GM Advisors Benchslapped on Fees

Bankruptcy fees have been escalating for years, and we’ve documented examples of how high they can be on the legal side. With $950/hr requests getting almost routinely rubber stamped, how bad does it have to be for a Trustee to say it’s gotten “staggering” and “excessive”?

It’s not even the ungodly number of lawyers working on the case. At least not yet.

This time, it’s the workout advisors. AlixPartners and Evercore have been working for GM, but US Trustee Diana Adams was shocked by their bill.

The advisors rang up a total combined pre-petition bill of $85 million, and now are seeking

Evercore

• $400,000 in monthly fees
• $2 million related to the proposed restructuring of Delphi, the onetime G.M. supplier
• $30 million in sales fees
• $2.5 million for a structuring fee related to the debtor-in-possession loan provided by the federal government
• $17.9 million as a success fee

AlixPartners

• What the trustee describes as an unknown amount in hourly fees, but potentially averaging$16 million a month. Albert A. Koch, G.M.’s chief restructuring officer and a senior AlixPartners executive, will bill at $835 an hour, and other staff members could bill more than $1,000 an hour
• $131,250 related to the Global Genesis Cost Management Project
• $13 million as a success fee
• An unknown “discretionary fee”

At least she asked, and answered for herself, the question everyone’s been wondering. WTF exactly did they do???

This was not the circumstance where the financial advisor was left to search for a buyer and through its own unique and extraordinary efforts identified a white knight to save the company and the jobs of the debtors’ employees. On the contrary, Evercore had no success at finding a purchaser or funder for the debtors.

The Assistant US Trustee on the matter is Tracy Hope Davis, a McDermott Will & Emery alum. We know Adams is also a BigLaw vet but haven’t tracked down which firm yet.

It may only be a matter of time before Adams gets around to the legal bills, though. She recently objected to General Growth’s request to have Kirkland & Ellis serve as conflicts counsel beside Weil Gotshal, saying the firms’ work would be duplicative and lead to excess fees for the REIT’s estate. She also didn’t look kindly on an alleged conflict at Dechert, objecting to that firm’s retention by Crunch Gyms.

Related posts:

1. Lehman Fees Crack Half-Billion Mark
2. Deals Busted, Advisors Still Getting Paid
3. Madoff Bankruptcy Fees
4. Weil Finally Getting Paid
5. Plaintiffs Firm Benchslapped