Am Law Daily has a great history and summary of how venerable Ruden McClosky wound up in bankruptcy court, relying in large part on Julie Kay's terrific reporting:
After more than two years of partner defections, layoffs, office closings, and mounting financial difficulties, Ruden McClosky filed for Chapter 11 protection Tuesday in its hometown of Fort Lauderdale. The firm, which has eight offices in Florida, plans to sell a substantial portion of its assets to Greenspoon Marder, another Fort Lauderdale–based firm, according to sibling publication the Daily Business Review.
Founded in 1959, Ruden McClosky had vociferously denied that it would consider dissolving, even as a flood of lateral departures caused the firm to suffer financially. Ruden McClosky responded to the loss of lawyers by shaking up its leadership and pursuing potential mergers with Cleveland-based Benesch, Friedlander, Coplan & Aronoff over the summer and Greenspoon Marder last month.But the deal was contingent on former partners accepting only 30 percent of their equity payments, an arrangement that has apparently collapsed:
Ruden McClosky, which once boasted more than 200 lawyers, was hit hard by the collapse of the Florida real estate market and saw its head count dwindle to its current total of 66 lawyers. In its bankruptcy filing, the firm lists both debts and assets of between $10 million and $50 million.
The deal with Greenspoon Marder was contingent on 58 former Ruden McClosky equity partners accepting payouts of 30 percent on $3.5 million in outstanding equity payments, according to DBR. Ruden McClosky had stopped making payments to former partners in January, and many of those same partners faced a Monday deadline to reach a deal on the remaining $3.5 million obligation so that the agreement with Greenspoon Marder could proceed. The sale to Greenspoon Marder was structured as a sale, rather than a merger, so that the successor firm wouldn't acquire any of Ruden McClosky's liabilities, according to a lawyer familiar with the Chapter 11 case.
But the South Florida Business Journal reported Wednesday that the plan to pay dozens of former Ruden McClosky partners had collapsed prior to the firm filing its Chapter 11 petition, and that they would have to file claims with the bankruptcy court in order to recoup what they are owed. Lawrence Gordich, a former Ruden McClosky partner who left the firm last year to open his own shop in Miami, is representing a group of ex-partners in the case. Gordich did not respond to a request for comment.You car crash gawkers can see the bankruptcy docket here and the Chapter 11 filing here.