Should one of Detroit’s Big Three auto manufacturers go bankrupt, it will be among the largest Chapter 11 filings in U.S. history. So who are the likely candidates for the assignment? The Am Law Daily interviewed several leading restructuring lawyers–most on the condition that they not be named–to find out.
The apparent early frontrunner for landing a Big Auto Chapter 11 assignment is New York’s Weil, Gotshal & Manges. Long a mainstay in the bankruptcy field through the founding partner of its practice, Harvey Miller, the firm also counts General Motors as a longtime client. (Miller and several other Weil restructuring partners did not respond to requests for comment.)
Several lawyers interviewed for this story say that Weil has the client relationship, pedigree, and size necessary to take on a potential GM filing. The bevy of high-profile Chapter 11 clients that Weil already has under its belt includes Enron, WorldCom, Global Crossing, Lehman Brothers, and as of today giftware maker Lenox Group.
“There aren’t that many firms that have the debtor capacity to represent [one of the Big Three],” says Mark Bane, cohead of the bankruptcy and business restructuring group at Ropes & Gray. “You would need such an enormous number of bankruptcy lawyers that many of the firms that are significant players would be precluded just by nature of their size limitations.”
Bane says that his own department, which numbers about 30 lawyers, doesn’t have the manpower necessary to take on a Big Three bankruptcy without abandoning the firm’s current clients and restricting its ability to take on new representations.
It’s uncertain whether a potential Big Three bankruptcy might present a similar problem for Weil–and how the firm would manage to juggle its Lehman, Lenox, and other client obligations in the event of such a resource-draining retention. That’s especially true given that it’s unclear whether a potential Big Three filing would proceed on a liquidation track (a la Lehman) or as an infinitely more complicated corporate restructuring.
“It’s one thing when you’re running a liquidation-mode case,” Bane says. “It’s intensive and it’s large. But it’s not the same challenge as keeping a company going and the myriad challenges you have regarding the different dimensions of a company’s operations in Chapter 11.”
Some lawyers say that Weil or any firm taking on a complex Big Three bankruptcy would likely have to rely heavily on local counsel.
Detroit’s Honigman Miller Schwartz and Cohn has historically been GM’s local counsel; the auto giant has often tapped the firm for supply chain management and insolvency issues. (The firm’s GM liaison partner, Robert Weiss, did not return a phone call requesting comment.)
Bane says that besides Weil, firms like Kirkland & Ellis, Willkie Farr & Gallagher, and Skadden, Arps, Slate, Meagher & Flom come to mind as having the appropriate capacity and expertise to handle a Big Three bankruptcy.