The Work

March 2, 2011 1:44 PM

Kasowitz Benson Reaps Borders's Bankruptcy Cash; More Firms on the Case

Posted by Brian Baxter

The ongoing Chapter 11 case of Borders Group in U.S. bankruptcy court in Manhattan is shaping up to be a boon to nine Am Law 200 firms, who have carved out various pieces of the action in the bankruptcy of the nation's second-largest bookseller.

Borders, which filed for bankruptcy two weeks ago, has turned to Kasowitz, Benson, Torres & Friedman as lead counsel in the Chapter 11 case. A four-page declaration filed on Tuesday by name partner and bankruptcy chair David Friedman reveals that between January 11 and February 11 of this year, Kasowitz Benson received several retainer payments totaling $2 million. The firm is seeking bankruptcy court approval to serve as general counsel to Borders, which saw its longtime general counsel Thomas Carney depart in January.

The document also states that Kasowitz Benson has handled a "discreet litigation matter" for Borders which has resulted in additional separate payments to the firm beyond the initial retainer. The firm received three payments totaling $102,833.50 for its work on that litigation matter. Kasowitz Benson agreed to waive two of the three because they were made within 90 days of the debtor's bankruptcy petition, thereby reducing the firm's prepetition bill against the retainer by $68,613.

Kasowitz Benson also disclosed that a junior paralegal had been employed on the matter from May 2010 to February 2011. The paralegal, who is not named in court records, is related to one of Borders's directors and officers. The individual handled only document management and file maintenance services and performed no work for the debtor. According to Friedman's declaration, the firm no longer employs the individual in question.

Along with Friedman, Kasowitz Benson restructuring partners David Rosner, Jeffrey Gleit, and Andrew Glenn, and special counsel Alan Lungen are leading a team from the firm advising Borders on its reorganization efforts. The firm's declaration states that Glenn is billing between $800 and $825 per hour and Lungen between $610 and $625. A previous filing by the firm states that partners are billing at hourly rates ranging from $550 to $1,000 per hour, while associates and counsel are billing between $250 and $750.

Baker & McKenzie has been retained as special corporate counsel to Borders in the Chapter 11 case. The firm has long served as outside corporate counsel to the Ann Arbor, Mich.-based company. According to court filings, Baker & McKenzie partners are billing between $500 and $1,000 per hour, of counsel between $400 and $700, and associates between $295 and $540.

60-page declaration filed by Baker & McKenzie corporate partner Craig Roeder states that the firm has received $344,831 from Borders in the 90 days prior to the company's bankruptcy filing. The firm also holds a retainer of $175,878 from the debtor and has unpaid invoices totaling $106,159.95 from its client.

Kelley Drye & Warren bankruptcy chair James Carr, restructuring partner Robert LeHane, and special counsel Benjamin Feder are representing certain landlords that lease space to Borders. Fried, Frank, Harris, Shriver & Jacobson senior partner and bankruptcy chair Brad Scheler is advising General Growth Properties, the nation's second-largest mall operator, in the Borders bankruptcy.

Morgan, Lewis & Bockius bankruptcy partner Wendy Walker and business and finance partner Sandra Vrejan are advising GE Capital, which is providing $505 million in debtor-in-possession financing to Borders. GA Capital, another Borders lender, has turned to Kevin Simard and Donald Rothman of Boston's Riemer & Braunstein. Bingham McCutchen financial restructuring partners Julia Frost-Davies and Andrew Gallo are advising Bank of America, agent to other Borders's lenders.

Last week Lowenstein Sandler was retained as counsel to the newly formed official committee of unsecured Borders creditors. Bankruptcy partners Bruce Buechler and Bruce Nathan are leading a Lowenstein team that includes partner Paul Kizel and Kenneth Rosen, chair of the firm's financial reorganization and creditors' rights practice. In January, Lowenstein secured the role of conflicts counsel to the unsecured creditors committee in the A&P bankruptcy case.

Skadden, Arps, Slate, Meagher & Flom corporate restructuring partners Van Durrer II, John Lyons, and Gregg Galardi are advising Gordon Brothers Group, a Boston-based restructuring firm working with a joint venture managing the liquidation of the inventory and store fixtures of 200 Borders book stores in 35 states and Puerto Rico. Gordon Brothers is part of a joint venture with Hilco Merchant Resources, SB Capital Group, and Tiger Capital Group. Weil, Gotshal & Manges business finance and restructuring partner Shai Waisman is representing the joint venture.



Latest Chapter: Kasowitz on Hand as Borders Begins Chapter 11
The Am Law Daily, 2/16/11

Book It: Kasowitz Takes Lead on Borders Restructuring
The Am Law Daily, 1/28/11

Borders GC Resigns, as Four Am Law 100 Firms Surround Ailing Bookseller
The Am Law Daily, 1/5/11

Borders General Counsel Thomas Carney Resigns
Corporate Counsel, 1/5/11


Contact Brian Baxter at [email protected]


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