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March 22, 2012 3:06 PM

Greece Discloses Fees Paid to Cleary During Sovereign Debt Crisis

Posted by Brian Baxter

Athens_Acropolis

The Greek government has paid Cleary Gottlieb Steen & Hamilton more than $8.5 million so far for legal counsel related to the $173 billion economic rescue package bestowed on the Hellenic Republic last month.

Also receiving nearly $33 million in fees: investment bank Lazard, which served as financial adviser to the Greek state on the deal. Former Cleary managing partner Mark Walker, who joined Lazard's sovereign advisory group last year, was part of the team advising the Greek government.

The Greek finance ministry made the fee disclosures, which were first reported by Bloomberg and Reuters, in order to refute a local news report that the country had paid nearly $100 million to its outside advisers in connection with efforts to avoid defaulting on its debt obligations.

The agreement was finalized earlier this month when more than 90 percent of the country's bondholders and other investors agreed to participate in the bailout, which slashed Greece's public debt by more than $130 billion, making it the largest debt write-down in recorded history. This week, the payout on Greek credit default swaps was also set, according to The New York Times.

The Am Law Daily has previously reported on the sovereign debt expertise of Cleary corporate and international finance partner Lee Buchheit, whose team of roughly 20 lawyers was hired by Greece last August amid the country's push to stave off a disorganized default.

Buchheit, who spoke to The Am Law Daily last year about Greece's sovereign debt woes before the country sought his counsel, was not alone in advising Greece on its arduous path toward solvency after swapping bonds worth $232.5 billion with private sector creditors.

Duke Law School professor G. Mitu Gulati, who once worked under Buchheit as a Cleary associate, also advised Greece on the debt exchange. Buchheit, who serves as a senior lecturing fellow at Duke, and Gulati were mentioned in a Times story earlier this month that explored whether the Greek model might be applied to other European nations struggling with their own debt loads. (Buchheit and Gulati coauthored a paper in May 2010 laying out how they would solve Greeceā€™s debt woes; The Times has more today on Greece's sovereign debt lessons.)

The American Lawyer examined Buchheit's front row seat to the Greek financial disaster in December, although the engagement wasn't the first time the Cleary partner dove into a dicey debt matter abroad. For example, Buchheit advised the government of Iceland after the country's economy collapsed three years ago.

Cleary also brought in nearly $20 million in fees and other disbursements for its Buchheit-led work through late 2009 helping the Iraqi government reduce the $120 billion in debt accrued under Saddam Hussein, according to sibling publication The National Law Journal. Cleary's work for Iraq's ministry of finance continues, according to a filing by the firm in January made under the Federal Foreign Agents Registration Act.

As for Greece, last month the government's public debt management agency named Deutsche Bank and HSBC as closing agents for the country's bond swap with creditors. Those closing agents, whom the finance ministry did not name on Wednesday, were paid roughly $5.3 million.

Private sector creditors, whose outside legal fees have not yet been disclosed, retained Allen & Overy and White & Case to advocate for their interests through a steering committee called the Private Creditor-Investor Committee for Greece. Nikos Salakas, a partner at the Athens-based Koutalidis Law Firm, served as local counsel to creditors negotiating with the Greek government.

Other firms, including Bingham McCutchen and Brown Rudnick, have been busy advising potential holdouts, many of them hedge funds, that could pursue litigation in European and Greek courts instead of accepting the bailout package.

The resolution of the Greek credit crisis notwithstanding, there has been one immediate casualty of the sovereign debt debacle. Alpha Bank has pulled out of a proposed merger with Greek rival Eurobank, a transaction that would have created the largest bank in southeastern Europe.

Reuters reported earlier this month that the bond exchange decimated Eurobank's portfolios, leading Alpha Bank to scuttle the deal in order to avoid similar losses. Skadden, Arps, Slate, Meagher & Flom and Linklaters were advising both Athens-based banks on the ill-fated transaction, according to our previous reports.

Photo: The Acropolis of Athens, Wikimedia Commons

 

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