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Category: Bankruptcy Fees / Expenses

Weil Gotshal Seeks $2M in Fees in PG&E Bankruptcy

October 22, 2019

A recent Law 360 story by Ryan Boysen, “Weil Gotshal Seek $2M for Work on PG&E Case,” reports that Weil Gotshal & Manges LLP is asking for $2 million in fees and costs for its work in August on the massive bankruptcy of California’s Pacific Gas and Electric Co., with billable hours from just two partners accounting for nearly half of the haul.  In a fee application, the firm said it put in about $2.5 million worth of work into the PG&E case throughout August, just as a proposed $24 billion Chapter 11 reorganization plan came into focus.  After a customary 20% haircut is applied, it brings the total to about $2 million.

Nearly $1 million of that comes from the billable hours of just two attorneys: Weil Gotshal’s Stephen Karotkin, who worked 300 hours, and Jessica Liou, who worked 275 hours.  While Weil Gotshal is the primary firm representing PG&E, the nation’s largest power utility has retained lawyers at several other firms in various capacities.  One report estimated in March that PG&E had spent at least $84 million in attorney fees up to that point.  It’s not clear how much more overall the utility has since spent.  That's not to mention the powerhouse restructuring attorneys representing the committees, creditors and other stakeholders who are all vying for an advantage in the massive case.

Earlier this month PG&E criticized the court-appointed fee examiner for attempting to put its attorneys on too tight of a leash, saying the examiner's suggested cost-cutting measures and fee caps were too strict.  PG&E, the nation's largest utility, filed for bankruptcy in January after racking up more than $30 billion in potential liabilities tied to its alleged role in causing a series of wildfires that tore through the Golden State in 2017 and 2018, killing 130 people and destroying billions of dollars in property.

PG&E Bankruptcy Attorneys Blast Fee Examiner’s Caps on Fees

October 2, 2019

A recent Law 360 story by Rick Archer, “PG&E Case Attorneys Blast Fee Application Protocol,” reports that counsel for Pacific Gas and Electric Co. (PG&E), the utility’s board of directors and the unsecured creditors in its bankruptcy case have jointly claimed the court-appointed fee examiner is seeking to impose excessively strict caps and unnecessary barriers to their fee applications.

In a filing with a California bankruptcy court, the parties said the fee examiners' proposal would unreasonably put a flat cap on compensation for time spent preparing fee applications, bar compensation for travel time and place other “unwarranted” barriers to fee applications.  “The protocol and motion together contain a litany of requirements that have no basis in the Bankruptcy Code, rules or guidelines,” they said.

The filing is a response to a September filing by Bruce Markell, the fee examiner appointed by the court in the case, proposing guidelines and procedures to evaluate applications to approve legal fees.  According to the filing, 23 firms had submitted appearances in the bankruptcy case as of Sept. 16, although only eight had filed fee applications.

Markell argued he should be allowed to bar redacted time entries and applications for nonworking travel time, which he said made up about $1 million of the then-current fee applications.  He also sought a cap on payable hours for time preparing employment and fee applications.  “The fee examiner has been impressed by the amount charged for obtaining court approval of employment. In one interim application, these fees approached $200,000,” he said.

In the filing, counsel for PG&E and the unsecured creditors argued the proposed guidelines are too strict, saying the general local guidelines call for fee application preparation to be capped at 5% of total fees, and that standard guidelines call for attorneys be compensated for up to two hours of non-working travel time.  They noted a number of attorneys in the case who are based in New York and others are required to travel around California in connection with wildfire litigation.  They also argued the procedures would unnecessarily penalize late applications and impose other “unwarranted barriers.”

“The protocol and motion should not impose requirements beyond what Congress has commanded,” they argued.  PG&E filed for Chapter 11 bankruptcy in January after racking up over $30 billion in liabilities related to its alleged role in sparking wildfires that charred vast swaths of California and killed 130 people.

Sears Vendors Demand Halt on New Attorney Fees in Bankruptcy

August 30, 2019

A recent Law 360 story by Rick Archer, “Sears Vendors Demand Halt on New Attorney Fees,” reports that a bottled water company has joined multiple other Sears Holding Corp. vendors in asking for a halt to new professional expenses claims and equal treatment in splitting up what it says is a shrinking pool of money. 

Niagara Bottling LLC argued in a motion that Sears is running out of cash and — with $200 million in professional expenses already submitted — every dollar paid to the company’s lawyers and other professionals will mean one less for the vendors who have kept the retail chain’s stores supplied since its Chapter 11 filing.  The motion joins one filed last week by other vendors.  “Because the debtors’ cases appear to be administratively insolvent, no further professional fees should be paid at this time,” the bottling company argued.

Sears declared bankruptcy in October, with more than $11 million in debt.  ESL Investments, a firm owned by former Sears CEO Edward Lampert, bought its assets for $5.2 billion in February.  Sears has faced objections to its proposed Chapter 11 plan by multiple creditors who argue there will not be enough money left to cover legal and other professional fees, post-petition vendor payments and other Chapter 11 administrative expenses.

