The U.S. car industry bailout process was a troubled one but at least ended well as both General Motors and Chrysler are in much better shape than two years ago. In fact, GM has even regained its number one spot in world sales. All is well that ends well, then.
However, the matter of fees and expenses for the lawyers and consultants that were owed by the “Old”, i.e. bankrupt, GM, remained. These professionals worked for the company during the bailout, and then requested their fees.
The U.S. Trustee, however, objected to about $3 million, noting that some of them had raised their hourly charging rates by more than 20%. Considering the whole process dragged on for two years, the money piled up quickly: overall, the 25 firms that were involved charged a total amount of $123 million.
Some might consider that small change compared to the $15 billion cost of the bailout, but the U.S. Trustee fee examiner said that some of the increases were “unjustified” and “not reasonable”. Especially since at the time most U.S. lawyers were getting small, or no, fee increases.
For example, bankruptcy law firm Weil Gotshal & Manges LLP Associates charged $335-$694 an hour (!) and 10 of its lawyers, along with two of another firm, charged an additional $1.6 million due to their increased charging.
Weil’s 400 lawyers charged a total of $45.3 million for 70,000 hours of legal work. That’s without counting the $54 million it received in preparation for the bankruptcy filing.
U.S. bankruptcy federal judge Robert Gerber approved $46 million for Weil but added that the company might be asked at a later date to return $2.5 million that he awarded to the firm, but are still in dispute.
While the fee examiner approved most expenses, he did find some discrepancies, like a lawyer charging for a “26-hour-working day”…
Story References: Detnews
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