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Post by Anonymous on Oct 29, 2008 15:14:24 GMT -8
Bank loans to law firms are generally personally guaranteed by partners/shareholders. When banks control firm checkbooks, banks will use accounts receivable collected to reduce loan balances. This is in the best interests of the banks and partner/shareholders, but not other law firm employees. You are entitled to two months notice before your paychecks can be stopped. And you entitled to your accrued vacation pay. If paychecks/vacation checks are not paid, you should force an involuntary bankruptcy. A bankruptcy trustee will, among other things, collect the accounts receivable and assure that you are paid to avoid the penalties. Banks -- not subject to the penalties -- could care less that you get paid.
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Post by observer on Oct 30, 2008 1:28:49 GMT -8
It's not so simple as that. Bankruptcy has some pluses, but also many minuses. These include added admin expense, lengthy delays, and many others. Bankruptcy trustees only indirectly look out for you; their first concern is for their fees and the fees of their lawyers and accountants.
A main concern is that a bankruptcy filing would very likely reduce the collections realized on the firm's AR.
Someone else has said that the Heller partners do not (per the loan docs, which I have never seen) have personal liability to the banks.
I've said this elsewhere, but will say it again: I am all for clear, reasoned discussion of these issues, and am very open to better ideas. What I wouldn't like to see, though, is emotional reactions leading to shooting ourselves in the foot on the economics. I do think that has already happened with that NK class action damaging getting 'waiting time' penalties.
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