Documents filed in the McGlinchey Stafford bankruptcy case shed new light on the New Orleans firm’s financial situation in the wake of its surprise decision early this year to shut down after more than 50 years in business.
The firm’s liabilities top $13 million and include more than $2.5 million in bank debt, $6.5 million in office leases and more than $1.5 million in wage claims to employees, according to court records.
Its $15.5 million in assets, though greater than its liabilities, include more than $9.4 million in accounts receivables, or bills for services that have not yet been paid.
The details were disclosed in documents filed March 12 with the U.S. Bankruptcy Court for the Eastern District, where McGlinchey filed Chapter 7 bankruptcy in mid-February.
A Chapter 7 bankruptcy means a debtor is liquidating its remaining assets to satisfy creditors, unlike a Chapter 11 reorganization, where a debtor remains in business while paying off debt.
The case has been assigned to U.S. Bankruptcy Judge Meredith Grabill.
In early January, McGlinchey Stafford surprised the local legal community by announcing that its equity members, a group of senior attorneys who owned the firm, had voted to dissolve.
A variety of factors contributed to the decision, including the recent departure of several high-profile lawyers with the firm, delinquent collections, internal disagreements and steep overhead costs in far flung offices, according to sources familiar with the situation and statements made by the firm’s leaders.
Managing member Michael Ferachi and a trustee appointed by the court to oversee liquidating the firm’s assets, Metairie attorney Bill Babin, have declined to comment on the case.
Assets and liabilities
JP Morgan Chase Bank is McGlinchey’s largest creditor and is owed more than $2.5 million by the firm, including more than $813,000 on a 2024 loan, nearly $825,000 on a line of credit from mid-2025 and more than $847,000 in letters of credit issued to two property owners for office space in Boston and New York City.
Chase is a secured creditor, meaning it will get paid first once the firm’s assets are liquidated.
McGlinchey also has more than $10.5 million in unsecured debt.
More than half of that debt, some $6.5 million, is owed for office space in high rise buildings around the country. The firm’s New York City landlord is owed nearly $803,000. Its Cleveland, Ohio landlord is owed $690,000.
Local property owners are owed even more. Mike Wampold, whose II River Mark Centre was home to McGlinchey’s Baton Rouge office, is owed some $942,000. The Pan American Life Center in New Orleans, where the firm was located for more than 15 years, is owed nearly $700,000.
Wampold, through his attorney, declined to comment.
Other unsecured creditors include 165 McGlinchey employees, who are owed more than $1.5 million in wage claims, and 195 vendors that did business with the firm.
Some of those vendors are large, with six-figure claims for computer software agreements and insurance policies. Other are small. A northshore bakery is owed $60,000 for king cakes. A New Orleans florist is owed nearly $800 for floral arrangements.
McGlinchey, through the bankruptcy trustee, will hope to settle some of those debts by collecting on its accounts receivables. The firm has $7.8 million in outstanding accounts that are fewer than 90 days old and $1.6 million that are older than 90 days.
Court records show it also has $4 million in “Work in Progress,” or legal work it was doing at the time of the bankruptcy filing, though it is unclear how it will be able to collect on any of that money because all of the attorneys that worked for the firm have since gone to work at other firms.
Other firm assets include $4 million in inventory and more than $1.5 in cash.
‘Inundated with calls’
The firm had 17 offices in 11 states and employed 300 people, including 150 attorneys, at the time of the filing. Filings suggested the enormity of work involved with unwinding all the cases and relationships entangled in a firm of that size.
One court pleading, filed March 9, says almost immediately after Babin was appointed as trustee, he was “inundated with emails and phone calls from former McGlinchey attorneys trying to locate the original Last Wills and Testaments (of their clients) that were stored by the debtor.”
“Further, the Debtor has offices filled with client files in multiple locations and in storage that need to be sorted and multiple computer servers and a vast computer network containing client files,” the filing said.
The pleading asked Grabill for approval to keep paying several McGlinchey employees to help administer the process, noting that “the former debtor employees have institutional knowledge that is unique … and that will help the Trustee to access information quickly and efficiently.”
On Monday, Grabill approved the request on an interim basis, freeing up some of the firm’s money to keep the employees on the payroll. A hearing to consider the full application is scheduled for next week.
