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Billing rates at big corporate law firms have reached a new mark: $1,500 per hour, despite low inflation and weak demand. The Wall Street Journal has the Daily Bankruptcy Review article here, but don’t forget to check out a supplementary piece on bankruptcy providing a window into billing practices.
Reuters/Beawiharta
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) New York supermarket chain Fairway Group Holdings Corp. says it may breach its loan agreement, DBR reports via WSJ.

Read More from: WSJ.com: Bankruptcy Beat

1 day 15 hours ago
By Donald L. Swanson Mediation should be standard procedure in Chapter 11 plan confirmation processes. Many of us have been arguing this point for years!  Caesars Entertainment now agrees and is placing its bet accordingly. Caesars Entertainment files for Chapter 11 relief in the Northern District of Illinois on January 15, 2015 (Case No.15-01145).  On February 3, 2016, Caesars files its Motion to appoint a mediator in the case (Doc. 3195)—see reports in Reuters, Wall Street Journal, and Las Vegas Review. The Motion requests a mediator “to mediate issues related to a chapter 11 plan of reorganization.”  In support, Caesars Entertainment says: “a neutral, third-party mediator can assist the Debtors and their key constituents in working through plan issues,” and “any mediation should process in parallel” with plan confirmation proceedings. The Motion claims that mediation “has been the successful path in other large chapter 11 cases.”  The Motion cites the following four examples of a successful mediation path to plan confirmation.

Read More from: Mediatbankry

1 day 20 hours ago
In the recent decision of Village Green I, GP v. Fed. Nat’l Mortgage Ass’n (In re Village Green I, GP), 2016 WL 325163 (6th Cir. Jan. 27, 2016), the U.S. Court of Appeals for the Sixth Circuit held that the contrived nature of the impairment will cause the plan to fail Section 1129(a)(3)’s good faith requirement. The debtor’s proposed plan at issue crammed down secured debt by paying it over ten years, and impaired unsecured claims by paying them over sixty days.  After the district court vacated and remanded twice, the case was appealed to the Sixth Circuit, which affirmed the ruling of the district court. On the issue of impairment, the Sixth Circuit found that:
[T]he plan undisputedly would alter the minor claimants’ rights, because these claimants are legally entitled to payment immediately rather than in two installments over 60 days.  That this impairment seems contrived to create a class to vote in favor of the plan is immaterial.  Section 1124(1) by its terms asks only whether a plan would alter a claimant’s interests, not whether the debtor had bad motives in seeking to alter them.
2 days 50 min ago
Upcoming Committee Formation Meeting:   Friday, February 12, 2016, 10:00 a.m. Case Name:  SFX Entertainment, Inc., et al. Case Number:  16-10238 (MFW) Location:  The DoubleTree Hotel, 700 King St., Wilmington, DE 19801 Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. Additional information and documents are available from Kurtzman Carson Consultants LLC. Contact Norman L. Pernick, Nicholas J. Brannick, or David W. Giattino for more information.
2 days 7 hours ago
Zuma Press
Companies seeking the fresh start of bankruptcy aren’t the only ones that have to contend with the transparency that is at the heart of chapter 11. It also applies to the lawyers and other professionals who work on the cases. To report on rising legal fees at the nation’s top law firms, The Wall Street Journal reviewed dozens of bankruptcy filings disclosing the ranges of firms’ hourly billing rates as well as the individual rates of partners in a variety of practices. “Bankruptcy court is one of the few places where this stuff becomes public,” said legal consultant Ward Bower of Altman Weil. The filings, made in some of the largest chapter 11 cases filed last year, show that some law firms have increased their maximum partner rates to approach $1,500 per hour. Many senior partners routinely billed between $1,200 and $1,400 an hour last year. The filings, made in some of the largest chapter 11 cases filed last year, show that many senior partners billed between $1,200 and $1,300 per hour, with some approaching $1,400. Some firms have recently increased their maximum partner rates to approach $1,500 per hour, while a few star lawyers can command close to $2,000 per hour.

Read More from: WSJ.com: Bankruptcy Beat

2 days 7 hours ago
Problems Getting Paid In The Past Over the past 20 years, I have been searching for the reason or reasons why bankruptcy judges make it so difficult for bankruptcy attorneys to get paid in Chapter 13 consumer bankruptcy cases. This goes all the way back to the early 1990’s when some judges would simply not+ Read More The post Some Judges Making It Difficult For Bankruptcy Attorneys To Get Their Fees Ordered appeared first on David M. Siegel.
2 days 8 hours ago
Last June we covered the U.S. Supreme Court’s decision in Baker Botts LLP v. ASARCO, which held that the estate may not compensate professionals under section 330(a)(1) of the Bankruptcy Code for fees incurred in defending fee applications.  At the time, we suggested as a potential work-around that estate professionals could seek contractual language in their engagement letters and retention orders providing that the estate would compensate the professionals for any fees associated with defending fee applications.  A recent ruling by Judge Walrath of the United States Bankruptcy Court for the District of Delaware in In re Boomerang Tube, Inc., however, calls into question that proposed solution.  Background:
2 days 9 hours ago
In re Boomerang Tube, Inc.,Case No. 15-11247 (MFW), 2016 WL 385933 (Bankr. D. Del. Jan. 29, 2016) In this case, the Delaware Bankruptcy Court addressed a question remaining in the wake of the Supreme Court’s ASARCO opinion:  Although fees incurred by debtors’ attorneys in defending challenges to their fees are generally not permitted under section 330 of the Bankruptcy Code, may such fees be approved if they are provided in the attorneys’ retention application under section 328(a)?  See Baker Botts LLP v. ASARCO LLC, 135 S.Ct. 2158 (2015).  In a succinct Opinion, Judge Mary F. Walrath ruled that they may not.  After ASARCO, Her Honor held no “contract exception” remains for fee defense provisions under section 328 even if such provisions would have previously been permitted under Third Circuit precedent. Read More › Tags: Employment, Retention & Compensation

