On February 24, 2015, U.S. Bankruptcy Judge Robert D. Drain gave Binder & Binder LLP, the struggling Social Security disability firm, access to $6 million in private equity financing to make payroll, calling the arguments of bank lenders that opposed the cash infusion “idiotic.”
The approved financing deal should allow Stellus Capital Investment Corp to provide enough cash for Binder & Binder to meet its payroll obligations and avoid an immediate shutdown. Judge Drain made the finding after Binder & Binder witnesses said a forced shutdown — in which the firm would fail to make payroll in coming days and disappear, leaving its remaining revenue streams to be collected by the two banks — would be the worst-case scenario for all involved.
The judge made the ruling while expressing doubt about whether Binder & Binder could survive as a going concern in the face of increasingly delayed fee payments in the environment of the current Republican-controlled U.S. Congress, whose members have expressed open hostility toward claimants’ representatives, and a desire for more budget cuts in Binder & Binder’s two main sources of fee payments: the Social Security Administration and the Veterans Administration.
Regardless of whether Binder & Binder survives or is wound down in an orderly fashion, witnesses, including Binder & Binder Chief Restructuring Officer William Brandt of Development Specialists Inc., said that the firm would close under performing offices and ultimately lay off a large portion of its workforce.