Weil Gotshal & Manges’ planned wind-down could put former partners’ distributions, capital repayments and the value left behind after their departures at the center of a Chapter 11 case, should the firm’s intended out-of-court dissolution require bankruptcy protection.
The firm reportedly intends to wind down outside of court and has retained AlixPartners and Davis Polk as advisors. Management recommended an orderly wind-down following partner departures and failed merger talks with Willkie Farr & Gallagher. Weil reportedly believes it can complete a solvent wind-down. Those reports describe a proposed dissolution, not a Chapter 11 bankruptcy filing. The wind-down recommendation is subject to a partner vote, which was to occur within days, as reported by 9fin last week.
If bankruptcy follows, the likely focus would be collecting outstanding client fees, resolving former client and partner claims, terminating or selling leases, and investigating potential causes of action and pursuing recoveries from former partners.
A conventional bankruptcy filing would face a fundamental problem. Lawyers can leave, clients can follow, and the estate cannot necessarily capture the future revenue they generate elsewhere.
That assessment draws on the partner-run framework examined in a paper by Andrew Granato, assistant professor at the University of...
