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Lehman Bankruptcy Yields Liquidators Almost Three Quarters Of A Billion In Fees
The biggest bankruptcy in American history has also become the biggest fee bonanza free for all for the dozens of legal and financial advisors who are assisting with the orderly liquidation of Dick Fuld's former firm. Total fees paid out to all related partied now adds up to $741.6 million. Note - this is not for a reorganization: this is a pure liquidation. Of this, chief liquidator firm Alvarez & Marsal has pocketed an unprecedented $262 million. Bloomberg quotes George Fisher of Capital Guardian: "What a travesty. They’ve taken nearly three- quarters of a billion dollars out of a company that’s bankrupt, and nobody cares." Too bad the US government will never allow any other firm to file for either Chapter 11 or 7 as this may put a dent in the administration's plan to confuse everyone that the greatest Ponzi market/economy of all time is based on anything but a constant low-volume meltup in the markets. So obviously restructuring specialists will milk all they can from the one remnant of the biggest market collapse until its emergence into... fully liquidated status. Talk about value added.
For those who do care, here is more from Bloomberg:
The restructuring firm, which provided Lehman with its current chief executive officer, Bryan Marsal, is billing the bankruptcy estate for “interim management,” according to today’s filing with the U.S. Securities and Exchange Commission. The defunct investment bank has paid all of its lawyers and advisers $731.6 million through March 31, it said in the filing.
Lehman, which before it failed used accounting methods that concealed billions of dollars of risks, according to an examiner’s report, is liquidating to pay creditors. Its payments to managers and advisers haven’t faced major objections such as those in the case of bankrupt automaker Chrysler LLC, which used U.S. Treasury loans to wind itself down.
“The way the system’s supposed to work is creditors stand up and object to the fees, which essentially come out of their payments,” said Robert Lawless, a professor at the University of Illinois College of Law in Champaign who tracks fees. “They don’t throw good money after bad because at best they can only increase their payout a little.”
The meltup in equities has resulted in a dramatic surge in Lehman bond levels as well, which fully explains the complacency of creditors to pay out any invoice presented by the advisory teams. Which is another argument for why everyone is incentivized to see the Keynesian reflation experiment through to completion. The loss in P&L should the Fed ever decide that we are in the most obvious stock market bubble since the dot com era is just too unthinkable to ponder.
Shortly, Zero Hedge will go through some select fee statements of select banks, which provide full disclosure on every invoiced plane ticket, car rental, hotel charge and meal. Those tend to provide hours of entertainment. Then again some of the smarter filers (UCC legal advisors Milbank Tweed being a good example) are aware of our pesky fascination with their expense detail and as a result decide to file these separately and without public disclosure. One wonder just what they may be hiding...
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adding to 2012 SPY put position. This shit is foamy.
It's a *travesty*. I think they should send in more lawyers to check up on the first bunch.
You have been a part of the largest ponzi scheme since you have been born, as were your parents and your parent's parents, etc.
Its the same ponzi scheme used over and over.
I just love it when Ponzi bumps the jukebox and says "Eyyyyyyyyy!"
not that you don't have a good point....
but I think we all get that now.
Milbank Tweed....LOL
Damn you WHITEY to HEEELLLLL!!!!
(disclosure: am white)
Funny, look at the ad to the left with the egg in the nest, boasting of a 5 year retirement program and notice what barbaric relic it is made of.
Are they telling us to simply buy gold?
No, they're telling us to invest in a goose that lays golden eggs.
Just a guess but one assumes they are hiding their multiple invoiced trips to the champagne room at flashdancers.
Alas, one is a true cynic.
Why do they always pick 'financial' or 'legal' advisors to get all the loot from a bankruptcy filing? Why not take the business to an engineering firm? There are gazillions of unemployed techies (displaced by H1-B visas) who would have, and could have done the work for a mere fraction of the cost. Why reward all these attorneys, accountants, and thugs for failure?
Seriously, ebay even. Does the court appoint these guys - is that the deal?
How doest that work exactly?
How doest that work exactly?
IN most circumstances (when Obama and Geithner et al are not committing treason by destroying contract law), the senior debtors form a majority committee, and that committee along with the bankruptcy judge work it all out.
It's been in the news often this month, Judge Peck Jr is the judge for Lehman, and he is under extreme pressure. Such as pressure from this Bloomberg.com piece in this article, it is part of a planted agitprop campaign by another lawfirm that wants to replace Marsal. Manufactured outrage, nicely packaged and served up raw to inflame the targeted bloomberg readership.
Why do they always pick 'financial' or 'legal' advisors to get all the loot from a bankruptcy filing?
If they took the fees to a real business, the recipients would incur tax liabilities. Attorney fees are one of the greatest ways to transfer tax free wealth within the jurisdictional confines of the US ever devised. They only pay "taxes" when they contribute to re-election campaigns.
Apparently I should have put my law degree to use in corporate finance...:(
I should have went the financial calculus route, instead of the scientific route....
easier, a zillion times more bucks...
It's not surprising to anyone who has watched pigs feeding at a trough. On second thought, maybe pigs have better manners.
FEE for all - not Free for all TD.
There is evidently a lot of money to be made in the bankruptcy of the US of A.
That's what happens when your compensation is calculated as a gross % of the GDP of an economy, rather than of the income of a productive business