Los Angeles-based bankruptcy law firm Stutman Treister & Glatt has announced that it will be closing its doors on May 1, 2014. With a practice of more than 60 years, when a firm has to go, it rings a warning bell, even in passing – adapt or perish.
The 25-lawyer bankruptcy boutique firm gained immense popularity for advising on Chapter 11 proceedings of companies like Lehman Brothers and Enron Corp. Its demise comes in the wake of a huge drop in corporate bankruptcy filings in the U.S.
In 2013, only 44, 012 Chapter 11 cases were filed. This was less than half the number of corporate bankruptcy filings in 2009 when 96,449 companies filed cases, as per data compiled by Epig Systems.
Additionally data from the United States Courts website shows that Chapter 11 filings fell by 36 percent between 2010 and 2013, from 15,251 filings to 9,811. Bankruptcy lawyers are of the opinion that the shuttering of Stutman signals that a downturn in Chapter 11 proceedings has greatly hurt the top U.S. bankruptcy law firms.
Stutman Shareholder Jeffrey Davidson told the media, “We’re in an economy that has had a significant dropoff in Chapter 11 activity.” While he declined to comment on the closure of Stutman, he referred to the statement in the California legal trade publication, The Daily Journal, which affirmed that the firm “has determined that it is in the best interest of our clients, creditors, shareholders and employees that we cease the practice of law.”
Davidson will join Pachulski Stang Ziehl & Jones, a larger bankruptcy firm, along with Stutman shareholders Isaac Pachulski and Gabriel Glazer. He also said companies that previously filed for bankruptcy now opted for refinancing because of lower interest rates offered by banks. And this had hurt the business for bankruptcy lawyers.