Accountants Confirm Plea for Chapter 11 : Bankruptcy: Bank debt stands at $85 million, Laventhol & Horwath says. Many offices closing their doors.
Laventhol & Horwath, one of the nation’s largest accounting firms, plans to file a Chapter 11 bankruptcy petition Wednesday, the firm said today.
Today’s announcement comes after two days of speculation that the company would fold under the weight of several lawsuits. Bank debt stands at $85 million, the firm said.
“A series of tragic circumstances brought this proud firm to this sad day,” said Robert Levine, executive partner and chief executive officer.
Despite the filing, Levine said, “the partners have every intention of continuing to serve our clients.”
Amid published reports that the firm’s partners voted at an emergency weekend meeting in Houston to file the bankruptcy petition, numerous offices have been closing their doors.
On Monday, partners in Ohio announced that they will close their doors Wednesday.
“Nationally, L&H; has been the target of extensive litigation and, due to the weakening economy and refusal of lenders to provide cash flow, could not remain in business,” Kerry Dustin, managing partner of the firm’s Ohio offices, said in a statement.
The lawsuits cited as the major factor in the bankruptcy decision were filed primarily by businesses challenging audits or by shareholders contending that they had received faulty financial information.
“Most accounting firms are suffering from high litigation costs, and our firm is no exception,” Levine said. “Because of the raised expectations of plaintiffs and the popular misconception of auditors as all-seeing and all-knowing, the number of lawsuits against accounting firms has skyrocketed.”
The firm’s headquarters has made arrangements for partners to acquire the rights to service Laventhol’s clients. There are 360 partners at more than 50 offices across the country.
Laventhol & Horwath is among the top 10 accounting firms in the country, with clients ranging from Trans World Airlines to Hyatt Corp. It has 4,200 employees with $350 million in domestic revenue last year.
