The Baltimore office of the accounting firm of Laventhol & Horwath terminated its 50 employees effective yesterday, after the nation's seventh-largest accounting firm said it would file for bankruptcy today.
Laventhol said it would seek protection from creditors under Chapter 11 of the federal bankruptcy code. The firm has been rocked by $50 million in settlements paid to victims of allegedly shoddy auditing work done by Laventhol. The company also has huge bank debts, and its chief executive officer has said the firm's assets will be liquidated.
Jeffrey Picker, managing partner of Laventhol's local office, said the Baltimore branch was not involved in any of the litigation against the Philadelphia-based company.
Mr. Picker said the five local partners would be splitting up. Partners Richard Pridgeon and Andrew McGrow, together with Leonard Nardone, who as a principal in the firm was a step below partnership, will open a practice together, Mr. Picker said. He said partner August Bonsall Jr. will also start his own practice.
Mr. Picker said he was talking with several firms about opportunities for himself and partner Jeffrey Krug, the head of Laventhol's Baltimore tax practice.
Laventhol's 50 local employees included 22 accounting and tax professionals and 20 computer professionals, Mr. Picker said. The former partners have the option of recruiting Laventhol employees for their new ventures, he said.
Laventhol's demise holds an unexpected wrinkle for downtown Baltimore's most trouble-plagued 1980s-era office building, 6 St. Paul Centre, where the accounting firm has been the major tenant.
Mr. Picker said the firm has occupied about 18,000 square feet of space in the building, at St. Paul and Baltimore streets. But he said "there's no intention of anyone continuing the lease."
The building was originally built to be headquarters of now-defunct Merritt Commercial Savings & Loan Association, but since Merritt's 1985 demise its new, New York-based owners have never managed to get Baltimore's tallest building even halfway leased. Even before Laventhol went broke, the building accounted for 29 percent of the vacant Class A office space in the city, according to a July study by W. C. Pinkard & Co., a commercial real estate brokerage firm.
J. Joseph Casey, president of Casey & Associates, the firm that has the listing on the building, could not be reached for comment.
Laventhol & Horwath has 4,200 employees nationwide, with $350 million in domestic revenue last year.