Coudert Brothers is facing a multimillion-dollar cash black hole and looks unlikely to be able to return any partner capital or pay their pensions, despite clearing almost $11m (£6.4m) in bank debts.
It is understood that the defunct law firm has reduced its $11m debts with secured creditors JPMorgan Chase and Citibank to less than $2m (£1.2m) and paid staff their basic statutory severance payments.
However, the firm now faces claims from its unsecured creditors, including a number of the firm’s international landlords and its retired partners, or those nearing retirement.
A former Coudert partner warned that there was “not enough funding to cover all of that”, as payment of the bank debt had reduced the amount of outstanding receivables to “substantially less than $100m [£58m]”.
“Much of that is very old and not collectable. We’re not going to get our capital back,” he said. Partners had paid between $100,000 (£58,000) and $300,000 (£173,900) into the firm.
The firm also owes an estimated $60m (£34.8m) to more than 40 retired or nearly retired partners, who will have to wait until all claims made by the firm’s landlords are finalised.
They are unlikely to receive full payment of their pensions. Under Coudert’s final salary scheme they are entitled to a maximum of $120,000 (£69,500) annually for 14 years.
The majority of Coudert’s most valuable assets have already been sold, including the New York office lease and work in progress to Baker & McKenzie for $10.3m (£6m).