October 26, 2011 6:40 PM
Howrey Professional Fees Reach $3 Million as Trustee Steps In
Posted by Sara Randazzo
With the bankrupt Howrey estate now in the hands of a trustee, professional service firms lined up for the last time this week to request payments for work done since the law firm's Chapter 11 bankruptcy began in June.
The total bill for work done by three law firms and two financial advisers working on the case from June 6 through October 13 was $2,949,774 according to Tuesday's filing. The largest bill was filed by financial adviser Protiviti, which requested $1.15 million. Wiley Rein, Howrey's primary bankruptcy counsel, had the second largest bill at $1.03 million. The firms have filed previous monthly statements (covered by The Am Law Daily here and here) and have been paid for some of those services, but the fee requests filed Tuesday recapped the entire period and seek the outstanding portion.
Howrey was initially pushed into involuntary Chapter 7 bankruptcy in April, weeks after the partnership voted to dissolve the firm; the bankruptcy was converted to a voluntary Chapter 11 proceeding in June. In September, Citibank, Howrey's largest creditor, asked U.S. bankruptcy judge Dennis Montali to return Howrey to Chapter 7 bankruptcy or appoint a trustee. He agreed to do the latter in late September.
From this point on, Howrey's bankruptcy will be managed by Allan Diamond, a Texas attorney with Diamond McCarthy who Montali appointed as trustee on October 12. Diamond is overseesing all litigation related to Dreier LLP, which filed for bankruptcy in December 2008 after firm founder Marc Dreier was convicted in connection with a massive investment fraud; Dreier is now serving 20 years in prison. Diamond could not be reached for comment Wednesday.
The latest round of bills submitted by Howrey's lawyers includes those of Richard Burdge, a former Howrey partner who now has his own practice in Los Angeles. In June, Burge began to help collect outstanding debts from former clients. Burdge's bills, the first he has submitted since the court retroactively approved his hiring earlier this month, shine some light on the nature of the work he's doing, including efforts to recoup money from Girls Gone Wild founder Joe Francis, Khayat Enterprises, Credit Solutions, and a handful of others. Burdge's work cost the Howrey estate $22,562 in fees, but it is unclear from court filings how much money, if any, he has recovered so far. Burdge did not respond to a request for comment.
Wiley Rein, until now Howrey's primary bankruptcy counsel, detailed its expenses for several projects including the disposition of the firm's assets and furniture in Washington, D.C., and Irvine, California; the handling of a dispute with health insurance provider CIGNA over unpaid claims; the development of a cash collateral budget with Citibank; attendance at various hearings and meetings; the drawing up of a liquidation plan; and its efforts to resolve a dispute with the landlord of the firm's former headquarters in Washington, D.C. Wiley's fees also included slightly more than $19,000 for preparation of the fee applications themselves--those submitted by Wiley and others.
Silicon Valley bankruptcy firm Murray & Murray, whose lawyers have served as local counsel in the matter, billed a total of $119,235 in fees and expenses. Accounting firm Salter & Company billed $632,560.
Advisers to the official committee of unsecured creditors had not filed their final fee requests as of Wednesday afternoon. Until recently, Sacramento bankruptcy firm Felderstein Fitzgerald Willoughby & Pascuzzi, led by partner Thomas Willoughby, served as counsel to the committee. The firm previously listed in court documents fees and expenses of at least $135,700 for its work on the case. The firm's role is now served by Baltimore-based Whiteford Taylor Preston. Bradford Englander, a partner at Whiteford Taylor, also interviewed for the trustee position taken by Diamond, sibling publication The Recorder reports.
A hearing to approve the final fee requests is scheduled for November 15 in front of Montali in San Francisco.
The work of the Howrey estate advisers is probably finished at this point, says H. Jason Gold, a Wiley Rein partner in Washington, D.C., and chair of the firm's bankruptcy and financial restructuring practice who has led the firm's work for Howrey. Traditionally, trustees hire a firm of their own choosing to assist in wind-down efforts, Gold says, though he does note rule out Wiley playing a role in the future.
The court papers detail work still to be done for the estate, including the recovery of accounts receivable, the ongoing pursuit of Howrey's interests in contingency fee cases, transferring unresolved litigation to successor firms, selling artwork and antiques, disposing of client files, and winding down information technology systems and European operations. According to the filings, the estate has just $3 million in cash excluding accounts in Europe and in a CIGNA fund earmarked to pay out health care insurance claims.Make a comment