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.