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November 22, 2010

Lehman Bankruptcy Fees Top $1 Billion

Wall Street Journal:

Lawyers and other professionals presiding over the bankruptcy proceedings of
Lehman Brothers Holdings Inc. have taken in a collective $1 billion in fees.

They crossed the threshold in October, according to a monthly securities
filing. Since the bankruptcy filing in September 2008, fees paid for
professional services total $1.023 billion. The law firms, consultants and
other advisers took in $40.6 million in fees in October alone.

Lehman's collapse unleashed a contraction in the credit markets, leading to
a $700 billion government bailout of the financial system. Lehman was a
major derivatives counterparty, and the unwinding of those contracts is what
is costing so much money, said Lynn LoPucki, a law professor at University
of California Los Angeles. "This is clearly the most expensive bankruptcy
case in history," he said.

Law firm Weil Gotshal & Manges, the lead bankruptcy counsel, had $8.8
million in fees and expenses in October and a total of $245.8 million in the

Alvarez & Marsal, the restructuring firm overseeing the unwinding of
Lehman's operations and the unraveling of its derivatives contracts, had
$13.4 million in fees and expenses for the month and a total of $369.8
million since the start of the case—the most of any adviser.

Lehman's chief executive officer, Bryan Marsal of the Alvarez & Marsal firm,
noted progress, including increased estimates of recoveries for creditors, a
reduction in the amount of claims, and an anticipated workforce reduction in
the next year.

A court recently ordered Bank of America Corp. to return $500 million it had
seized from Lehman shortly after its bankruptcy filing. Closing briefs in a
separate $11 billion lawsuit against Barclays PLC are due to be filed

"The strategy of managing and maximizing the value of assets rather than
liquidating quickly at fire-sale values—and of pursuing litigation when we
believe the potential value warrants it—will yield far greater returns for
the creditors," Mr. Marsal said in an emailed statement.

Milbank Tweed Hadley & McCloy, the creditors' lead counsel, had $4.4 million
in fees and expenses in October and $75.6 million overall.

FTI Consulting Inc., a financial adviser to the creditors, had $2.5 million
in fees and expenses in October and $42.6 million overall.

November 22, 2010 in Current Affairs | Permalink


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1 billion?? only?? poor...

Posted by: nikos | Jan 9, 2011 1:17:00 PM

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