A 10% Collection Rate

In the News Articles section today, I’ve posted a link to Heller Collects Only $8M of $77M from The Recorder.  The reporter, Amanda Royal, who has covered many recent Heller Ehrman developments, reviews the latest Operating Report filed by Heller on February 28, 2009 and makes this observation:

Heller Ehrman has “collected only $8 million of the $77 million owed to it by clients since its bankruptcy filing nearly three months ago . . “

In addition, as I pointed out yesterday, Heller has marked about $12m as doubtful accounts.  Others have said it is very optimistic for Heller to think that they will collect 85% of their accounts receivable and only “write off” 15%.  Some have even said Heller will be lucky to collect 25% of the $77m.

This leads me and others to believe that the idea of there being “plenty of money to go around when all is said and done” is bullshit.  

I also have to wonder why type of “deals” the departing shareholders struck with their clients as they crept off to other firms like Orrick, Cooley, and Covington and Burling.  Did they offer a discount on existing Heller Ehrman billings? A total write-off? Was that part of the “deal” to go to these firms and bring their clients along?


2 Responses to “A 10% Collection Rate”

  1. 1 Thomas MacEntee 27 March 2009 at 12:47 pm

    From Former Associate who was having problems posting comments earlier:

    “The Creditors Committee needs to hire a pitbull collection attorney to go after the nonpaying clients. Clearly, the SHs care more about bringing along their clients than they do about making sure that those clients pay their outstanding bills to the carcas that is Heller Ehrman.

    Also, we need to see a list of nonpaying clients. Their failure to pay outstanding bills is directly responsible for our failure to get paid.”

  2. 2 Anon 28 March 2009 at 1:26 pm

    While not comforting, these figures are not entirely surprising. January is in fact a slow collections month – it is the beginning of the year, both in terms of the calendar and in terms of fiscal year for most clients. I will be more worried if March is equally anemic. In addition, the quotes in the article are, as is often the case, gratuitous. While not ideal, it is actually common to collect a large portion – not 85% mind you – of A/R aging 90 days or more.

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