By Sara Randazzo
Binder & Binder, one of the nation's largest Social Security
disability firms, filed for bankruptcy protection Thursday night
amid shrinking demand for its services as government scrutiny of
disability claims tightens.
The Wall Street Journal previously reported that Binder &
Binder had been preparing for Chapter 11 to restructure its debt.
The firm listed assets and liabilities each between $10 million and
$50 million in a bankruptcy petition filed in U.S. Bankruptcy Court
in White Plains, N.Y.
Those debts include $23 million in secured debt to lenders U.S.
Bank and Capital One Bank and $16.7 million in unsecured debt to
Stellus Capital Management, a spinoff of investment firm D.E. Shaw
& Co., court filings show.
U.S. Bank and Capital One Bank are prepared to lend up to $26
million in bankruptcy financing, filings show, subject to court
approval.
Founded by brothers Harry and Charles Binder, the firm
represents people seeking disability benefits from the federal
government. It rose to prominence in recent years thanks to an
aging workforce, high unemployment and less oversight than in the
current environment, although it now must confront a shrinking
number of people seeking benefits and tougher scrutiny from the
Social Security judges who decide cases.
A number of the judges who paid high amounts of benefits in
recent years have either been placed on leave or left the agency,
data show. The agency has also tightened its controls.
People familiar with the matter have told the Journal that the
Chapter 11 filing isn't immediately expected to affect the majority
of the firm's 966 employees, many of whom aren't lawyers, or its
nearly 58,000 active cases.
In projections filed in court papers, Binder estimates its
employee head count will drop to under 400 over the next two
years.
Damian Paletta contributed to this article.
Write to Sara Randazzo at sara.randazzo@wsj.com
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