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September 9, 2011 6:30 PM

DLA, Squire Sanders Representing Alexander Gallo in Bankruptcy

Posted by Brian Baxter

Alexander Gallo Holdings, an Atlanta-based court reporting and legal services firm, filed for bankruptcy September 7 in New York along with ten affiliates.

At the same time, the company announced plans to sell most of its assets to HIG Capital Management, a Miami-based private equity firm whose subsidiary, Bayside Capital, is providing $20 million in debtor-in-possession financing to Alexander Gallo, according to court records.

In a press release, Alexander Gallo stated that its Chapter 11 filing would help it "eliminate debt, strengthen liquidity, and allow the company to continue providing critical litigation support to more than 10,000 law firm offices and corporate clients nationwide."

The company provides court reporting, litigation, and e-discovery services, as well as legal staffing. Revenue for the first six months of 2011 is down 20.9 percent, according to an affidavit submitted as part of the bankruptcy filing by Marc Pfefferle, a partner at the Carl Marks Advisory Group serving as the company's chief restructuring officer.

Alexander Gallo, Pfefferle wrote, suffered an abrupt decrease in sales as the "number of lawsuit filings and depositions decreased because of the economic downturn, law firms and corporations have scaled back on outsourcing litigation support services, court reporting services, and trial software programs."

DLA Piper restructuring group vice-chair Thomas Califano in New York is serving as lead bankruptcy counsel to Alexander Gallo. Atlanta-based Joseph Alexander, Jr., chair of DLA's corporate group for the Southeast, has previously advised the company on M&A and finance matters. Squire, Sanders & Dempsey is providing corporate counsel to Alexander Gallo. Neither firm has yet filed billing statements with the bankruptcy court.

Alexander Gallo lists debts of $258 million against assets of $208 million, according to court filings. A list of the company's 30 largest unsecured creditors reveals that the debtor owes $558,948 to Kirkland & Ellis and $163,025 to McKenna Long & Aldridge for professional fees. Alexander Gallo reports that it has additional debt obligations stemming from its 2008 acquisition of legal staffing firm Hobart West Group. (As part of that deal, Menlo Park, Calif.-based Accel-KKR took a significant stake in Alexander Gallo, which now owes the private equity firm $147.9 million.)

The company was founed in 1999 by Alex Gallo, a former court reporter who currently serves as its president and CEO. Alexander Gallo's general counsel is Domenick DiCicco, a former name partner at Philadelphia firm Edelstein Martin & Nelson.

Earlier this week Alexander Gallo sold Esquire Solutions, a court reporting and litigation support subsidiary, to Atlanta-based Document Technologies. Terms of the Esquire deal were not disclosed.

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