Professional services firm LECG Corporation said Monday that it expects to sign an amendment to its credit agreement and to transition two expert practice groups to FTI Consulting Inc., as the financially troubled firm struggles to stay in business.

LECG also said it has agreed in principle to transition two other practice groups to Grant Thornton LLP and a third practice group to Grant Thornton LLP and WeiserMazars LLP.

The tenth amendment to LECG’s credit agreement is expected to allow the cash-strapped firm to transition several practice groups to other firms and determines the process for similar transactions in the immediate future. The firm revealed this month that it was in discussions with FTI on a possible deal (see LECG in Talks with FTI on Acquisition Deal).

The tenth amendment also will limit how LECG may use its cash until it repays its lenders. The facility matures on March 31, 2011 and approximately $27.8 million is outstanding. Absent sufficient proceeds from the transition of practice groups, LECG said it would not have adequate cash resources to repay the amounts outstanding under the facility.

The transaction with FTI Consulting, Inc. involves the transition to that firm of LECG's International Arbitration and Aviation Competition practices and is expected to take effect Monday, subject to the satisfaction of closing conditions, including the consent of its lenders to the release of liens on certain assets to be transferred. Terms of the deal were not disclosed.

LECG also signed a letter of intent with Grant Thornton LLP to transition the company's tax and business consulting groups. Simultaneously, the partners of LECG Partners LLP, which provide attest services under an alternative practice structure, will continue to provide their professional services with either Grant Thornton LLP or WeiserMazars LLP.

The announced transitions will involve approximately 350 employees in Atlanta, Albany, Cambridge, Chicago, Devon, Harrisburg, Houston, New York, Schaumburg and Washington, D.C..

The firm said it continues to negotiate the possible transition of the majority of its remaining practice groups, with the advice of its restructuring advisors.

LECG will initially use the majority of the proceeds from practice group transitions to repay the $27.8 million in principal outstanding under its credit facility. The company said it does not believe there will be any value remaining for the common stockholders after taking into account the expected net sale values of these transactions in the aggregate, and the use of the proceeds to fund payments to the Company's lenders and unsecured creditors. Contractually, the remaining value available to equity holders, if any, would be first allocated to the firm’s outstanding preferred stock.

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