A recent American Lawyer story, “Sullivan & Cromwell Faces Fee Challenge in Primorsk Bankruptcy,” reports that when Sullivan & Cromwell took on a rare debtor's counsel role earlier this year for Arctic tanker company Primorsk International Shipping Ltd., the white-shoe law firm adjusted its normal billing structure to charge hourly rates during the Manhattan bankruptcy case.

Now the firm is facing scrutiny over roughly $2 million that it's requested in fees, as Primorsk's senior lenders have questioned whether the price tag lines up with the firm's work over the first few months of the case.  The dustup over the legal fees came to light in a pair of filings this week in Manhattan federal bankruptcy court.

Since lodging its Chapter 11 petition in January, Primorsk has faced resistance from a group of senior lenders owed about $263 million.  Those senior lenders, including Nordea Bank Norge ASA, opposed Primorsk's original plan to restructure its debt and emerge from bankruptcy, alleging that the plan would unfairly benefit Primorsk insiders and the company's affiliates.  In late March, the Arctic tanker company abandoned its restructuring plan in favor of a proposal to sell off its assets.

Nordea objected to part of Sullivan & Cromwell's first fee application in the case.  A White & Case team, led by the firm's global litigation chairman, Glenn Kurtz, and insolvency partner Scott Greissman, represents the bank, which is a Norwegian unit of the Stockholm-based Nordea AB.

Although Sullivan & Cromwell's first fee application covered the period from Jan. 15 to April 30—and seeks nearly $2.8 million in fees—Nordea's objection only challenges the roughly $2 million in fees that Sullivan & Cromwell requested for its work prior to March 25.  Sullivan & Cromwell had collected a little more than $528,064 from Primorsk before the company filed for Chapter 11.

According to the objection, March 25 is a pivotal date because Sullivan & Cromwell notified the court on that day that it was withdrawing Primorsk's initial plan to restructure the company's debt.  Since then, Primorsk has instead pursued a plan to auction off its assets, which include a fleet of nine double-hulled oil tankers that can navigate extreme conditions in the Arctic.

Lawyers for Nordea argued in filing that Primorsk's bankruptcy case has been marked by "undeniably troubling" facts.  The White & Case lawyers wrote that the court should wait until the planned asset sale takes place in July before deciding whether Sullivan & Cromwell's fees and expenses through March 25 "provided any value."

Sullivan & Cromwell, led by partners Andrew Dietderich and Brian Glueckstein, shot back with a defense of their fee request, writing that the work they've done for Primorsk throughout the bankruptcy has, in fact, been valuable.  The lawyers argued that the Chapter 11 process served as the only way to help Primorsk return to running a profitable tanker chartering business.

"Value is evident from the record.  Prior to the Chapter 11 filing, Primorsk's situation was grave.  The company had minimal cash," the Sullivan & Cromwell team wrote in Tuesday’s filing.  "Today, after the Chapter 11 filing and the legal work performed during the period covered by the [fee] application, the situation is completely different."

U.S. Bankruptcy Judge Martin Glenn is scheduled to consider the fee request and Nordea's objection at a hearing on Thursday.