Advisers that led Enron through its complex bankruptcy case have asked a judge to approve more than $780 million in fees.
That figure includes $164 million requested by New York law firm Weil Gotshal & Manges. If the request is approved, it will be more than any law firm has been awarded in a bankruptcy case, according to data compiled by Bloomberg. The largest bankruptcy in the U.S. was filed in 2002 by WorldCom Inc., now reorganized as MCI Inc., which asked a judge to OK $622 million in professional fees.
“With Enron, there were a number of reasons for the fees to run high, including some 20 investigations of the massive fraud,” said Lynn M. LoPucki, a law professor at the University of California at Los Angeles. “It's not as easy for me to understand why MCI was as expensive as it was.”
In the Enron case, U.S. Bankruptcy Judge Arthur Gonzalez will consider more than 50 payment requests by professional firms in November 2005, after all final fee proposals are filed.
“Obviously the fees are significant money, but it's been a very complex case,” Gonzalez said at a Dec. 16 hearing. “We've come a long way.”
The second-highest amount of money, $87 million, is being requested by Atlanta law firm Alston & Bird. Most of the advisers charge a discount of 2 percent to 10 percent, a common bankruptcy practice, according to court papers. For example, Ernst & Young LLP said in court papers that it is seeking almost $37 million, which is about $3 million less than it would usually charge. The firm was hired in December 2001 as accountants to Enron's committee of unsecured creditors.
Enron's creditors will get an average of 20 cents on the dollar once all of its assets are sold. Shareholders, including former Enron employees, will get nothing.