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The $500/Email Bankruptcy Bonanza, Or Does Capstone Heart Flight Club
Bankruptcy advisors are increasingly having to defend the exorbitant fees (expenses, not so much - see below) that they are charging from their zombied clients, which in the absence of traditional banker products has become one of the primary sources of revenue for whatever is left of the financial advisory industry. A wonderful case in point is today's defense by Evercore of the ridiculous fees they collected for quote-unquote advising on the most predetermined and advice-remote transaction in the history of bankruptcy, i.e. the nationalization of General Motors via the stalking horse legitimization mechanism.
And while Evercore added absolutely no value to this transaction, and ostensibly will end up costing taxpayers billions and billions of dollars by signing off on the appropriateness of the deal, it ended up demanding a $17.9 million success fee.
That's when the U.S. Trustee (the guy who is supposed to police comparable unmitigated greed idiocy) blew up and described Bill Repko's fee demands as "staggering" and "excessive" among other more colorful words. So yesterday Bill Repko, with characteristic flourish took the podium and defended himself with the most ludicrous defense one has ever seen:
Although the transaction did not result directly from an extensive
marketing effort or auction of the debtors, Evercore undertook
significant efforts in evaluating other potential transactions. In
particular, broad and systemic efforts were undertaken by Evercore over
the preceding year to identify or eliminate alternatives and to
facilitate the government-sponsored purchase of the debtors’ assets.
The elimination of alternatives surely benefited taxpayers who are now on the hook up to their gills, and are very grateful to Bill that his elimination technique made sure that virtually any and all potential private acquirers would not end up purchasing GM. Great work Bill - just for that you should add one zero to your invoice. We taxpayers will gladly pay you for your tremendous value added.
Additionally, from the filing posted in the GM docket yesterday, here are some other activities that Evercore performed that justify their meager remuneration demands, which obviously only a NASA savant with a 1985 SPARC computer and the Fed's balance sheet as backstop could have come up with:
So between Bill and Worth, they toiled mercilessly under the beating Sahara sun sending and receiving a combined 35,200 emails (of which at least a whopping 11,700 had hernia inducing attachments). Surely they deserve compensation for this massive undertaking: and just based on the success fee, let alone monthly retainers, and expensed trips to Flashdancers, they charged $508 per sent (or received) email, or the very sensible $1,530 per attachment.
Is there anyone here who feels Evercore is not being majorly impaired by requesting only the token amount they have generously asked for? Why, everyone knows the going rate per email is at least $1,000 while attachments, last time we checked, cost on average $2,000 each.
We hope the U.S. Trustee shares the same magnanimity that Zero Hedge staff believes is necessary and sufficient in this case and promptly sees things from Evercore's point of view: after all, they achieved exactly nothing, but worked oh so very hard, to achieve said nothing.
Speaking of expenses, it bears pointing out that while the grizzled and wise consultants over at Capstone, made (in)famous for hiring such unbiased, experienced and retentionally impaired in the future by any creditor they may ever cross paths with, as Robert Manzo, recently filed their expense detail in relation to that "other" Stephen Rattner special, Chrysler. Not only was the outcome of this deal even less in question than the GM one, and not only did advisors have to go crying to the administration when secured creditors dared to require fair and equitable treatment at least on par with that of the highly unsecured UAW, but they ended up sending some pretty impressive invoices. I present the Capstone fee and expense application for the month of July.
While the entire expense statement is quite amusing, the most notable section is the "team's" dining practices while on location mostly in and around the Detroit area, which I summarize below.
Several questions emerge: i) why does Mr. Tsui perform the biggest greenhorn expensing mistake and on June 30 submit two dinner expenses. The man is a Director for pete's sake (and charging $335/hour) - one would think he should know better at this point in his career; ii) what is Capstone's "per person" meal expense limit? Because based on the above disclosed information, Capstone professionals expensed on average $88.96 per person in various selected more "discretionary" meals in June, while overall the invoice recipients in the Chrysler case (ahem, taxpayers) had to fork over $13,072.39 in making sure Capstone's professionals are well fed for the month of June; iii) And back to Mr. Tsui: why did he expense $343.70 in dinner meals on June 11th when he actually took a flight back from Detroit to EWR on June 10, while the bulk of the other listed dinner participants (O'Neal, Sell, Chonich) were flying back to their respective homes on the same day?
