A Minor Deity in the Bankruptcy Arena
From the Salad Oil Scandal of ‘63 to Lehman Brothers today, Harvey Miller is the bankruptcy lawyer you don’t cross
Published in 2009 New York Metro Super Lawyers magazine
By Michael Y. Park on September 24, 2009
Ask one of the most important bankruptcy lawyers practicing how he got where he is, and he’ll give an answer that can be summed up in a word:
No doubt Harvey Miller’s keen legal mind, countless hours of hard work and take-no-prisoners attitude had something to do with it as well. The man, after all, was chosen to oversee the unraveling of Lehman Brothers in the biggest and perhaps most complicated bankruptcy case in history. Even General Motors doesn’t compare. When GM filed for bankruptcy earlier this year, it was only the fourth-largest in history. But Miller’s handling that one, too.
That kind of prestige cloaks Miller in considerable gravitas. When a financial adviser to Barclays noticed how the entire bankruptcy court hushed once Miller stood to speak, he was so impressed that he turned to Tom Roberts, head of Weil, Gotshal & Manges’ corporate department, and a member of the Lehman team, and stated, “Harvey Miller is a minor deity in the bankruptcy arena,” Roberts recalls.
Roberts adds, “When [Harvey] talks about bankruptcy, everybody listens.”
You could almost say Miller was born for bankruptcy. When his mother gave birth to him in Gravesend, Brooklyn, in 1933, the country was in the depths of the Depression and his father, a construction estimator, worried he wouldn’t be able to foot the hospital bill. Automobiles were a rarity, summer vacations meant Coney Island, and the Miller family shared their tiny apartment with Miller’s aunt and her son.
“It was a world in which, when you wore out the soles in your shoes, you put cards in there till you could get a new pair of shoes,” Miller says.
Law was the furthest thing from his mind. He liked playing basketball in the public courts. As for a career: the expectation was that, straight out of high school, he’d get a job and contribute to the household expenses—like his older brother and almost every other kid in Gravesend.
Then World War II ended, and colleges were no longer an opportunity reserved for a minority of Americans, thanks to the G.I. Bill and America’s new emphasis on improving its infrastructure and academic pool. Miller attended Brooklyn College, then a free university, and never wanted to leave. He didn’t give much thought to what would come after. He only knew he’d been particularly fond of a constitutional law course.
His laissez-faire attitude about his future changed after he met a spirited urban-planning student who insisted he begin applying to law schools. After two years in the Army—during which he married the student who’d egged him on (his wife, Ruth)—Miller started at Columbia Law School in 1956 under the G.I. Bill. By the time he graduated in 1959, he was eager to start his career … in labor law.
“I never thought about bankruptcy,” he says. “Coming from a liberal environment and perceiving employers as oppressors, I was thinking about labor law. … [But] back in 1959, it wasn’t at all like it has been in the past 20 years. Nobody recruited at law schools, and Columbia had just created a placement office. Generally, you had your résumé mimeographed, went from office to office in the Wall Street area, and hoped they’d call you.”
Job searches in downtown Manhattan proved fruitless. A trip to Washington, D.C.—his first plane ride—was more promising, but a congressional budget crisis froze hiring, and Miller found the weather unbearably hot and humid.
Desperate, he put an ad in The New York Law Journal. The next day, he had 12 responses, including a postcard from a firm, Ballon, Stoll & Levine, in the Garment District. Stopping in primarily because it was located near a convenient subway stop, Miller met with Frederick Ballon and a familiar-looking associate who turned out to have been a friend he knew through basketball back in Gravesend.
“[He] was from Brooklyn, and, when I played basketball, his best friend was the guy I used to play with,” Miller recalls. “He took me to his office, said, ‘I think Fred [Ballon] likes you.’ Then we talked about basketball.”
Forty minutes later, arriving back at his Prospect Park apartment, Miller got a phone call. It was the Ballon associate. “He says, ‘Can you come in Monday?’” Miller recalls.
It turned out that Ballon, Stoll & Levine was handling the biggest Chapter 11 case in the district’s history, the reorganization of a garment-industry firm. The junior attorney had just quit, and Miller was his replacement.
Which is how basketball helped Harvey R. Miller become a bankruptcy attorney.
Miller was a quick learner—from discovering simply where the bankruptcy court in New York was, to dealing with clients, to taking the lead in court.
“I’d never tried a case in my life, and Ballon said, ‘There’s always got to be a first time,’” Miller says. “I took over the case before I was even admitted to the federal court.”
But Miller felt he needed to shore up his credentials, and took a night course at New York University.
“Here I was, a novice giving advice to these people, while reading the bankruptcy act at night, trying to figure it out,” he says.
Bankruptcy law suddenly blossomed for him. “This was an area where labor law, contracts, torts, landlord-tenant law all came together,” he says. “You had a chance to be different people—a litigator one day, an administrator another day, a negotiator the next day. It was living a fantasy, it really was. I [looked] forward to going to the office.”
After two years, Miller was wooed to Seligson & Morris, the firm run by renowned scholar and bankruptcy attorney Charles Seligson, whom he still refers to as “Professor.” “I remember the first time I worked with him,” Miller says. “I worked 24 hours straight, then he wanted me to report in at 10 o’clock the next morning.”
At Seligson, Miller was involved with the biggest cases in the corporate world, such as the restructuring of Mill Factors Corp. (“the Tiffany’s of commercial factors,” Miller says), and the Salad Oil Scandal of 1963, in which a New Jersey commodities trader tried to corner the soybean-oil and cottonseed markets and then duped American Express into giving his company loans based on fraudulent inventories of oil. The scam, which cost the corporate world $150 million, was a precursor to the kinds of lapses of judgment that led to the current subprime-mortgage crisis.
