Weil Gotshal Pulls Bankruptcy Partner Away from Kirkland

Weil Gotshal & Manges LLP is bringing in a lawyer from one of its biggest rivals to help run its marquee bankruptcy business, as firms fight over a shrinking supply of big restructuring cases.

Ray Schrock, a partner at Kirkland & Ellis LLP, will join Weil as a partner with a leadership role and could be in line to take over as co-head of the restructuring group in the future, according to two people familiar with the hiring. Weil’s bankruptcy group is currently helmed by chair Marcia Goldstein and co-chair Gary Holtzer.

“We thank Ray for his service to the firm.  We wish him well,” a Kirkland spokeswoman said Thursday night. A Weil spokeswoman declined to comment, saying it has a policy not to comment on partners at other firms.

Weil has handled some of the most notable bankruptcies in recent corporate history, including Texaco Inc., Enron Corp., General Motors Corp. and Lehman Brothers Holdings Inc.

But the hiring of Mr. Schrock, who has worked on mortgage lender Residential Capital LLC’s Chapter 11 bankruptcy, as well as on various matters for Charter Communications Inc. and grocery chain Great Atlantic and Pacific Tea Co., follows a challenging year for Weil.

The firm’s revenue slipped 7.4% in 2013, according the American Lawyer magazine, as some big assignments such as its role advising Lehman Brothers wound down. Last June the firm laid off about 170 junior lawyers and staffers, and slashed pay for dozens of partners.

To be sure, a surge in big-ticket mergers and acquisitions during the first half of 2014 has boosted the fortunes of Weil’s corporate group, which is advising DirecTV in its pending $48.5 billion sale to AT&T Inc. The firm had a hand in about $212 billion worth of announced deals during that period, according to Dealogic.

In the bankruptcy world, Weil has more recently represented equity holders or creditors of wireless venture LightSquared and those in municipal bankruptcy cases including the City of Detroit. The firm also advised former American Airlines parent AMR Corp. in its recent Chapter 11 case.

But the overall picture for restructuring is grim.

Last year U.S. commercial bankruptcy filings declined 24%, plunging to their lowest level since before the financial crisis. Cheap credit and low interest rates have helped troubled companies avoid bankruptcy court. In July, filings fell 21% from a year earlier, according to data provided to the American Bankruptcy Institute by Epiq Systems Inc.

Built up by legendary partner Harvey Miller, Weil’s bankruptcy group is known for taking on sprawling debtor-side representations that have netted the firm hundreds of millions of dollars in fees. The firm is set to earn $77.4 million from its work for AMR, for example, and garnered more than $450 million from its work on Lehman.

Kirkland & Ellis has snagged debtor advisory roles on a number of well-known cases recently, including Energy Future Holdings Corp. and Sbarro LLC. Some Kirkland partners were informed of the move this week, the people familiar with the hire said.

Emily Glazer contributed to this article.