Aug 22 The judge overseeing Energy Future Holdings' massive bankruptcy appointed a committee to review the fees of lawyers and other professionals in the case.
Law firm Godfrey & Kahn, which advised a fee committee in the bankruptcy of Lehman Brothers, the largest and most expensive Chapter 11 filing in history, will advise a similar four-member committee in Energy Future's case, according to an order signed by Judge Christopher Sontchi on Thursday in U.S. Bankruptcy Court in Delaware.
Energy Future, the former TXU Corp, declared bankruptcy in April to restructure more than $40 billion in debt, making it among the largest-ever Chapter 11 cases. The army of financial advisers and high-priced, specialized restructuring lawyers from top-level firms like Kirkland & Ellis and Morrison & Foerster will make the case an expensive one.
Energy Future's estate will also be responsible for the fees of its official creditors' committee, and potentially other creditor factions.
In bankruptcy, where the goal is to maximize recoveries for creditors, professional bills are publicly filed, heavily scrutinized and subject to court approval.
The most sought-after bankruptcy lawyers charge more than $1,000 an hour, sometimes creating a perception in restructuring circles that lawyers have no incentive to move cases along quickly. The U.S. Trustee Program, the Justice Department's bankruptcy watchdog, rolled out new guidelines last year for how lawyers in big bankruptcy cases should report their fees to courts.
It is common practice in large and complex cases like Energy Future's to appoint a committee or examiner to review monthly fee statements, work with parties to reduce costs, make recommendations to judges on whether to approve fees and object to fees they believe are unnecessary.
Energy Future's committee will include four members: one each chosen by the company, its creditors' committee and the U.S. Trustee, and one independent member. (Reporting by Nick Brown; Editing by Dan Grebler)