* Firm to be sold through bankruptcy to HIG Capital
* Weak demand for legal services cut sales 21 pct
By Tom Hals
WILMINGTON, Del., Sept 8 (Reuters) - Alexander Gallo Holdings LLC, one of the largest U.S. providers of litigation services, plans to sell its business to an investment firm after a sharp drop in sales forced it into bankruptcy.
Alexander Gallo provides about 10,000 law firms and companies with court reporting and electronic discovery services. Business has fallen sharply as law firms and companies have scaled back their use of outside legal services during the economic slowdown.
The company, which was built through acquisitions since it was founded by court reporter Alexander Gallo in 1999, plans to sell most of its operations to HIG Capital, an $8.5 billion investment firm.
The terms of the proposed sale have not yet been disclosed. Money from the sale, which is subject to higher bids and must be approved by Manhattan’s bankruptcy court, will go toward paying off the company’s debts.
HIG Capital also agreed to provide a $20 million loan to finance Alexander Gallo during the bankruptcy.
The company’s revenue for the first half of 2011 fell 20.9 percent compared to the same period last year, according to court papers. It blamed the sluggish economy, which has prompted fewer lawsuits and reduced demand from law firms for outside services.
At the same time, Alexander Gallo is carrying a big debt load from its 2008 purchase of Hobart West Group Inc, which was financed in part by issuing notes to Accel-KKR Co LLC, which is currently owed $147.9 million.
In total, Alexander Gallo listed assets of $208 million and liabilities of $258 million.
Earlier this week, Alexander Gallo sold its Esquire Solutions, which provides court reporting and electronic discovery services, to Document Technologies Inc. Terms were not disclosed.
The case is In re Alexander Gallo Holdings LLC, U.S. Bankruptcy Court, Southern District of New York, No. 11-14220 (Reporting by Tom Hals; Editing by Tim Dobbyn)