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Disclosing Bankruptcy's Dirty Little Secret
With many companies operating in bankruptcy, and every breath they take studied under a microscope by every single hedge fund (somehow everyone now is a distressed specialist), every fund manager tries to get a step up in the "informational asymmetry" race. Yet if you have been blacklisted by Goldman Sachs and are unable to get that market moving data 24 hours ahead of everyone else what do you do? This is especially relevant in cases such as General Growth Properties, where the development of the case is supposed to determine the future of not only substantive consolidation in BRE case law but the fate of CRE in general. We present one of the more secret tricks in the bankruptcy book.
Every several months advisory companies (i.e., banks and law firms) which receive compensation by a bankrupt debtor are supposed to file their fee statements in order to get their exorbitant fee demand approved by the bankruptcy court. Usually the bulk of these documents are filled with the exquisite detail of bankers, consultants and lawyers trying to justify billing 18 hour days, while somehow fitting in expensed lunches and dinners, and also 3-5 hour airplane trips, all in the same day (yes Mr. Trustee, feel free to double check some of these, oh wait, you already did in GGP and found a whopping $11,047.28 in "recommended expense adjustments" for Alix Partners- great work). And speaking of Alix Partners, for some hilarious examples of just this behavior we refer readers to the billing and expense detail of one Clayton Gring of AlixPartners, consultants in the GGP bankruptcy case.
Yet the real meat is found usually in comparable documents filed by debtor and creditor legal teams, in which ever-scrupulous lawyers provide magnificent detail of how they spend each and every hour. Many times, the information provided is way beyond what can be found anywhere in the public register. Lawyers, however, will give this detail because the Trustee and the Judge need to see some justification for awarding bargain-basement $1,000/hour rates. Which is why we were very surprised when we found quite a few tidbits of information that had not been disclosed anywhere previously from merely scouring the some of the most recent Akin Gump fee applications.
As we do not want to get in trouble for pointing out what we have uncovered (somehow GGP may be considered a national interest, now that Bernanke and Geithner have made the case that they will rather see America explode than let real estate - both residential and commercial - be priced fairly, and any uncouth information dissemination may promptly lead to a one-way ticket to Guantanamo), we will merely provide readers with a link and a copy of the filing, and let them do their own work.
Here are several very much relevant Akin Gump filings: First App, July, August, and September. For other such examples we refer readers to comparable fountains of information-cum-monthly fee applications by Kirkland, Miller Buckfire, and Weil Gotshal.
Akin Gump fee app example (and goldmine for keyword searches).
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Do these fine lawyers go to the bathroom?
Can they bill for toilet time at $1,000 per hour?
Of course, they take their cell phone into the bathroom.
MultiTasking.
no they just go into a time warp and have 60 hour days unlike the rest of us with 24.
And any genuinely honest lawyer will admit that most of the profession operates exactly on that basis.
A genuinely honest what...?
That is like looking for a highly experienced virgin prostitute...
Tom, lawyers are made in the bathroom. I make one every morning after my first cup of coffee.
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email extractor
In all seriousness, I work in a law firm and routinely hear the blackberry scroll-wheels' "clicking" sounds coming from inside bathroom stalls in the men's room.
Not sure porn surfing with $h*t hanging out their a$$ should be billable.
Apologies Marla- can/may I still lurk?
"one way ticket to Guantanamo"
You mean the new Financial Crimes Detention Facility?
First inmates - Timmy, Benny, and Lloyd.
What a pleasant thought...
Can't you see Lloyd's wife, Mrs. Blank-dick, snapping while waiting in the conjugal visit line because people with REAL money should not be bothered to wait...
Poor Timmay is going to get punked...
Yet hundreds of thousands of American engineers are unemployed, and these 'legal' people are billing, in many cases, >$500/hour?
WTF is wrong with this country?
Bring out the pitchforks!
In Amurrika, Banker is at the top of the totem pole and Lawyer is directly below because he does his dirtiwork. After the corporate executives and insiders, everyone else is just an economic serf. Get used to it. And fuck the pitchforks, they have Bushmaster 450's, Barret 50 cals, and Blackwater security.
I can't believe I am writing this. I never thought it could happen to me...
Rest assured that such finely detailed billing disclosures are not made because the lawyers enjoy keep and publishing such records.
If such detail were not given, the redundant cadres of lawyers for interested parties, not to mention the office of the U.S. Trustee, would file equally detailed, sharply honed attacks for inadequate record keeping and demand that the fee requests be denied or at a minimum sharply discounted.
Yes, it was a bitch keeping the records and publishing the fee requests.
Yes, it was aggravating to be subjected to such scrutiny.
Yes, we all wanted to kick the U.S. Trustee's representative in the balls we were sure she had -- until the day she was a member of a panel on development in local bankruptcy practice.
She wore a just-above-the-knee length skirt to the conference, and to her chagrin and the entertainment of the audience, she sat at a table on the stage directly facing the audience -- had no tablecloth. Her knees were pointing directly at our foreheads in the audience. For twenty minutes the valley of the promised land was all we could see as she expounded on her office's noble efforts to reduce the expense of bankruptcy for debtors and creditors alike by making sure our professional fees were pared to the minimum.
