The Work

August 3, 2011 6:59 PM

The Bankruptcy Files: Lehman, Hooters, School Buses, and Tankers

Posted by Brian Baxter

UPDATE: 8/4/11, 11:30 a.m. EDT. Information on the Chapter 11 filing of 785 partners has been added to the tenth and eleventh paragraphs of this story.

Weil, Gotshal & Manges continues to make it rain in the largest bankruptcy case in U.S. history. The firm has served as lead counsel to Lehman Brothers since the start of its bankruptcy case in September 2008, a role that has translated into more than $300 million in fees and expenses for Weil.

According to Lehman's monthly operating report for June, the bankrupt investment bank spent another $27.5 million on professional fees last month, bringing the total spent on outside advisers by the debtor to $1.35 billion.

Weil once again took the largest share of those fees, billing $9.1 million in June, which pushed its total take on the so-far 35-month-long matter to $318.9. Jones Day was paid $1.6 million in June for its role as Lehman's special counsel for Asia and domestic litigation, increasing its total Chapter 11 tab to almost $54.2 million.

Weil, meanwhile, recently earned praise from an unlikely source for its handling of the Chapter 11 filing by General Motors, which went public last November, a year and a half after exiting bankruptcy.

UCLA School of Law professor Lynn LoPucki, a well-known critic of the legal fees racked up by firms handling big bankruptcies, determined that Weil's $45 million in fees from the GM bankruptcy--Weil billed the company for $54 million prior to the Chapter 11 filing--were well below the estimated $230 million he had predicted Weil would reap from the bankruptcy. (The Wall Street Journal has more on LoPucki's findings.)

Below are some of the latest corporate bankruptcies and their lawyers of note to cross our desk:

Hooters Casino Hotel

Not even a Hail Mary could save Hooters Casino Hotel, which opened five years ago in Las Vegas during Super Bowl weekend. The 696-room hotel and casino filed for Chapter 11 protection Monday in Las Vegas. Hooters of America bought the casino in 2004 for $74.6 million and reopened it in February 2006 under the Hooters brand name.

But after failing to reach an agreement with creditors on a prenegotiated reorganization plan, the casino’s operating company, 155 East Tropicana LLC, filed for Chapter 11 to block the threat of foreclosure. Hooters Casino Hotel listed assets of between $10 million and $50 million against liabilities of between $100 million and $500 million.

Brigid Higgins, a partner at Nevada firm Gordon Silver, is serving as lead Chapter 11 counsel to Hooters. The firm has not yet filed billing statements with the bankruptcy court. Hooters's nationwide chain for 450 restaurants is unaffected by its casino and hotel unit's bankruptcy case.

785 Partners LLC

The owner of a 42-story glass tower in Manhattan filed for bankruptcy in New York on Wednesday, listing debts and assets of between $100 million and $200 million. Bloomberg reports that 785 Partners owns the building developed by Esplanade Capital that contains 122 condominium units and is located at 785 Eighth Avenue.

Andrew Glenn, a partner at Kasowitz, Benson, Torres & Friedman in New York, is serving as lead Chapter 11 counsel to 785 Partners. The firm has not yet filed billing statements with the bankruptcy court. Last fall the owner of the Lipstick Building, another prominent Manhattan property, filed for bankruptcy as a result of the broader downturn in commercial real estate. The owner of Kasowitz Benson's current New York office at 1633 Broadway completed a recapitalization of its stake in the property this week.

USA United Fleet

Family-owned USA United Fleet, based in this Am Law Daily writer's hometown of Staten Island, N.Y., entered Chapter 11 proceedings in Brooklyn last month after as a result of a dispute with 1,200 unionized workers.

USA United is one of the nation's largest school bus companies, operating a fleet of 400 yellow buses working for New York City's public school system. But labor woes and other financial hardships drove it into insolvency, according to The Wall Street Journal. In late July, USA United converted its bankruptcy case to a Chapter 7 and moved to liquidate assets to pay off its debts.

Todd Duffy, chair of the bankruptcy and restructuring group at New York's Anderson Kill & Olick, is advising USA United in bankruptcy proceedings. The firm has not yet filed billing statements with the bankruptcy court.

Richard McCord, a bankruptcy partner at Long Island firm Certilman Balin Adler & Hyman, is serving as Chapter 7 trustee for USA United. Bankruptcy court filings show that Certilman Balin partner Jaspreet Mayall ($350/hour) and associate Carol Glick ($315) are advising McCord ($465) in the case.

Marco Polo Seatrade

Dutch shipping company Marco Polo Seatrade filed for bankruptcy July 29 in Manhattan along with several affiliates that own six tanker ships and bulk carriers, Bloomberg reports. Amsterdam-based Marco Polo is seeking to complete a restructuring process and avoid the further seizure of some of its vessels by creditors.

Bracewell & Giuliani partners Robert Burns and Andrew Schoulder are advising Marco Polo and its Seaarland Shipping Management affiliate on the bankruptcy proceedings. The firm has not yet filed billing statements with the bankruptcy court. Last month Bracewell picked up the work advising Greek shipping giant Omega Navigation Services on its Chapter 11 case.

According to a list of creditors filed by the company, the debtor owes $54,362 in professional service fees to Loyens & Loeff, one of the largest law firms in the Netherlands.

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