Even though the Baltimore office of Laventhol & Horwath is closing, along with the rest of the giant national accounting firm, the company's local computer services division plans to continue on.
Yesterday was the last day of work for Laventhol employees, who were told the day before that they were losing their jobs. Nationwide, 3,300 Laventhol employees were affected.
Philadelphia-based Laventhol & Horwath, plans to file a Chapter 11 bankruptcy petition today, the firm announced yesterday.
The announcement comes after two days of speculation the accounting firm would fold under the weight of several lawsuits. Bank debt stands at $85 million, the firm said.
"A series of tragic circumstances brought this proud firm to this sad day," said Robert Levine, executive partner and chief executive officer.
Despite the filing, Levine said "the partners have every intention of continuing to serve our clients.
However, as many as 20 of the 50 jobs at the local office at 6 St. Paul Centre in Baltimore might be spared as a company that merged with Laventhol in October 1989 attempts to re-establish itself.
The division, called Laventhol & Horwath Information Systems Group, was formed in October 1989 with the merger of GP Systems Corp into Laventhol. Now the principals of GP Systems are reasserting their ownership rights to computer software and to pursue negotiations on outstanding contracts, according to a letter to clients from Gary Ingber, president of GP Systems Corp.
"GP Systems Corp. is back in business," Ingber said in the letter. "These next few weeks will be hectic. We are scrambling to find office space and relocate as of December 1, 1990," the letter said. The division specializes in producing and servicing accounting and distribution management software.
Sandy Kammer, a writer of software manuals for the computer division, said she estimates about 15 people work for the division. However, Jeffrey Picker, the managing partner for the Baltimore's Laventhol office, had previously said there are about 20 computers consultants at the Baltimore office. He was not available later to confirm whether all those workers are part of the Information Systems Group.
Kammer, who briefly left 6 St. Paul Centre late in the afternoon to mail the letters from GP Systems to the clients, said she was stunned by the announcement. "I'm a zombie right now," she said. "I'm trying to get through minute to minute."
"It's one of the saddest things I've ever seen," she said about the closing of the company. "Talk about going from feast to famine."
While she is relatively assured of her job, she said other highly trained workers will be hitting the ranks of the unemployed. "Extremely qualified people are going to be available," she said. "There will be some great opportunities for some companies."
Jim O'Rourke, another employee of the information system group, said employees had a warning that there were big problems with the company when they had to take a 10 percent pay cut two to three weeks ago. "It looks like everybody had feelers out," O'Rourke said about early efforts to find new jobs.
While O'Rourke is sure that he will keep his job at the new GP Systems Corp., he said there is some understandable bitterness on the part of those losing their jobs. "It's hard to feel good about it," he said. But the workers were not very emotional about the closing, he said.
Picker, the managing partner, said there were no severance checks given to the workers yesterday and he did not know if there would be any future severance pay.
Of the 50 workers, about 20 were in computer consulting, 22 were in accounting and taxes and eight were administration and support areas, he said.
The decision to close the accounting firm was made during the weekend at a meeting of partners in Houston, which Picker attended. "I'm very sad," he said about the shutdown of the firm. "I've been associated with this firm for 22 years and its painful to vote for dissolution," he said. There was no other "logical" alternative, Pickers said.
There should be no disruption in service to the hundreds of local clients because individual partners in the firm will be responsible for clients assigned to them, he said. In the Baltimore office there are five partners in the audit and tax division and two partners in the computer division.
Along with his workers, Pickers also lost his job yesterday. But he is free to set another operation and even hire back some of the office's employees. "I'm investigating a number of possibilities," he said.
Despite the sudden job loss two days before Thanksgiving, some employees have volunteered to come in today to tie up loose ends, Picker said. "It's outstanding team of people," he said.
The firm has been plagued by a series of lawsuits filed by businesses challenging audits or by shareholders contending they received faulty financial information.