GM Bankruptcy Advisor Has Its Hands Full
To find a countercyclical business that's gone into overdrive, check out 767 Fifth Ave. in Manhattan. That's where the law firm of Weil, Gotshal & Manges is headquartered. Three months ago, Lehman Brothers Holdings retained Weil's Harvey Miller to handle its Chapter 11 filing, the largest in history. Now General Motors (GM) has turned to Miller to advise it on a possible bankruptcy filing.
The urgency of such advice lessened a bit on Friday, Dec. 12, when the White House indicated it may not let GM or Chrysler collapse before the Obama Administration moves in. Still, one might wonder why GM would turn to a law firm that is already so swamped. But only a handful of law firms in the country have the infrastructure and expertise to handle cases as colossal as GM's would be.
GM and Weil: Old Friends
One of those specialized firms, Jones Day, has already been tapped to represent Chrysler should it go under. Others may have conflicts that would prevent them from representing GM. Weil, on the other hand, has longstanding ties to the automaker. In 2006, for example, it advised GM's board on selling a stake in its GMAC finance arm. And it currently counsels GM in the bankruptcy proceedings of Delphi, the carmaker's former parts operation. (A Weil spokesman did not respond to a request for comment.)
It's worth noting that Weil's headquarters location is know as the GM Building. GM's presence there has shrunk through the years, and its naming rights expire in 2010, according to The New York Times (NYT).
Miller, 75, is a longtime dean of the New York bankruptcy bar, and Weil has made its name in the area representing debtors. Other high-profile bankruptcies handled by the firm include Continental Airlines (CAL), WorldCom, and Drexel Burnham Lambert.
"There are a lot of good bankruptcy lawyers, but few with the depth and breadth of what Harvey has," says Alisa Levin of New York legal recruiter Greene-Levin-Snyder and a former bankruptcy attorney.
An Opportunity for Growth
While still formidable, Weil's bankruptcy department has suffered defections in recent years, as other firms have sought to strengthen their insolvency practices. But Levin says Weil can easily staff up to take on more work.
Bankruptcy represents a rare island of growth for corporate law firms, which otherwise have seen a big falloff in work over the past year and have been cutting professionals and staff.
GM officials have insisted that bankruptcy would be a disaster, since they expect buyers would turn away from vehicles built by a company with such uncertain prospects. If it did file, GM would list lower total assets than Lehman, though it would probably still rank as the largest nonfinancial case in history. Peter Clark, a bankruptcy partner at McDermott Will & Emery in Chicago, says a GM filing could be so big that it would take multiple law firms to handle it. If it comes to pass, he says, it "is going to be like no other case that's ever been filed."