Binder & Binder Bankruptcy Information
Binder & Binder filed for Chapter 11 bankruptcy protection on December 18, 2014. This has serious potential consequences for their disability clients. Our advice is to seek high quality (and solvent) representation now.
The complete bankruptcy filing is public information and is available here. The bankruptcy "Wind Down" plan calls for the company to fire approximately 2/3 of its work force and shut down 27 of 34 offices in an effort to pay its creditors approximately $50 million. Assuming the bankruptcy plan is confirmed by Judge Robert Drain, Binder & Binder will be under the leadership of a “Restructuring Officer”, William Brandt of Development Specialists, Inc., and the watchful eye of the U.S. Bankruptcy Court. Based on a review of Mr. Brandt’s credentials, he has no experience in winning Social Security disability claims and, of course, neither does the U.S. Bankruptcy Court.
In our opinion, this bankruptcy plan has SERIOUS potential consequences for Binder & Binder’s clients. The logistics of shutting down 27 offices, firing 600+ employees, transferring cases and personnel to offices in different states, attending hearings with the bankruptcy court and negotiating with creditors, etc., will likely be a HUGE distraction to the day-to-day operations and effective handling of Binder & Binder’s 58,000 clients’ cases. In fact, the debtors’ “business as a going concern would be severely jeopardized, if not irreparably damaged” if the Court does not approve a motion to pay certain vendors. Further, this would “effectively eliminate the critical services that the Debtors provide to disability claimants.” The Motion to pay certain vendors is included here. Basically, the company is teetering on the brink of self-destruction, which would have disastrous consequences for their clients and employees.
If you are a current or prospective Binder & Binder disability client, we urge you to not wait for Binder & Binder’s bankruptcy to play out. You should understand these developments and how they might impact your disability case. While Binder & Binder grapples with its survival, we at Quikaid continue to run our business in a responsible manner, putting our clients’ interests ahead of our own. If you are interested in experiencing the Quikaid difference, we invite you to do so now.
Business As Usual?
Despite their bankruptcy, (Binder & Binder's lead attorney, Kenneth Rosen (of the New York law firm Lowenstein, Sandler, LLP), said it is “Business as usual” for Binder & Binder’s clients and employees. To quote Mr. Rosen, “We have filed papers to pay our employees in the ordinary course. We don’t want the employees to feel anything; they will not. We don’t want the clients to feel anything; they will not,” Mr. Rosen said. “The last thing we would want is there to be any interruption. It’s business as usual.” (Crain’s New York Business, December 19, 2014). Let’s lay out these publicly-available facts and let you decide if it is “business as usual.” Consider the following:
Creditors – Who Does Binder & Binder Owe Money To?
Binder & Binder owes money to many individuals and businesses - 618 creditors in total. This is the complete list of individuals and companies owed money by Binder & Binder, and a summary of this information is available below:
•$16.7 million to Stellus Capital Management
•$2.7 million to Integrated Media Solutions
•$821 thousand to Google
•$200 thousand to LexisNexis
•$175 thousand to Yahoo
•$158 thousand to Information Analysis
•$126 thousand to CenturyLink
•$109 thousand to Webmetro
•$108 thousand to De Lage Landen
•$106 thousand to W.B. Mason Co.
•$85 thousand to Teaktronics
•$65 thousand to TGI Office Automation
•$54 thousand to WLNY-TV
•$48 thousand to United Welfare Fund
•$45 thousand to United Service Workers Sec. Division
•$41 thousand to North Country
•$37 thousand to Bullseye Telecom
•$33 thousand to American Express
•$31 thousand to Promenet
•$28 thousand to News 12 Networks
•And the list goes on… the list of 618 creditors includes non-payment of their own employees’ health insurance premiums – not to mention not paying their utility (electric and Internet) bills. They had to petition the bankruptcy Judge to keep their lights on: “Business as usual!”
Layoffs – How Many People Will Binder & Binder Fire?