In 1969, realizing that the era of the small law firm was over, Miller, now a partner, shepherded a merger between Seligson & Morris and Weil, Gotshal & Manges. “I became the 14th partner at Weil, got a small piece of the 31st floor, showed up on Dec. 2, and was immediately very busy,” he says.
Thanks to his work with the liquidity problems of a company on the New York Stock Exchange, Miller was asked to become the NYSE’s legal representative in broker-dealer relations in 1970, a time when the Exchange was reeling as several member companies faced a severe shortage of liquidity. “It was a point in time when people were questioning whether the New York Stock Exchange would survive,” Miller says.
From 1970 to 1972, Miller and Weil Gotshal were directly involved in the liquidations of 20 member organizations of NYSE, including Goodbody & Co., Blair & Co., and Robinson & Co. Miller, meanwhile, worked with the National Bankruptcy Conference in consultation with Congress to formulate the new bankruptcy law, which eventually became the Bankruptcy Reform Act of 1978. In it, he pushed for a better balance between the needs of debtors and creditors while trying to strengthen the existing laws’ original purpose, saving companies. After the NYSE crisis subsided, the retail world underwent a sea change in shopping—consumers fled downtowns as the age of the shopping mall began. It was, he says “a terrific time” for Miller and his bankruptcy team, and the practice kept growing as they represented creditor and debtor alike.
“Retail companies began to say, ‘We don’t want Miller on the other side,’” he says, chuckling.
There was always work. Something, somewhere, was always failing, and opportunities arose for Miller to get involved, which he did: Continental Airlines in 1983 (then again in 1990), another retail collapse in the 1980s, StorageTek in 1984, Texaco in 1987-88, Eastern Airlines in 1989 (it ceased operation in 1991), Federated Department Stores (now Macy’s Inc.) in 1990, Enron in 2001, and WorldCom and Global Crossings in 2002. In 1990, he also had a part in the dissolution of Drexel Burnham Lambert, a Wall Street banking firm destroyed by the junk-bond market and its own aggressive corporate culture—a situation that parallels the current economic crisis.
Marcia Goldstein, the chair of Weil Gotshal’s restructuring department, was mentored by Miller when she joined the firm fresh out of Cornell University Law School in 1975. “He was intimidating when I was 23 years old, but not so much anymore,” she says, laughing.
Well, depends who you ask.
In the 1989 Eastern Airlines case, as the story goes, Miller manhandled a lawyer for a potential buyer—in judge’s chambers.
“I had to grab his arm to prevent any mayhem from going on,” says Joel Zweibel, a now-retired bankruptcy attorney who tangled—verbally—with Miller in court. “I have a lot of respect for Harvey as a lawyer, but I and a lot of others found it difficult to establish any of those interpersonal relationships that often ease one’s ability to communicate one’s client’s positions and arrive at a good consensus or compromise.”
Roberts, who’s known Miller for 15 years, says the incident was blown out of proportion. “Every good lawyer has got an incident like the one alleged in the Eastern Airlines case, and most of us have more than one,” he says. “Harvey brings a great deal of passion and intensity to his work, which is what makes him successful
and is why people go to him for the most complicated cases.”
“My recollection was I grabbed him by the tie and I picked him up or something,” says Miller. “It was an unfortunate situation and I’ve been very contrite about it. It should’ve never happened. It happened with the door to the chamber open, and there happened to be a Wall Street Journal reporter in the room, and it became a story. It was just the tension of the proceeding and the fact that some of us had been up for 36 hours.”
In 2002, Miller left his home of decades and went to boutique investment bank Greenhill & Company as a managing director. Then he yearned to be part of the action again. “I missed practicing law,” he says. “I missed the collegiality, I missed the intellectual challenge of legal problems as opposed to economic problems.”
Miller made waves when he took a pay cut to return to Weil Gotshal in March 2007. Of course, current events allowed him to jump right back in.
“I didn’t expect to work quite this much,” he says.
Working on Lehman Brothers, Miller made news in April when Weil Gotshal submitted its bill for the first four and a half months of its bankruptcy work there—an unprecedented $55 million, for 100,296 hours of work. Miller himself had logged 795 hours at $950 an hour—or over $755,000.
“Look, I think that Harvey has proved he’s the dean of the bankruptcy bar and is in a class of his own when you see how he’s handled himself in the Lehman case, how we were able to accomplish the sale to Barclays in the course of a week,” says Stephen Dannhauser, CEO of Weil Gotshal. “I don’t think anything like that has been done before.”
Miller hasn’t kept his opinions about the case to himself, especially with his scathing criticism of the federal government’s response last fall, which he said did nothing to stave off the crisis of confidence that exploded into the worst economic crisis since the Great Depression.
“They totally missed it,” he told The New York Times in December. “If the Fed or the Treasury said, ‘Let’s say to Lehman, there’s no bailout, we’re not going to save the company,’ they could have supported an orderly unwinding of all the transactions over a period of months. It probably would’ve cost the economy a lot less money.”
Once a young lawyer exhausted by his mentor, Seligson, Miller is now the professor outlasting his younger colleagues during marathon work sessions—this time in a case of unprecedented depth and complexity that spans everything from real estate law to litigation to tax law to mergers and acquisitions.
“I’ve stayed up 48 hours twice already in Lehman,” Roberts says. “I laid down in the wee hours of the morning, the second of the 48 hours, and took a nap, and he basically did not and has not let me forget.”
Miller wouldn’t have it any other way. “It’s been a hell of a ride,” he says.
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