Lenders Gave Thacher One Week to Complete Sonnenschein Deal
Lawyers at Thacher Proffitt & Wood were talking about a possible merger or other combination with Sonnenschein Nath & Rosenthal when their lenders gave them an ultimatum.
Citigroup and Wachovia were threatening to declare Thacher in default of its loan agreement because of an exodus of several partners in 2008 after the collapse of the mortgage market, Business Week reports. Two other law firms that dissolved last year—Thelen and Heller Ehrman—had similar problems with their banks.
Partner Douglas McClintock recalled the pressure in an interview with Business Week. “The people in the restructuring areas of banks can be very difficult,” McClintock said. If the banks declared a default, Thacher would have been required to immediately repay its debt, which stood at some $33 million.
Thacher lawyers were negotiating with Sonnenschein in one conference room and its bankers in another. Finally, the lenders offered a reprieve, the story says. Thacher had just one week to negotiate a deal with Sonnenschein.
It worked. Within a week, Sonnenschein agreed to hire 100 out of 170 of Thacher’s lawyers.