And many more such question, one of which is whether or not performing a cursory check of the Flight Club invoice records will indicate an above average subsidization of its "waitress pool's" tuition demands through law school by Capstone professionals, and their proxies in this matter, the American taxpayers.
As time permits, Zero Hedge will check out Capstone's May expense statement, where we expect to find no less of the same proper adherence to ethical and proper expense protocol as above.
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HFE-mailing
cheeky..caught this on Drudge...you are just gonna love it!
http://www.wftv.com/news/20362245/detail.html
yep, my own personal squad of space monkeys did that; next target; to put it on the Moon
Awesome...fwd to my representative...But as Tao pointed out in a previous thread, it's quite likely this concern will get "over-ruled" at the reps. discretion...
Going somewhere Solo?
Yes, Greedo, as a matter of fact I was, just tell your boss Bernanke to bite me...
It’s too late. He would have bitten you before, now his entire head is stuck up the cloaca of Goldman Sachs. His new master, Lloyd, has now put a price on your head so large that every bounty hunter and bankruptcy advisor in the galaxy will be looking for you. I’m lucky I found you first on this tin hat wearing blog. However if I wait to collect the price will deflate to zero due to the $1 quadrillion in treasury auctions tomorrow morning.
Yes the cloaca, that sounds about right...
now here's where I get confused, who shoots first?
Now I know for sure that I'm in the wrong business - I should just be reading email! Wait - I already do that - LOL, I am really underpaid.
my newest bookmarked finance website: finance news & finance opinions
TD....I mean this with the utmost sincerity; we taxpayers should be paying you for parsing out this shit. I'm at least gladdened by the fact that the US Trustee was pissed.
You and Spitzer need to get together, seriously.
Once again, thank you very much.
Yes, but no one, including bankruptcy judges, takes the UST seriously. By and large, they manage to give bureaucrats a bad name, which is a difficult accomplishment.
Brilliant, as usual...
What else is new in this country ?
Mr. Tsui is not allowed to eat lunch and dinner? Also sometimes credit card charges get posted on the next day... Team Tyler is spending a lot of time splitting c*unthairs.
we know about credit card posting delays. SOP for expense reports is the date of the expenditure, not the date the transaction posts.
some of the per person charges for food are over $100...give me a fuckin' break.
get a fucking sandwich or piece of pizza, particularly at the hourly rate being billed for services.
huh?? no escargot?? foi gras?? a basket of lamb? $300 bottle of wine?
you mean people actually PAY for those things on their own??? who?
Maybe you two have never been on the road. Usually you bring the client with you so a $400 bill reported for 3 people is usually for 3 from the firm and extra people from the client site. And reporting 2 meals in one day is not unusual as most people eat lunch and dinner.
Seems to me like deception is an art form here. Like the other post by TD using Alexa.com to make claims about how much interest there is in ZH when he knows that there is a quantcast.com nugget in his html code which reveals the truth about the massive decline in pageviews.
go tell you BS is stories somewhere else ... http://www.quantcast.com/zerohedge.com
Schooled in the queens English were you?
The numbers speak the truth.
Daily People; from a high of about 40k to the current level of about 20k
Screen shot of the graph.
http://i28.tinypic.com/2r6309t.jpg
Thanks for another great comment from you.
In fact that picture shows a clear double top pattern. Down we go...
We appreciate your interest in our daily traffic and are happy you point out correctly that on weekends traffic indeed drops to roughly half of weekdays. Please come again.
to make claims about how much interest there is in ZH when he knows that there is a quantcast.com nugget in his html code which reveals the truth about the massive decline in pageviews.
better read what you write and come back with a graph that supports your claim about PAGEVIEWS.
http://i30.tinypic.com/2r4pf60.jpg
For a person intimately familiar with expensing details you seem vaguely clueless about traffic differentials on weekdays versus weekends.