Despite her incredibly offensive, dry delivery, she received a well-deserved ovation at the conclusion of her speech.
Good times in the Eastern District of California bankruptcy bar.
What's really amazing is they're paid their rate to keep their own records plus they're paid their assistant's rate to make up this bill. Only in the Banana Republic of the Unites States of America.
I remember reading about an architectural dig that was uncovering a section of ancient Rome during the 100 A.D period of time when Rome had devolved away from Senatorial rule and smack dab into one man Emperor rule.
This was a detailed story about the various finds. It was soon obvious they had uncovered the location of a den of thieves, also know as lawyers. They found tablet after broken tablet of detailed invoices, bills for minute amounts of work performed for various clients, including the city of Rome itself, meaning this was a very politically connected law firm they were now unearthing.
It seems even 2000 years ago the lawyer knew how to pad the bill. The old tricks are still the best tricks.
Pitchforks, indeed. Real Estate around the District of Criminals is booming.
Since I don't know jack about this case, or what has been published on GGP, could someone grow a pair and post a few of the relevant points? Thanks.
Add this to the growing list of reasons why deflation if great. Cheap money is killing America.
THIS is journalism. Well done TD.
Lawyers are just like vultures. They seem to quit fighting for truth justice and the american way the second the carcass has been entirely consumed.
I have no comment. I just thought I'd juxtapose my avatar with your posting.
No way. Subprime is contained.
Nice catch on C.Gring: $303 hours in July. Assuming he took either Saturdays or Sundays off (To Praise God, for being able to bill at $450/hr!), that's 27 days at 11.22 hours per day.... Was his last hour of the day as productive as his first. Maybe so if he was with the stewardess in the mile high club, er that would be re-productive now wouldn't it.
Frankly the only thing that seems odd about those expense filings are some of the low dollar entries. The guy you singled out appears to be a young ambitious player, who is obviously focused mostly on this deal, stays in nice hotel rooms, but occasionally eats on the cheap or rides in a Taxi (versus a Limo).
303 hours seems in a month seems short to me - VP level employees at a consulting firm (this guy is an MBA business consultant, not a lawyer), law firm, or an investment bank typically work 12+ hour days in normal times, and easily hit 20 hour days during a big deal. Saturday and Sunday work is typical. Their hourly fees don't even seem like that big of a deal - if they were based out of NYC, instead of Texas, they're top hourly rate would exceed $1,000 easily.
And to Fibozachi, I agree "This IS journalism" - it's your typical eye-catching headline, followed by a supposed expose that exposes nothing surprising or new, but its flashy. I don't see one thing in here that is surprising or new - please tell me what I'm missing.
Don't make the "poor unemployed engineer" argument. If the Engineer can help fix the problem and wants the paycheck, he should go apply for a job at Alix.
Full disclosure, I don't work or know anyone in the report.
Right....guessing you are an attorney, a consultant, or someone else that gets paid by billable hours.
'Senior Policy Adisor'(sic)... $550/hr billing rate isn't too shabby.
what the fuck TD, just give us the word search at least man. I hate fucking billing sheets, and you want us to dig for the gold mine you already found.
Help a honkey out.
+1 on Miller Buttfire.
There is an awfull lot of information in those lists and going through it properly would take a long time. My first reaction was that they spent a lot of time in respect to taxes. A quick view and I quickly came across the name Goldman and further on Wells, ING, Prudential, Metlife, citcorp although these were less interesting. My second reaction was what the heck was going on with the DIP and what exactly were they waiting for the Hill to decide on the TALF. I also noted that they were all over the new guidance rules from the treasury on REMICS. There are some subtle hints in there about employee rights, questionable loan pratices, and real estate maintenance or the lack of. I am sure I have missed the main thrust of what TD is hinting at, but I will leave it to others to apply the detailed microscope. Still its an interesting challenge to pick through if only briefly.
I found Goldman 46 times. What do I win?
I think these guys missed a *ton* of billable hours! Look at this, for example: "Prepare for and attend Senior Team Meeting." They only billed 2.2hrs for that.
Didn't that guy have to go to Law School to prepare for that meeting? If he hadn't gone to Law School he'd be in no position to attend! That's just one example. I mean, everything everybody involved in the case did in their life was preparation for every tiny detail of their involvement. Must not be Chigurhists.
Note how many of the entries during certain time periods (e.g., page 5) mention Fee Statements. In other words, billing someone for putting together the paperwork that's necessary for you to get paid.
Bankers, politicians, insurance agents, bureaucrats, Walmart, McDonalds, lawyers...the list is getting long. Is there anybody left that actually works for their living? We still have farmers don't we? Please say yes.
"Lawyers are just like vultures." No they are not. Vultures can't change their wingtips.
death by 1000 cuts
These lawyers look to me the best of the best, better than the special operation teams. They work non-stop 18h days at the top performance, not even the finest machine ever build on earth (BMW) can not accomplish that. Bravo. Should make them all senators, now that the Senate is in Thanksgiving vacation. By the time senators are back all the legislation is sorted out.
They billed for 2300 hrs total = 138000 minutes. the bill for the tele charges was 16,000. At $0.10 cost per minute that is 160,000 minutes.
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