The Work

March 6, 2012 5:48 PM

As Lehman Exits Bankruptcy, Weil's Tab Stands at Nearly $383 Million

Posted by Brian Baxter

Weil, Gotshal & Manges's business finance and restructuring group has been busy the past three years with Chapter 11 cases for fallen financial services giants Lehman Brothers and Washington Mutual.

On Tuesday, Lehman Brothers emerged from bankruptcy more than three years after the abrupt collapse of the New York–based investment banking giant in September 2008 forced Weil to help one of its biggest clients quickly put together the largest Chapter 11 case in U.S. history.

"We're very proud of the work we've done," Weil business finance and restructuring chair Marcia Goldstein told The Am Law Daily Tuesday. "The [bankruptcy] judge has been extremely complementary of us."

Harvey Miller, the firm's longtime bankruptcy baron and a lead Lehman adviser, was in court Tuesday and not immediately available for comment. But Weil bankruptcy partner Lori Fife, the firm's lead lawyer on the case, confirmed that Lehman officially exited from Chapter 11 at 12:01 a.m. Tuesday.

In a statement issued Tuesday morning, Lehman announced that it will begin making payments to creditors on April 17. Fife says the defunct bank should remain a going concern for at least three years to manage the ongoing process of liquidating its remaining assets in order to pay creditors. One asset not yet for sale, Fife says, is the Lehman name.

A monthly operating report filed by the Lehman estate with the SEC last week shows that its total bankruptcy bill for outside lawyers, accountants, and other restructuring professionals has reached almost $1.6 billion, not too far off the $1.4 billion that Bloomberg estimated it would pay external advisers three years ago.

Of that amount, Weil has been paid nearly $383 million in fees and expenses through January—the firm billed another $7.4 million that month—for its work as lead debtor's counsel. The sum represents almost 8 percent of the nearly $4.9 billion Weil has collected in gross revenues over the past four years. (The Am Law Daily reported last month that the firm's gross revenue rose 3.8 percent in 2011 to $1.2 billion.)

Another major Weil client that has wallowed in bankruptcy since 2008, Washington Mutual, saw a judge approve a nearly $7 billion reorganization plan backed by dissident creditors last month that could see funds start flowing from what was once the nation's largest thrift later this week.

A monthly operating report filed recently with the SEC shows that Weil's tab as lead debtor's counsel to Seattle-based WaMu stands at nearly $71 million, or a little more than 1 percent of the firm's gross revenues over the past four years.

Of course, Weil isn't alone in racking up the billables in the Lehman and WaMu bankruptcies.

Milbank, Tweed, Hadley & McCloy, lead counsel to Lehman creditors, has received almost $133.7 million in fees and expense for its work. Lehman's special litigation counsel Jones Day ($61.2 million), conflicts counsel Curtis, Mallet-Prevost, Colt & Mosle ($42.5 million), and special tax counsel Bingham McCutchen ($21 million) have also reaped the rewards of landing roles in the Chapter 11 case, which has seen more than 30 law firms bill the bankrupt estate.

In the WaMu bankruptcy, the failed bank's special litigation counsel at Quinn Emanuel Urquhart & Sullivan has been paid nearly $14.8 million for its services, while Akin Gump Strauss Hauer & Feld has received almost $26.2 million as counsel to WaMu's creditors' committee. (The Am Law Daily reported in December on the nearly 25 firms being paid by the bankrupt WaMu estate.)

Weil's Fife acknowledges the end of the big wave of corporate bankruptcies that began in 2008 and 2009 that have bolstered many a major Am Law 100 restructuring practice. But Weil's restructuring lawyers won't be sitting idle now that the Lehman and WaMu bankruptcy battles are ending.

The firm is already busy advising several clients in need of restructuring counsel, Fife says, some of which have already filed for bankruptcy. For example, Weil is representing American Airlines parent AMR in its Chapter 11 proceedings, as well as the administrators from KPMG handling the wind-down of U.K. operations for MF Global Holdings.

Meanwhile, the end of the Lehman and WaMu bankruptcies may prove to be a boon to the broader national economy. CNNMoney reported this week that with both bankrupt financial institutions set to emerge from Chapter 11, a combined total of $15 billion in estimated payments to creditors could be made over the next two months—money that could eventually make its way back into the stock market.

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