Binder & Binder's "Wind Down" plan calls for the elimination of 611 jobs over the next approximately 24 month period. The complete list of terminated positions is available here, and a summary of this information is provided below:
•20 Advocate employees will be fired by December 2016
•ALL 109 call center employees will be fired in the next six months
•113 clerical employees will be fired by December 2016
•10 Fee employees will be fired by December 2016
•118 Hearing Casework employees will be fired by December 2016
•ALL 75 IA/Recon employees will be fired in the next year
•14 IA/Hearing employees will be fired by December 2016
•ALL 28 Interview employees will be fired in the next six months
•18 Management employees will be fired by December 2016
•ALL 52 Open Files employees will be fired in the next six months
•12 Operator employees will be fired by December 2016
•4 Travel employees will be fired by December 2015
•34 Writer employees will be fired by December 2016
Closings – Which Offices Will Binder & Binder Shut Down?
Binder & Binder is shutting down 27 of its 34 (79.4%) of its offices. The complete list of office closings is available here, and is summarized below:
Class Action Lawsuit – Is Binder & Binder Being Sued By Its Employees?
Documents filed as part of the bankruptcy case show that Binder & Binder employs a law firm for “legal services related to labor class action pending in California.”
Business As Usual? We Think Not.
The news of Binder & Binder’s Chapter 11 Bankruptcy filing does indeed reflect a challenging environment for disability recipients as well as their representatives. We respect Charles and Harry Binder and their backers (including majority shareholder Miami-based HIG Capital) for “going for it!” But, unfortunately, they did so in a manner that left insufficient margin for error. As a result, we are saddened for their employees, 611 of whom will lose their jobs. We are also saddened for their clients, many of whom will justifiably worry about being “lost in the shuffle” as Binder & Binder conducts massive layoffs and closes down 80% of its offices. Many of these clients have waited years for their disability claim to be approved and if a hearing is lost due to the firm’s disorganization and chaos, the consequences for the client would be devastating.
If you or someone you know is a Binder & Binder client, or is considering utilizing their services, our recommendation would be to do your research and understand your options. At Quikaid, we are highly professional and ethical and no claim is ever lost in the shuffle. We make good on ALL of our obligations – to our vendors, our employees and, most importantly, to our clients. If you would like to discuss your case with a disability expert now, we are standing by and would like to help. Call us at (800) 941-1321 or send an email to [email protected] You can also click the Click Here For Help Now button to explore how we can help you immediately.
Will Binder & Binder’s Bankruptcy Plan “Work?”
In our opinion, not a chance. However, it depends on how their creditors define success. If the definition of it “working” is that all creditors are paid back in full, then we do not think this plan will “work.” Even if the definition is that some creditors will be paid back some money owed, we still are doubtful that plan will work. Based on our expert understanding of Social Security disability, they will continue to experience pressure on their "top line" revenue given the challenging environment. They also have an inefficient cost structure. So they are not likely to generate sufficient cash flow to enable creditors to be re-paid. We think a more likely scenario is a Chapter 7 liquidation. However, a primary issue in this bankruptcy is that theirs is an “asset light” business, which presumably is why H.I.G. Capital bought a controlling interest in Binder & Binder in 2010. "Asset light” is great – if it works. In this case, it did not work. The fact of the matter is that the only asset of any real (potential) value is Binder & Binder’s caseload: there are basically no other assets! They lease virtually all assets they utilize, including office spaces, computers and related equipment. And, of course, the employees aren’t assets of the business (especially the 600+ who are slated to be fired). So, the only way for their creditors to realize ANY value in this situation is to monetize the caseload. Unfortunately, if Binder & Binder tries to do this themselves (as outlined in the Chapter 11 Bankruptcy plan), their cost structure (even without advertising!) is still not tenable. And, as more and more of their existing clients become aware of their bankruptcy, more of them will defect to other firms who provide disability representation services and who are not grappling with these extraordinary distractions. And key Binder & Binder employees will also seek career alternatives that provide certain income, benefits and career advancement opportunities. With stronger employees leaving, this will also have a deleterious effect on Binder & Binder’s remaining clients (i.e., the “good” people may be gone). So, in the end, in our opinion, the "Wind Down" plan is not likely to work for anybody.
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