Earlier this month ESL objected to Sears’ Chapter 11 plan on the grounds the plan assumes favorable court rulings for Sears on a number of disputed points in the sale agreement.  If the court finds Sears is owed less money that it claims, Sears will not have enough to cover the administrative expenses, it argued.

In the motion, Niagara — a California-based bottled water and soft drink company — joined eight other post-petition vendors who filed a motion last week asking that further professional fee approval be suspended and their claims be given equal treatment, claiming Sears has stopped paying even uncontested administrative claims and the estate appears headed for insolvency.  “Notably, distressed claim buyers are now offering only 40% for administrative claims that involve no disputed issues of fact or law,” it said.

Niagara claimed professionals in the case have already billed about $167 million in fees and expenses and have recently submitted applications for over $32.5 million more.  If Sears is declared administratively insolvent and the case is converted to a Chapter 7, already-approved professional fees will be given priority for payment, it said.  “Accordingly, no further payments of professional fees should be made at this time.  All administrative creditors should receive equal treatment,” it said.

Law Firm Bills Soar Quickly in Big Bankruptcy

August 22, 2019

A recent Law.com story by Samantha Stokes, “Law Firm Bills in Big Bankruptcy Cases Growing Rapidly,” reports that there was no summer slowdown for law firms advising on large corporate bankruptcies: the season has brought a bonanza of law firm fee applications and approvals.  Several Am Law 200 firms stand to gain up to tens of millions of dollars from some of the most active Chapter 11 bankruptcies this summer, including Sears Holding Corp. and PG&E Corp.

In the Sears case, U.S. Bankruptcy Judge Robert Drain of the Southern District of New York on June 28 approved fee requests for 16 advisers—including six law firms—that totaled about $130 million in all for work mostly from mid-October through February.

Of the $130 million fee package, Weil, Gotshal & Manges alone billed and was awarded more than $40 million, as well as nearly $1.6 million in expenses.  According to the firm’s fee application, that amount included billing from 154 attorneys and 39 others.  The highest hourly rates—$1,600—belonged to Weil partners Kenneth Heitner, Greg Danilow, Ellen Odoner, W. Michael Bond, Stuart Goldring and Paul Wessel.  The lawyer that netted the most for the firm in the fee award, about $1.4 million, was partner Ray Schrock, co-chair of the firm’s business finance and restructuring department.

In addition, Drain awarded Akin Gump Strauss Hauer & Feld, counsel to the committee of unsecured creditors, $20.3 million in fees and $1.3 million in expenses, and Paul, Weiss, Rifkind, Wharton & Garrison, conflict counsel for debtors and counsel for the restructuring subcommittee, $14.38 million in fees and about $289,000 in expenses.  Delaware law firm Young Conaway Stargatt & Taylor, conflicts counsel, was awarded $239,471 in fees, while McAndrews, Held & Malloy, IP counsel for Sears, was awarded $628,967.  Wachtell, Lipton, Rosen & Katz, which previously served as special counsel for Sears but withdrew from the case in March, was awarded about $873,185.  Sears is to begin repaying what it owes, according to the order, although fee applications will still be reviewed by an independent, court-ordered fee examiner.

Across the country, PG&E has already paod more than $84 million to four firms in the months leading to its January 2019 bankruptcy, including Cravath, Swaine & Moore; Weil; Jenner & Block; and Keller & Benvenutti.  In the last two months, several law firms have filed fee applications for compensation after PG&E’s Chapter 11 filing in the Northern District of California.

Last month, Weil, representing the debtors, applied for fees to the tune of more than $9 million, in addition to more than $335,000 in expenses; Munger, Tolles & Olson, representing debtors on certain matters, applied for $6.65 million in fees and $99,000 in expenses; and Keller & Benvenutti billed for $1.1 million in fees and more than $32,000 in expenses.

Also in July, Baker & Hostetler, counsel to the committee of tort claimants, asked the court for $7.19 million in fees; Simpson Thacher & Bartlett, counsel to PG&E Corp.’s and Pacific Gas and Electric Co.’s boards, as well as certain current and former independent directors, applied for $1.9 million in fees; and Milbank, counsel to the committee of unsecured creditors, submitted a fee application for $7.28 million.

In August, Jenner, special corporate defense and energy counsel to the debtors and debtors in possession, applied for $3.48 million in legal fees.

Earlier in the summer, a judge approved more than $56 million in fees for Kirkland & Ellis from Toys R Us’ bankruptcy proceedings.  The firm is likely to reap further fees from the representation of luxury retailer Barneys in its own Chapter 11, filed in August.

NALFA Announces The Nation’s Top Attorney Fee Experts of 2019

August 20, 2019

NALFA, a non-profit group, has a network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2019:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA
"Outstanding Skills Assessing Reasonable Attorney Fees in Class Actions"
Stephen J. Herman
Herman Herman & Katz LLC
New Orleans, LA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Fox Rothschild LLP
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins Arroyo LLP
San Diego, CA
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
Los Angeles, CA
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA