner of The American Lawyer’s parent company. Kirkland previously advised Rue21 on an initial public offering in November 2009 that raised $129 million and generated roughly $800,000 in legal fees and expenses for the firm. (Cleary Gottlieb Steen & Hamilton advised underwriters on that offering.)
Stacy Siegal, a longtime general counsel and chief legal and administrative officer for Rue21, left the company late last year to join publicly traded, Pittsburgh-based clothing and accessories retailer American Eagle Outfitters Inc. as senior vice president and general counsel. As for Rue21, which filed its bankruptcy reorganization plan on June 2, the company hopes that closing 400 out of its 1,179 stores will help it shed some of a $1 billion debt load and revitalize its operations amid increased online competition.
Kirkland is also advising Fort Myers, Florida-based cancer care services provider 21st Century Oncology Inc. on its May 25 bankruptcy filing in White Plains, New York. The company, which calls itself the world’s largest cancer treatment center operator as a result of the 179 facilities it controls in the U.S. and Latin America, cited the uncertain regulatory environment and increased costs linked to legal settlements as contributing to its bankruptcy case. The company is pursuing a reorganization plan that will reduce its debt by $500 million.
Middle-market private equity firm Vestar Capital Partners, a longtime Kirkland client, bought 21st Century Oncology—then known as Radiation Therapy Services Inc.—in a $1.1 billion deal announced in late 2007. The company adopted its current name in December 2013 ahead of a planned $200 million IPO, a long-delayed listing that was eventually withdrawn in January 2016. Securities filings show that Kirkland took the lead for 21st Century Oncology on that aborted offering, one that would have yielded $5.8 million in legal fees and expenses for the firm.
Kirkland’s Christopher Marcus, who joined the firm in 2008 from Weil, Gotshal & Manges, is working with fellow restructuring partners James Sprayregen and William Guerrieri in advising 21st Century Oncology on its Chapter 11 case. (Sprayregen re-joined Kirkland in late 2008 after a stint at The Goldman Sachs Group Inc.) Kirkland has not yet filed billing statements with the bankruptcy court. According to a list of 21st Century Oncology’s 50 largest unsecured creditors, the company owes $73,432.67 to McDermott Will & Emery.
Kimberly Commins-Tzoumakas, a partner at Hall, Render, Killian, Heath & Lyman and managing partner of its office in Troy, Michigan, serves as outside general counsel to 21st Century Oncology. Court filings show that Hall Render, one of the nation’s largest health care-focused firms, is seeking to work as bankruptcy co-counsel for the debtor along with Kirkland. As of Friday, Hall Render also had yet to file billing statements with the bankruptcy court.
Lastly, while the U.S. energy sector’s economic outlook may be improving, Kirkland added another Chapter 11 case to its portfolio on April 30 with the bankruptcy filing of AFGlobal Corp., a Houston-based energy products manufacturer formerly known as Ameriforge Group Inc. First Reserve Corp., a private equity firm that owns AFGlobal, has been a longtime Kirkland client.
In a bankruptcy court filing on May 25 by Kirkland restructuring partner Edward Sassower, the firm said that it had received retainers totaling nearly $1.84 million from AFGlobal in the period prior to its official insolvency. Kirkland partners are billing between $995 and $1,745 per hour, of counsel between $645 and $1,745 and associates at hourly rates ranging from $555 to $1,015, according to Sassower. AFGlobal’s general counsel is Thomas Giles.
Jackson Walker, which is seeking to serve as co-bankruptcy counsel to AFGlobal, stated in court filings that it received a $75,000 retainer from the debtor in order to handle its Chapter 11 case. Jackson Walker bankruptcy partners Patricia Tomasco ($750 per hour) and Matthew Cavenaugh ($575) are leading a team of lawyers from the firm advising AFGlobal.