Read More from: Delaware Bankruptcy Insider

2 days 11 hours ago
Given the volatility in the world over the past several years, I am seeing more security clearance cases as they relate to foreign influence and foreign preference. The United States government can express a concern regarding an individual’s access to classified material in the form of a secret or top-secret security clearance if it has concerns regarding the individual having divided loyalties or foreign financial interests. Specifically, the government’s concern is that an individual with divided loyalties or foreign financial interests may be manipulated or induced to help a foreign person, group, organization or government in a way that is not in US interest or is vulnerable to pressure or coercion by any foreign interest. Conditions That Raise Foreign Influence Security Concerns The conditions stated by the government that may raise a security concern regarding foreign influence and may be disqualifying as far as allowing an individual to obtain or retain a security clearance include:
  1. contact with a foreign family member, business or professional associate, friend or other person who is a citizen or resident in a foreign country if that contact creates a heightened risk of foreign exploitation, inducement, manipulation, pressure or coercion;

Read More from: Bonds & Botes, P.C.

2 days 11 hours ago
Is your legacy to your kids an encounter with your unpaid creditors? Debt problems for those over 65 may not be problems for the elder at all.  Income and assets are largely protected by law from creditors. But that doesn’t trouble creditors:  they’ll simply wait and get their money from your kids. Seniors enjoy protection from collection Elders have a raft of legal protections from creditors.  Exemption laws, pension law, and the Social Security Act often make it hard for creditors to seize the assets of elders, even to pay legitimate debts. Looking at seniors with debts they can’t easily pay, Jay Fleischman and Gene Melchione  explored the question of whether it made any sense for seniors to file bankruptcy in a recent Consumer Ledger podcast. The argument against bankruptcy for the elderly relied on the relative legal impunity of seniors to debt collectors.
2 days 13 hours ago
On June 15, 2015, the U.S. Supreme Court issued its opinion in the case of Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158 (2015), denying compensation to two law firms for the fees they incurred in defending objections to their fee applications.  Subsequent to confirmation of ASARCO’s plan of reorganization, the law firms of Baker Botts L.L.P. and Jordan, Hyden, Womble, Culbreth & Holczer, P.C. filed fee applications under section 330(a)(1) of the Bankruptcy Code.  Id. at 2163; 11 U.S.C. §§ 101-1532.  ASARCO, then controlled by a company the two law firms successfully sued during the course of the bankruptcy cases, objected.  135 S. Ct. at 2163.  The bankruptcy court overruled ASARCO’s objection and awarded the law firms, among other sums, approximately $5 million for time spent litigating in defense of their fee applications.  Id.   The Fifth Circuit reversed, holding that section 330(a)(1) does not authorize fees for defending fee applications, and the Supreme Court affirmed.  Id.
2 days 14 hours ago
The election of a Republican president could be the first prerequisite to repealing the financial reform law, but banks still need to argue their case for why repeal is necessary.

Read More from: BankThink

2 days 14 hours ago
Receiving Wide Coverage ... CEO Slashes Bonus: Credit Suisse chief executive Tidjane Thiam has asked his company's board to cut his bonus. His request comes just days after the bank reported a loss of roughly $5.88 billion in the fourth quarter, which led to a 12% drop in price in the company's stock on the Zurich exchange Thursday. The larger-than-expected quarterly loss resulted from a write-down following a reassessment of the value of Credit Suisse's investment...

Read More from: BankThink

2 days 14 hours ago
Tennessee-based Noranda Aluminum Inc. filed for chapter 11 bankruptcy Monday to sell a business segment. The Wall Street Journal has the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) Retailer American Apparel Inc. has emerged from bankruptcy, WSJ reports. DBR reports via WSJ on private-equity chief Lynn Tilton stepping down from her $2.5 billion funds. Read Bankruptcy Beat’s report on the nearly 13% rise of corporate chapter 11 filings last month.

