The Work

August 25, 2009 7:20 PM

Law Firms Double Down in Station Casinos Bankruptcy

Posted by Brian Baxter

If you're a major law firm with a bankruptcy practice, chances are you have a role in the bankruptcy of Las Vegas-based Station Casinos. The bankrupt casino operator, which filed for Chapter 11 on July 28, has legal bills in excess of $16.2 million.

The Am Law Daily previously reported that Station had retained Milbank, Tweed, Hadley & McCloy financial restructuring cochair Paul Aronzon and bankruptcy partner Thomas Kreller as lead debtors counsel. Bruce Beesley, bankruptcy chair at Lewis and Roca, is serving as local counsel with Brownstein Hyatt Farber Schreck filling in as regulatory counsel for the gaming company.

Recent court filings show that Milbank billed Station for $12.8 million in fees in the 12 months prior to the company's bankruptcy filing. Roughly $4.9 million of that amount was for restructuring advice, $6.8 million for general legal services, and a $1 million retainer was paid to the firm in February for prepetition bankruptcy work. Partners are billing between $740 and 995 per hour, counsel between $700 and $905, and associates at hourly rates ranging from $285 to $685.

While billing information for Lewis and Roca and Brownstein Hyatt was not immediately available, the Las Vegas Sun reports that a few other firms are looking to join the Chapter 11 fray.

At least four firms have been retained by Station's board of directors, which is comprised of the Fertitta brothers of UFC fame, two high-ranking executives of private equity firm Colony Capital, and independent director and local entrepreneur Dr. James Nave. (The Fertitta brothers and Colony Capital took Station private in a $5.4 billion deal in 2007.)

Nave has turned to Skadden, Arps, Slate, Meagher & Flom corporate restructuring partner Van Durrer II and Janet Chubb from Nevada firm Jones Vargas for counsel. Real estate billionaire and Colony Capital CEO Thomas Barrack, Jr., and chief investment officer Jonathan Grunzweig have tapped O'Melveny & Myers. And Station chairman and CEO Frank Fertitta III and vice chair Lorenzo Fertitta have retained Munger, Tolles & Olson.

The Las Vegas Sun reports that Station has already advanced retainers in the amount of $750,000 to Nave's two firms and $1 million to O'Melveny. The company has also reportedly agreed to cover the costs of the Munger lawyers working for the Fertitta brothers.

And that's not all.

Also seeking to get on the bankruptcy bankroll are Squire, Sanders & Dempsey partners Stephen Lerner, Howard Nicols, and David Alexander. The firm has asked the bankruptcy court to approve its retention as counsel to a special litigation committee of Station's board of directors set up in March to investigate possible derivative claims stemming from the 2007 deal that saw the company go private.

Bankruptcy court filings show that Squire was paid a $125,000 retainer for the special litigation work and was also paid more than $1.2 million within the past year for other legal services provided to Station. Partners are billing between $350 and $950 per hour while associates have the hourly meter running at a clip between $190 and $475.

Gibson, Dunn & Crutcher is seeking to be approved as special counsel to a group of Station lenders. Court records show that the firm has been paid a $350,000 retainer and that lawyers are billing between $295 and $895 per hour.

Greenberg Traurig's Brett Axelrod is representing the company's official committee of unsecured creditors.

Station owns and operates 18 casinos and resorts, including ten hotel casinos in the Las Vegas area that cater predominantly to local residents rather than Sin City tourists. Station's operating units were not included in its bankruptcy filing, although the parent company did reach an agreement with senior lenders to allow it to access $150 million from its noncasino subsidiaries. Bondholders hold $2.3 billion of Station's $5.7 billion debt.

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With the exception of the firms that are said to bill within the $195-$350 range, no one is worth the hourly rates cited in the article.

Complicated issues? Probably.
Value for the dollar? No.
C'mon boys, leave something for the creditors.

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