Now I know for sure that I'm in the wrong business - I should just be reading email!
Wait - I already do that - LOL, I am really underpaid.
The Flight Club was off the hook back in the day. Money well spent.
$183 per person dinner tab at the taxpayers expense? Anything for productivity....
All of this rests upon the definition of what "fair, reasonable and adequate" actually represents.
I am sure that if we asked David Rosenfeld and Lewis Liman we would be told that parsing expense accounts is just like parsing bonuses in that the sums do not represent a lot of money. Especially since the base pay, bonus pool and other renumeration is inadequate to meet the needs of proper substance while facing the rigors of the road.
Perhaps the Trustee should lunch with Jed Rakoff.
Your investigative financial journalism skills never fail to impress.
TD, what about Tajuddin expensing over $120 for each in room dinner?
A Single Serving Friend
TD, did they charge to eat the dinners?
A Single Serving Friend
It's free money for ..... err... school.
In other news ....
Maiden Lane I, the LLC established by the Fed to acquire Bear Stearns' toxic paper, incurred $54,134,000 in expenses for "professional fees" to Blackrock, the fund's investment manager, during the period between March 14th 2008 and December 31st 2008.
What did tax payers get for the paltry sum of $6,369,000 per month in professional fees to BLK?
An unrealized $3,400,000,000 loss, of course. Not too bad; that's only 1.6 cents in professional fees to generate every 1 dollar in losses.
http://www.federalreserve.gov/monetarypolicy/files/BSTMaidenLanefinstmt2...
Oh, and Blackrock is only 20% off it's all time highs.
See, everybody's a winner!!! Uh, that is if you discount the American taxpayer from the equation. And since most of the individuals orchestrating all of this don't pay taxes or pay a small amount of what they normally would were they not able to afford sophisticated tax avoidance schemes ... in their eyes, everybody is a winner.
Now this is what you should be digging into but that would piss daddy off wouldn't it.
fwd(ed) to Marcy Kaptur D-Ohio 9th District, proponent for auditing the Fed, and I think she get's what's going on
http://www.youtube.com/watch?v=eteiCoYvKF0
TD, expenses, even outrageous ones, are lost in rounding. How about the $10 million bonus paid to your buddy, the entertainment expert?
A Single Serving Friend
Exorbitant fees???
Why are you guys so surprised. Our best hope is that this gets so far out of balance that we start seeing pitchforks and torches in the streets.
To anyone but the schmuck lawyers. I'd almost gladly cheer for the 0s to keep rolling into crooks' pockets if it had the effect of being exposed and creating real outrage... but not to these schmucks. I can't go for that (no can do).
Evercore is a restructuring advisory firm, not a law firm.
Was hoping Marla would chime in, but duly noted about Evercore.
no, our only hope is that health care passes, cap and tax kills 2 million jobs, and just before the dollar exhales it's final breath obama is caught saying "let them eat cake" on what he thought was a turned off microphone.
Brilliant Rant. So eloquent...just love it.
If anybody knows Andrew Ross Sorkin, please send this to him. I'd love to see him do a front pager on how Evercore is getting fat by feeding at the taxpayer trough thanks to its political connections to the Obama administration.
Anyone who bills services for a living would hate experiencing open court scrutiny and castigation by a bkc court judge in a hearing on a motion to approve fees and expenses. Perfectly legitimate time and expenses frequently get whacked.
On the other hand, it was always amusing to watch professionals accustomed to raping clients in fees and expenses twist in the wind as fraudulent billing and expense practices were exposed, examined, and denied. The worst offenders were always financial advisors from investment banks, who were always appalled that they would not be paid their usual fees despite failing to add value to the estate.
That double billing a single meal may provoke the judge into denying fees altogether. You can count on Capstone suffering a substantial reduction in fees.
I look forward to a spirited defense of Evercore's very reasonable charges by Benjamin N. Dover.
Classic. Well Done ZH
Snacks $57. Yup that's legit
What happened to the line item for strippers and cocaine?
Yes the cloaca, that sounds about right...
now here's where I get confused, who shoots first?
my newest bookmarked finance website: finance news & finance opinions