Social Security Disability Firm Binder & Binder Files for Chapter 11

By Sara Randazzo 

Binder & Binder, one of the nation's largest Social Security disability firms, filed for bankruptcy protection Thursday night amid shrinking demand for its services as government scrutiny of disability claims tightens.

The Wall Street Journal previously reported that Binder & Binder had been preparing for Chapter 11 to restructure its debt. The firm listed assets and liabilities each between $10 million and $50 million in a bankruptcy petition filed in U.S. Bankruptcy Court in White Plains, N.Y.

Those debts include $23 million in secured debt to lenders U.S. Bank and Capital One Bank and $16.7 million in unsecured debt to Stellus Capital Management, a spinoff of investment firm D.E. Shaw & Co., court filings show.

U.S. Bank and Capital One Bank are prepared to lend up to $26 million in bankruptcy financing, filings show, subject to court approval.

Founded by brothers Harry and Charles Binder, the firm represents people seeking disability benefits from the federal government. It rose to prominence in recent years thanks to an aging workforce, high unemployment and less oversight than in the current environment, although it now must confront a shrinking number of people seeking benefits and tougher scrutiny from the Social Security judges who decide cases.

A number of the judges who paid high amounts of benefits in recent years have either been placed on leave or left the agency, data show. The agency has also tightened its controls.

People familiar with the matter have told the Journal that the Chapter 11 filing isn't immediately expected to affect the majority of the firm's 966 employees, many of whom aren't lawyers, or its nearly 58,000 active cases.

In projections filed in court papers, Binder estimates its employee head count will drop to under 400 over the next two years.

Damian Paletta contributed to this article.

Write to Sara Randazzo at [e-mail]

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