By Sara Randazzo and Damian Paletta
One of the nation's largest Social-Security disability firms is
preparing for a possible Chapter 11 bankruptcy filing as soon as
next week, people familiar with the matter said, as it faces
roughly $40 million in debt and shrinking demand for its services
amid tightening government scrutiny of claims.
Binder & Binder, founded by brothers Harry and Charles
Binder, is working with law firm Lowenstein Sandler and turnaround
firm Development Specialists Inc. to prepare a Chapter-11 filing,
one of the people said.
The firm, which is dependent on government-paid fees earned from
shepherding Social Security disability claimants through the
system, owes around $23 million to lenders U.S. Bank and Capital
One Bank, one of the people familiar with the matter said. The firm
owes about another $16 million in unsecured debt to D.E.
Shaw-spinoff Stellus Capital Management, that person said.
Binder executives couldn't be reached for comment on Friday.
U.S. Bank declined to comment, while representatives for Capital
One, Stellus and Binder's private equity backer, H.I.G. Capital,
didn't return requests for comment.
Chapter 11 protection from creditors would be used to help
Binder restructure debt and close some far-flung offices, the
people familiar with the matter said. The filing isn't expected to
affect the majority of the firm's nearly 1,000 employees, many of
them nonlawyers, or its 57,000 active cases, the people said.
Binder rose in prominence over the past several years as a
combination of an aging workforce, high unemployment, and lax
oversight fueled the rapid growth of the Social Security Disability
Insurance program.
Access Investor Kit for Capital One Financial Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US14040H1059
Subscribe to WSJ: http://online.wsj.com?mod=djnwires