Read More from: WSJ.com: Bankruptcy Beat

2 days 15 hours ago
An unsettled, and even unsettling, question for bankruptcy lawyers and debtors alike is whether client worksheets can be examined by the other side in a contested bankruptcy court hearing.  Does the attorney-client privilege protect such documents from being seen by hostile creditor attorneys? A bankruptcy lawyer will often provide a client worksheet at a first consultation with a new bankruptcy client.  The worksheet will typically ask the client to write down information about assets, how much these are worth, past property transfers, income history, and household living expenses.  The lawyer reviews this worksheet with the debtor and uses that information to fill out the bankruptcy documents. Next, the debtor signs these documents under oath in the lawyer’s office.  The lawyer then files the bankruptcy documents in court, where they are available to be seen as public court filings. The problem arises when a creditor or trustee claims that the debtor has been untruthful in the documents, by under-valuing an asset, concealing property or something similar.  The creditor might ask the judge to order disclosure of the client worksheet to see if there are inconsistencies between the worksheet and the public bankruptcy documents.

Read More from: Bankruptcy Law Network

4 days 2 hours ago
People wait to enter U.S. Bankruptcy Court in New York Feb. 2, 2010.
Brendan McDermid/Reuters
The number of U.S. corporate bankruptcy filings increased nearly 13% in January, while bankruptcy filings overall declined. There were a total of 2,802 businesses that filed for bankruptcy in January, almost a 13% uptick from the 2,481 in January 2015, according to data from claims agent Epiq Systems Inc. Meanwhile, total U.S. bankruptcy filings fell 11% in the past year to 52,522. Restructuring lawyers and advisers primarily pointed to the oil and gas and commodities sectors for the uptick, which is expected to continue throughout 2016. “We see the increase in corporate filings to be principally attributable to the impact of sustained reductions in the price of oil and other commodities, and pressures on retail sales,” said Michael A. Rosenthal, co-chair of Gibson, Dunn & Crutcher’s restructuring practice.

Read More from: WSJ.com: Bankruptcy Beat

5 days 7 hours ago
A seminar promoter owed nearly $24 million for arranging speaking gigs for Robert Kiyosaki, the best-selling author of “Rich Dad Poor Dad,” is fighting for access to a secret lawsuit. Lawyers for Learning Annex LLC, which has accused Mr. Kiyosaki of moving “tens of millions of dollars plus other lucrative assets” among his companies to avoid making royalty payments, are now arguing to unseal an August 2014 lawsuit that appears to cover similar ground. The request comes during Learning Annex’s long-running fight to collect from Rich Global LLC, the entity that licenses the “Rich Dad Education” brand and the Rich Dad logo. Court papers show that Rich Global took in more than $45 million in royalties from the Rich Dad seminar business from March 31, 2007, to April 31, 2010. But after Learning Annex accused Rich Global of withholding royalty payments under their agreement, Rich Global filed for bankruptcy protection—saying it only had $1.8 million worth of assets. The bankruptcy filing put Wyoming lawyer Tracy Zubrod in charge of looking for ways that Rich Global can pay off its debts, including the royalties owed to Learning Annex. In August 2014, she sued Mr. Kiyosaki and several of his companies—litigation that has unfolded under seal.

Read More from: WSJ.com: Bankruptcy Beat

5 days 7 hours ago
The bankruptcy process is often long and arduous for clients, whether debtor or creditor, and their counsel.  Bankruptcy courts feel the pain, too.  So, when we finally reach the glorious goal of plan confirmation, most revel in the conclusion of the plan process.  Though often considered anathema, appeals of plan confirmation orders are sometimes pursued.  Recognizing the public policy desire for finality in bankruptcy proceedings, the Eighth Circuit applies the “person-aggrieved” doctrine in determining whether an appellant has standing to appeal a plan confirmation order.  Recently, the Eighth Circuit had the opportunity to review whether a debtor – the proponent of the plan and the champion of its confirmation – can be a person aggrieved with standing to appeal its own plan.  In re: O&S Trucking, Inc., No. 15-2048 (8th Cir. Jan. 22, 2016)Background
5 days 7 hours ago
On February 3, 2016, EmKey Companies, LLC and its affiliates (collectively, “EmKey” the “Debtors”) filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division.  According to the declaration of the EmKey’s President, Worth Snyder, (the “Snyder Declaration”), the Debtors operations have been focused on the acquisition, production, exploration, and development of midstream assets and upstream oil and natural gas properties primarily within New Mexico, New York and Wyoming. The Debtors primary assets are working interests (operated and non-operated) in approximately 117 “oil and gas production sites” encompassing over 25,000 gross acres. See Synder Declaration at 6-7. The Emkey’s liabilities total approximately $14.6 million dollars in unpaid principal plus accrued interest and other fees and expenses, pursuant to a Credit Agreement with Texas Capital Bank, N.A. as Administrative Agent, secured by liens on substantially all of the Debtors assets. See Synder Declaration at 14-15 The Debtors’ bankruptcy cases are being jointly administered in the bankruptcy case captioned In re Emkey Companies, LLC, et al., Case No. 16-30548. A copy of the Synder Declaration can be accessed here: Download Snyder Declaration
5 days 8 hours ago
Orrick partner and co-head of Europe Restructuring Stephen Phillips recently joined a Debtwire panel on potential high yield restructurings in Europe and current volatile market conditions at the 12th European Distressed Debt Market Outlook. Several videos from the launch are now available on Debtwire’s site. For more information, please contact Stephen.  
5 days 8 hours ago

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